Aberdeen Asset Management have always been known more for their value investing like style of choosing companies so it is interesting that I saw that they got vested in SBS Transit at SGD2.20.
SBS Transit have fallen quite a fair bit due to fuel cost and possible increase in operation cost.
Could it be that Aberdeen sees value at SGD2.20?
I dunno about this, since i haven’t go back and take a look for some period.
2008 SGD 0.032
2007 SGD 0.375
2006 SGD 0.25
2005 SGD 0.2625
2004 SGD 0.065
As you can see the payout was pretty consistent last three years. the question is if it will continue in a high inflation environment.
The div payout in 2007 was SGD 94 mil and in 2006 it was 60 mil.
On an average their operating cash flow is around 120 mil. Lets say expenditure increase to 60 mil and they save 10 mil. That means they can still safely pay out 50 mil. I believe they can still payout 0.20ct of div this coming year.
The yield would work out to 9%. I think its pretty good for a business that will generate continuous cash flow due to their duopoly status and ability to raise rates in an inflationary environment.
Its a good consideration!