First of all, I consider UOB kayhian, Kingsmen and SPH before, but decided to put all these in the back burner. Most of their most recent quarter report show continuous deterioration of earnings as compared to YOY. While I expect SPH earnings to improve next quarter due to the increase in print price, the net increase is not significant enough to put to rest the sustainability of its reduced dividends. I think 15 cents is more sustainable without growth drivers. Of course, SPH could inject Seletar mall and experince a short term jump, but that need some luck in timing.
In terms of yield, it is closest to replacing CMPH. Before u start throwing shoes at me and remind me of the 4th Telco, and that M1 will be most impacted due to its solely Singapore market and its high dependency on mobile and broadband market, let me say all investment is worth a look at some price.
M1 has fallen the most, as compared to starhub and Singtel. I however, think bundling strategy has evolved from cost savings and win-win situation to one that fleece the consumer. I am sure consumers are aware. Look at the trend now, sim data only plan, without lock in period for subdized phone etc.
While the will to bring in the 4th telecom by IDA is not in doubt, the feasibility of it is not a foregone conclusion. The 4th telecom will disrupt the 3 companies profits, but by how much? Assume M1 dividends go to 2013 levels, and assume M1 pays out almost all of it profits, it is a almost 15% drop we are talking about and we still have 6% yield. And that bad situation will mostly materialize in 2018 the earliest. (Build up of infrastructure takes time) Did not seem too bad now, isn't it?
Will read up more on M1 defintely.
Option 2: Waste business operators; Colex or 800 Super
When u read quarter reports, these 2 companies have the most stable or growing business YOY. 800 super has a good growth story but Colex has better balance sheet. 800 super is gaining market shares in waste disposal business from NEA and is giving decent dividends but has its shares price run up due to a analyst report. Colex has a track record of paying pittance as dividends. Just look at their cash on hand, payout ratio and u know they are misers when dividends is concerned. It is rather surprising to me though, since its directors are paid reasonably and cleanly (no options) and the parent company owns 78% of company. Wouldn't Bonvest want money to flow up to the parent?? This is not the situation with Comfort and Vicom for example:
Option 3: Yangzijiang
I am still a fan of YZJ, and I view Ren Yuan Lin as "buffet of the East" it's my own infatuation, and u need not agree with me. It's HTM never exploded like others say it would. It refrain from building Rigs/ jack ups and it's a very profitable company in the global fraternity of ship builders. Even Korean yards are in trouble now.
The best part is, he is very candid. The order books is still strong but he admits they are won at the expense of margins. What do u expect right? Market did not seem to factor the depression of margins in yet though. I expect margin to fall and profits to go down. I am waiting for better valuation and hope to buy this as a cyclical recovery stock. I believe 4.5 cents dividends might not be sustainable in the short term.
Option 4: accumulate ST engineering
STE Q1 report is actually not as bad as the headline suggests. Expenses for Airshow is one-off. In fact, the recovery for aviation has finally arrived, but we will
Not know if the capex cycle has restarted
Or it is just a one-time fluke.
It is a net cash company with yield of 5%, not many blue chips company with this yield and balance sheet strength.
Option 5: Accumulate LMIR
A wonderful company and performance under Alvin Cheng. Waiting for rights issue news LOL or higher MOS.
However, option 5 is least likely because it is a trust and I have no wish to increase my exposure to reit/ trust unless the offer is irresistible.
Hopefully, will have more time during the June holidays to do some more number drilling and peer comparisons before I take the plunge.
If the market recovers in the meantime, I dun really mind.