Business Overview
Vicom is company that doing vehicle inspection. Vicom holds 100 percent stack of Setsco and Setsco is a company doing testing (ie. NDT, water test and etc). Vicom has total 7 locations doing vehicle inspection business and 1 location doing non-vehicle testing business.
2020 Financial Summary
Year 2019, Vicom has exercise 4 to 1 stock split.
From the table, we can observed that Revenue is hovering around 100mil. Due to pandemic in 2020, business is impacted and only able to achieve 86mil. Average operating profit is at 34.2mil. Return on equity is around 20!!! What a good company!!!
Income statement (1H2021)
1st half revenue increase 23 percent due to Singapore is slowly loosen the control. Besides that, Singapore also provide support 1.2mil for the company. PAT increase 23 percent.
Balance Sheet
From the balance sheet, we observed that company cash reduce 12mil. This is due to dividend given to shareholder about 22mil. Other than that, there is not much changes.
Cash flow
Company dividend policy is 90percent of the profit. But in 2017 and 2018, they declare 120percent of profit for dividend
My thought
Vicom from SGD2.25 dropped to SGD2, drop about 12 percent.
Let's have a rough calculation on this stock whether it worth to buy it.
EPS: 3.38 X 2 = 6.76
P/E : 30
ROE: SGD 24MIL / 125MIL = 19%
This stock not a growth. Hence, we should use dividend approach to calculate the intrinsic value.
Avg dividend - SGD0.066
My dividend expectation is at least 5 percent for Singapore stock.
DY = 0.066 / X *100 = 5
IV = SGD1.3
Current DY - 0.066/2.01 = 3.2%
Even though company provide 120% dividend in year 2017 and 2018, but in one day it will definitely stop paying for 120% as the cash will keep dropping and remain 90percents. For conservative investor, we will plan for the worst and hope for the best.
Although the company has high margin of profit , no debt and high ROE. But it still not a stock that worth to hold at this moment.
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