25 October 2013

My Thought after Sim Lian AGM - Oct 2013

I just finished attending AGM of Sim Lian at Jurong Country Club. So far, this is my 1st AGM attended in any of Singapore Listed Companies. One of the reasons why I wished to attend the AGM was that I would like to meet those directors whose faces were not printed out in Annual Report (haha, you may treat it as a joke), and I think EDs & Group CEO are all handsome and pretty people there. The group CEO is a soft spoken people and I enjoyed chatting with him for a while after AGM was finished. 

Anyway, below is the summary that I got it from AGM just now:
  1. Sim Lian Equity grew from S$200M++ to S$800M++ in just 4 years time. I believe it is due to its good strategy to tap on uptrend of property market cycle by introducing higher profit margin projects. After UBI One is completed, the profit margin may fall to normalized rate. (FC mentioned that the industrial property project normally enjoys a higher profit margin compared to residential property project)
  2. Investment Properties started to be appeared in Balance Sheet, with the group's intention to generate more recurring income. In fact, the property bought in Sydney also would bring in about 6% rental yield. I believe the group played in a prudent way to ensure that the excess cash is taken good care of, although the ROI is definitely lesser than property development project
  3. Net Debt Ratio dropped to near to 0% level in FY2013. It may indicates that the group would think it is harder to seek a good land bank with reasonable price. In fact, they may focus on their strategy to have more recurring income projects to diversify the concentrated risk on property development project
  4. The reason of Joint Venture given by Top Management was to cater for huge CAPEX projects that may exceed group's capacity to do it alone. Anyway, my personal view is that it may increase ROE by pulling Assets & Liabilities out of the group's BS. Of course, I still think it is a good way to do so as it may capitalize loan to JV in BS, while still enjoying the shared profit of JV and an increased net profit margin. I foresee this may be a trend for group to park some huge projects in this JV categories
  5. Group CEO shared with me that the script dividend reinvestment scheme was implemented as and when the group needs the cash to support ongoing working capital. They do not have intention to privatize the group at this moment although I think they already control at least 70% stake. Personally, I think the Dividend Reinvestment Scheme was good for those who still think the group has bright future and are willing to be the long term investors. 
  6. With 4.6c dividend payout, it implies to about 5.2% dividend yield, which I think is good. Anyway, I think Sim Lian is in the midst of increasing recurring income properties, so the coming net profit may not exceed the record result in FY2012
If you ask me whether this share is cheap, I think it is not. However, I would opt in for the dividend re-investment scheme if there is any. Ya, it is definitely in my watch list and I am still waiting for a chance to increase my exposure in it later.

8 comments:

  1. The land purchase at Venture Avenue is the jewel of Sim Lian. Superb prime location. Go google and check it out.

    May I ask what was your entry price? Tks

    ReplyDelete
    Replies
    1. My entry price was quit high as I only discovered it after June this year (so you can guess what my entry price is). Nonetheless, with more than 70% shareholdings with management, I believe that the price fluctuation can only be done when the dividend paid out date is around the corner. Anyway, this is only my own view without any supportive fact.

      Delete
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    ReplyDelete
    Replies
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