Friday, February 10, 2017

FSL trust and singpost update

FSL trust

I used to own FSL trust and it has been on my radar since. Many things have happened, and I thought readers should know.

1) CEO left. He made no secret his unhappiness and the board did not mince words in explaining the reasons of letting him go. Apparently, there is some coporate issue and conflict of interest. The Ex-CEO is accused of pursuing his own interest over the trust.

2) Profit guidance. The trust is expected to report loss due to impairment but still positive in generating cash flow.

U can read the announcements from the SGX. When I first read 2 announcements, I am rather tempted to re-enter the counter if the price is good. It is cash flow that determine payout although the impairment might cause stresses on its loan convenant.

However, I decided against it when I read this:

 

FSL do have 4500-5000  TEU containers chartered to YM and it's a big contributor to revenue.
 
 While the news state 4500 TEU - 5000 TEU, I am not sure if FSL will be spared.


Yang ming is the biggest contributor. So I will leave it alone.

 Singpost

I will leave FSL behind and is going to leave Singpost behind me. 


Scenario 3 happens. Top line is increasing fine but the bottom line is horrible. The main culprit if u read the presentation is the ballooning expenses in US companies.

The wound did not end there. To add salt to injury, one major customer of the US firm went bankrupt. That is already reduce business dealings with it before it bankrupt is not comfort to me. 1 thing is quite clear, this is a bad deal as there is going to be impairment going forward.

Given the new dividend policy of pegging payout to profits. U can kiss decent dividends good bye.

I am kissing it goodbye come Monday. I still like the company but no longer it's current price 

12 comments:

  1. Current result for singpost is bad. If I remember correctly it used to be 1.5 cents in last year 3Q. Now cut to 0.5 cents.

    Management wise in recent years needless to say, CEO left, COO left, CFO left. Chairman turned down position.

    Market recently have punished starhub and M1 over dividend cut. Judging by the same logic, it will punish singpost accordingly.

    It might be wise to exit once the reasons for your initial entry has changed.

    ReplyDelete
    Replies
    1. Hi solace, indeed I am caught by the "badness" by surprise. To be honest I am expecting flat profits with rev growth only.

      As for Top management, I am not so bother by it as I thought the replacement CEO and Chairman is heavyweight. I kinda of support pegging dividends to NP. Although I will get a cut in dividends

      Well this could still turn out to be a darling after I sold (a mistake) but no need to second guess la.

      When they turnaround the US entities is a question mark. So far their execution sucks

      Delete
  2. Hi SI,

    Quite a surprise at the massive cut of dividend on SP. Hope you could exit at a not too shabby price on Monday.

    ReplyDelete
    Replies
    1. Hi IF,

      I do have a buffer from the current price and the buy price. I have already key in the purchase price at cost. In the unlikely event it went below that, I will still sell. I bought a very small stake, so no problem. I dun think it will crash say 15-20% la. But I will stomach whatever comes

      Delete
  3. Dividends aside, it is the company's ability to execute their various expansion strategies that's lacking.

    Shown clearly in the numbers: revenue increases, but earnings fell, operating costs rised, lousy performance of the acquired company,

    Not sure about the top managements quality, but judging by the numbers and execution records, they may lack the calibre to bring the company forward in an exciting, promising yet competitive industry.

    It is hard to acknowledge an investment error especially when the results prove one's thesis wrong. But it's important to detach early and preserve our capital, after all, investment is about buying a stake in fundamentally strong company.

    Guess it's really time to say goodbye

    ReplyDelete
    Replies
    1. Hi CSCCC,

      Guess u are vested too? Ya, I for one make more mistakes than right call. I am surviving but I will continue to invest. It open my mind and perspectives.

      Something are intangible.

      The new management inherited the company, so the bad execution are by the previous director and board. Will still keep this under radar. Hope they dun waste the strategic advantage they have over others.

      Delete
  4. Hi SI,

    I was quite tempted with FSL trust a year back. Back then, I thought of the potentially juicy yields they might offer when they reinstate their distributions.

    However, what made me hold back was the state of the shipping industry. Glad I did not put in my money. Phew!

    ReplyDelete
    Replies
    1. Hey UN,

      U are the first to talk about FSL . It could be a good short term play if u catch the timing of restatement of dividends.

      But the odds just get lower.

      Happy yuan xiao !!

      Delete
    2. Hey SI,

      FSL caught my eye too when a friend of mine introduced it to me. It was a "play" on reinstating its dividends. But it has so much debt that I felt very uncomfortable. whenever i have doubts, I become even more risk averse.

      Rgds,

      Heartland Boy

      Delete
    3. Hi Hearthland boy,

      It's loans are high but is getting lower and lower over time. It is a good trend.

      But future growth is uncertain. Tankers are doing well now, but containers might be problematic after yang ming. If trade and shipping recover, they have no problem finding new charterers then ...

      Nvm. I will just hold more cash. First

      Delete
  5. Hi SI,

    Your title got some spelling error, LOL

    ReplyDelete
    Replies
    1. Lol !!!

      Thanks LP. Hope my still getting good sleep

      Delete