Category: SIA Engg

Sell @ $4.97

No more left. Decided to free up cash in case I need it to defend SGX, which was under selling pressure. But, after selling, I also managed to contra off my entire SGX holdings. Now, I'm left with a huge warchest… 😀

Sell @ $4.97

Decided to take more profits. Treat it as taking the 18ct dividends (with discount) in advance.  My warchest is getting bigger again, have to look for any Yield Rotataion Strategy target… Perhaps if SATS drop to $3.0x or SGX < $6.90 (patiently waiting for bigger drops after May data is published as likely big drop yoy since May-13 was strong).

Good to see collectors around… 😀

Sell @ $4.95

Decided to take some profits. Using Financial Engineering, will be recognising the sale for my most expensive buys @ $4.88  $4.85. Gives me the flexibility to buy back at higher prices on any drops as the existing holding can easily average it down. STI is weak today, likely affected by US overnight drop due to a likely earlier rate increase within 6 mths. Possibly, also China's continued mkt correction…

As this stock is part of the ongoing Yield Rotation Strategy being used, I may not be buying back and may switch to the next target eg. SATS (which'll release results tomorrow). 😀

 

Buy @ $4.84, $4.82, $4.81

I was expecting at least a 5ct – 10ct  jump from yesterday's close of $4.80 due to the unexpected Special Div of 5ct. So, what I did was to do a Jump-Q to buy at $4.84 at 9am matching. However, it proceeded to drop to a low of $4.80… When it stabilised, I bought more at $4.82 and left some in Q @ $4.81, which was partially done.

It'd appear that the big seller, which had been selling since the last week of April is still around. Fortunately, there were also buyers around and it finally closed @ $4.83. I'm expecting prices to stay suppressed till the seller(s) are done with their job.  From ft.com, there're 10 funds holding 1.9Mil to  22.25Mil shares each. But, as it's less than 5%, we'll not be able to immediately find out who's the culprit… 😀

 

Buy @ $4.80

Having spent so much time to add to my previous post in kinv blog (got a bit unnerved by the non-stop selling at lower prices) over the weekends, it seems a shame not to buy more… 😀

Q4 Results was announced after mkt close (earlier than last year which was on the 15th). A pleasant surprise to see a Special Div = 5ct, which is quite close to my Best Case of 6ct. Final Div = 13ct was lower than my Estimate of 14-14.5ct but the reduction was partly due to a lower Payout Rate of 83.75% (vs 89.75% last year). Cash = $536Mil was $4Mil higher than my estimate…  The forward statement is quite vague and I think I'll sell before xd, sometime in end-Jul.

Buy @ $4.82, $4.80, $4.79

Kept dropping… Kept buying to average down.. 2H results will be out in May (14-May last year with Div = 15ct).

 

Time to do more studies….

First, the financials,

NOTE : FY is end-Mar

 

Comments

• Q3 EPS dropped due mainly to higher Staff Costs, Subcontract  Material Costs
  • Unless Q4 shows y-o-y growth, FY14 EPS is set to be lower than FY13 (my estimate 0.5ct to 1ct lower in worst case)
  • If so, div may be reduced to 14 – 14.5ct (from 15ct) unless Payout Rate is increased
• Cash = 41.46ct / share or 39.86ct (Less Debts of $18m)
  • Negligible Debts
• Yield = 4.583% ; PE = 19.58 (20 using latest 4Qs)
  • Yield not great ; PE on the high side for a non-growth stock

 

Next, the Dividends,

Source : SGX

Background colour of above table,

• Pink – 1H Div
• Blue – 2H Div
• Yellow – 2H with Special Div

 

Cash Comparison for Q3 & Q4,

Note : Outstanding Shares = 1,114,571,358

 

Comments

• Q314 Cash is at a very similar level to Q311 when they last paid a Special Div = 10ct
• But, the Cash Increase from Q3 to Q4 had been tapering, from +122m in FY11 to +93m in FY13

Assuming Q314 to Q414 Cash Increase continues to taper , eg. Ball Park estimate to +$70m (Cash generated from Operations = $51.4m in Q3),

=> Estimated Q4 Cash = $462m + $70m = $532m

Further, assume SIAEC requires $320m Working Cash (estimated from FY11 Q4 = $581m less 24ct Div or $262m),

=> Cash Available for 2H Div = $532m – $320m = $232m or 20.8ct

=> Best Case 2H Dividend Scenario = 14ct (Final) + 6ct (Special)

Note : I have reduced the Estimated Final Div from 15ct to 14ct as FY14 EPS looks set to be lower than FY13.

 

Conclusion

• A Special Div is not impossible, but, it'll be lower than the 10ct of 2H11
• SIA is the majority shareholder with 78% and will likely be motivated to "milk" this "cow"
• The unknown is whether they have other plans for the excess cash eg. to expand into other airports with new JVs

In the worst case, Yield = 4.5% is the compensation for a longer term hold… Further, the Quasi Bond-like behavior of Dividend Yield Stocks will likely kick in soon ie. the expected 15ct Final Dividend will help to provide some cushion for any bigger drops … till xd. IMO, current sell down is either due to switching by Funds or someone with insider info of bad results…

 

Reference

• Q3 (Dec) Results

Buy @ $4.86, $4.84

Add to my collection for Yield Rotation Play. Someone sure seems to have lots to sell…. Most likely foreign funds switching out as all my seller CP are foreign ones… Quite scary actually… 😀

Buy @ $4.88

Itchy fingers… add back to my portfolio by Jump-Q at 5pm. Change of plan, after doing a fair bit of selling recently. Need to re-deploy my free cash, otherwise idling around earning little return from bank interest…, Further, need to revive Yield Rotation Strategy as I'd sold off all my SATS.. 😀

Sell @ $4.91

Take profit, no more left. 😀

This is part of the action plan for Part II of David's Yield Rotation Strategy. This would be the Pre-Results phase, where we'd expect a tug-of-war between FEARS (Uncertainty on Profitability due to rising Costs may lead to a reduction in Div) & GREED (EPS MAY not be as bad and POSSIBILITY of Special Div). On top of that, the Quasi-Bond characteristics will temper the intra day swings as we approaches mid-May (Results Annc).

Buy @ $4.82

Add back to my portfolio. Fingers itchy… initiate next part of David's Yield Rotation Strategy. Actually, not very attractive as,

• PE = 19.67 (FY13 – Mar) or 20.08 (latest 4Qs)
• Yield = 4.564%

There's also a risk of lower Div Payout as 9M EPS was lower compared to last year.

The only bright spark (my guess only) is the possibility for a higher Special Div component is more than 50% as the Cash level is high ($462Mil vs $459Mil in Dec-10, where they subsequently declared a 2H Div = 24ct in 2H Mar-11). Note however that there was a higher $122Mil increase in Cash from Dec-10 to Mar-11, and I did not check the reasons for the increase. For comparison purpose, Cash from Q3 (Dec) -> Q4 (Mar),

• FY13 =  $420Mil -> $523Mil => +$93Mil
• FY12 = $388Mil -> $498Mil => +$110Mil
• FY11 = $459Mil -> $581Mil => +$122Mil

Anyway, just a small position wich I can hold for longer term dividends if I'm stuck…..

I have also noticed a rather high level of price volitility due to it's low liquidity (low vol) and will likely exploit any opportunities for short term profits. 😀