There were 2 things I learnt in the course of analysing Singapore Shipping Corporation (SSC). Well, it’s actually only 1 main thing, and that is while an investor should definitely have a common framework of analysis, he or she should be flexible to recognise when it is no longer applicable. In the case of SSC, I felt that circumstances warranted the breaking of 2 of the usual value investing philosophy.

Ignoring historical performance

Value investors have typically emphasized on looking at historical, normalized performance as a yardstick of future business performance. Unsurprisingly, the assumption is that the future environment will be somewhat similar to the past. SSC is one of the rare instances where circumstances are going to change so drastically that the past is absolutely irrelevant. Looking at SSC’s 3-year performance, the indicators are actually pretty attractive.

ROA and ROE indicate stable profitability. It is evident that the prudent ...