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One of the favorite grandfather stock that gives good dividends on a business that is predictable and survives well in recession.
I won’t be doing a full review on this stock but would rather take a look at its nine month operating performance and give an opinion about it.
The key thing for investors looking to invest in it is:
Replacement of Mail Equipment in 2013-2014
Singapore Post would need some 150 mil of capital expenditure to replace their equipments then. The beauty of Singapore Post is that capital expenditure is normally pretty low.
Any business that makes 130mil operating cashflow and needing 10 mil in capex is good business. SingPost have 4 years to come up with 150 mil.
Will they cut their 6.25 cents div because of this? There is a chance but may not be likely.
Lets just say that this business the earnings and cashflow are pretty predictable.
Dividend payout for 6.25 cents comes up to full year 120 mil
Their Operating Cashflow comes up to 170 mil
CAPEX will come up to 10 mil tops
170-120-10 comes up to 40 mil.
If they can maintain that for 4 years they should finance that 150 mil pretty well