Friday, January 19, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of SMRT Corp

Value Investment on Singapore Stock Exchange - Valuation Report of SMRT Corp

Evaluated on 19-Jan-2007 and I am currently invested in this company.

About the company:

  1. Core Business: Public transport - provision of train, bus and taxi services.
  2. Date of Listing: Jul-2000
  3. What I like about this company: Its has got a stable earning basis, being a public transport service provider. Revenue and Net Asset Value improving throughout last 5 years. Profit and Earnings Per Share improved in 2002-2005, but there was a dip in 2006, likely due to increase in oil prices.
  4. What I do not like about this company: About 77% of its total assets is vested in Property, plant and equipment. I am not too comfortable with its bond issuing activities, because I do not understand the bond issuing concept. Probably need to re-visit this again some time later...
  5. Competitive advantage (if any): Being 1 of the only 2 MRT operators, it sure has its advantage!

Valuation Statistics (base on 1H07 financial report)

  1. Earning Per Share: $0.078 (projected)
  2. Price/Earnings ratio : 17.82 (projected)
  3. Operating Profit: 19.80%
  4. Return on Equity Ratio: 10.16%
  5. Current Ratio: 0.68 (as mentioned in above, something I do not like)
  6. Debt/Total Equity Ratio: 1.37
  7. Net Tangible Assets: $0.384


  1. Price: $1.39 (18-Jan-07)
  2. Intrinsic Value: $0.77 (highly subjective)
  3. Maximum Price I would purchase at: $0.62 (highly subjective)
  4. Price to IV: 180%
  5. Final word: At a 180% price to IV ratio, it is too expensive for me to make a purchase! Thus, I would not consider buying this stock at this point. Having said that, this is one of those recession-proof stock, which I would love to hold, when it is less expensive.

Information sources

  1. SMRT Corp website at
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.


Anonymous said...

Hi Mr Lim,

Got to know about your blog from Sunday Times.

Will be visiting this space regularly in future.


James Ong

Aragorn said...

Good Blog.

Fu Chin said...

Dear James, Aragorn,

Thanks for the kind compliments! :)

This blog will stay free for now... more like a social responsibility at the moment.

Warm regards,
Fu Chin