First of all, Singapore Post is a yield stock, meaning that investors are concerned about price stability and dividend it gives. Generally these stocks fair well when the overall market sentiment is bearish and smart money get out of risky assets. As always, before clicking the BUY button, it is wise to take a look at the financial to understand a bit about the business and its growth prospect. Usually I will go here (http://www.reuters.com/finance/stocks), type in the name of the company, and it will pull out all the numbers. Below are some interesting figures on Singpost.
Dividends
| Company | Industry | Sector | S&P 500 | |
|---|---|---|---|---|
| Dividend Yield | 5.43 | 1.92 | 1.52 | 1.81 |
| Dividend Yield - 5 Year Avg. | 5.96 | 1.24 | 1.35 | 2.47 |
| Dividend 5 Year Growth Rate | -16.61 | 4.10 | 9.37 | -3.82 |
| Payout Ratio(TTM) | 74.82 | 12.04 | 20.94 | 32.28 |
This doesn't look attractive since dividend growth rate for 5 years is negative. It means that the company may not be able to maintain its payout. And the yield does look a bit low compared to REITS.
Financial Strength
| Company | Industry | Sector | S&P 500 | |
|---|---|---|---|---|
| Quick Ratio (MRQ) | 2.05 | 0.93 | 1.10 | 0.69 |
| Current Ratio (MRQ) | 2.05 | 1.32 | 1.39 | 1.02 |
| LT Debt to Equity (MRQ) | 154.23 | 37.78 | 44.44 | 151.16 |
| Total Debt to Equity (MRQ) | 154.23 | 48.57 | 61.87 | 198.11 |
| Interest Coverage (TTM) | -- | 1.02 | 0.07 | 17.31 |
Long term debt is a bit high now compared to the industry for this recent quarter. One may want to check why Singpost is borrowing so much long term debt. Is it a move to expand its business beyond mail service? Long term debt impacts cashflow and also the amount of dividend the company can gives. So much for the financial figures though there are much more to consider for investor. Generally, the preferred company should have low debt, high ROE, healthy operating cashflow, healthy P/E, good sale growth, and margin. Now let's zoom to the weekly chart of Mr. Postman.
First and foremost, price is now under the long term moving average (blue line). The white line is the trendline from Oct 2008 low, and price is beneath it. There is a a strong support between range 1.13 to 1.15. To long this stock, there must be evidence of strong buying volume (See attached chart note below). At present, the probability of a downside move seems much higher. A clearer signal is needed for long entry.
Always check out my earlier post:
http://clickandtrade.blogspot.com/2011/04/singapore-post-battle-of-email-and.html
Happy profiting!!!
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