It has been getting more interesting for retail bond investors recently, with the launch of Aspial's 5.25% bond in Aug, Singapore Savings Bonds in Sep and now Perennial's 4.65% bond. Does Perennial's 4.65% bond have sufficient margin of safety according to Benjamin Graham's criteria of minimum earnings coverage and minimum stock value ratio as described in
The Lost Art of Bond Investment?
Perennial was listed following the reverse takeover of St James Holdings in Oct 2014. Hence, it did not have financial statement for a full financial year. Based on Perennial's latest financial statement for the year ended Jun 2015, the minimum earnings coverage and minimum stock value ratio are computed as follow.
Earnings Coverage
| Profit before tax |
= $57.1M |
| Adjusted for: |
|
| - Deduct: Non-recurring fair value gain on investment properties |
= $46.0M |
| - Deduct: Other non-recurring gains (earn-out, forex) |
= $11.0M |
| - Deduct: Share of ... |
|
...
