A breather for Vicom?

Demand for old cars for rental slows scrappage

The number of cars taken off the road has slowed, contrary to expectations, as taxi app operators like Uber and GrabTaxi snap up older vehicles to grow their rental fleets.

More than a third of Singapore's car population is between eight and 10 years old, but the recent phenomenon may be putting the brakes on the scrap rate.

Taxi app firms Uber and GrabTaxi are snapping up older cars and renting them out as "limousines" which ply like "on-call cabs". So while a 91/2-year-old car may previously have gone to the scrapyard, it remains on the road for another six months.

Because the rental rate of such old vehicles is low, they are proving to be popular with former cabbies as well as people who are willing to be part-time drivers in order to have access to a car.



Respite
This small but much needed news may be the catalyst that Vicom is yearning for in a bid to counter the tsunami of cars heading for de-registration. This trend may soften the tough landing for Vicom's maintenance unit and hopefully smoothen the entire imbalance age of the COE issued in Singapore.

Vicom closed $6 on Wednesday, giving a yield of 4.38%. I'm still having the likings for this company due to the high barrier of entry and safe nature of its business.

Besides, they've the chance to raise their fees after keeping the same rates for about a decade. 

I wrote an article about Vicom and how I think it's a good buy. The factors are still intact. Slow and steady eh?

Let's Get Rich's Report Card - August 2015

	Name	Portfolio %	Average price ($)	Div Yield on cost
1	M1	15.56%	3.63	5.20%
2	Singtel	10.82%	3.78	4.62%
3	Raffles Medical	9.45%	4.13	1.09%
4	SATS	8.88%	3.11	4.50%
5	Parkway Life	6.69%	2.34	4.83%
6	Sembcorp Industries	6.51%	4.56	3.51%
7	Colex	6.05%	0.321	1.56%
8	StarHub	5.78%	4.05	4.94%
9	Design Studio	5.64%	0.54	12.01%
10	CapitaMall Trust	5.55%	1.95	5.59%
11	Vicom	4.31%	6.04	4.35%
12	Sheng Siong	3.69%	0.68	4.48%
	UOB	3.29%	23.05	3.90%
13	DBS	2.54%	23.06	3.38%
14	Old Chang Kee	2.48%	0.87	1.73%
15	SIIC Environment	1.43%	0.20	0%
16	Thai Beverage	1.32%	0.46	3.69%

Expected Annual Dividends: $3,054 ($254/month)

Dividend Yield: 4.36%

Expected annual dividends and yield dipped slightly as I've divested a partially on SATS.

Why?

I've realised the gains on SATS (at about 20%+) by selling a partial stake of SATS, which used to be my largest holding. I'm glad to be able to sell at a higher price before it finally decline with the general market.

Although I'm a huge advocate of holding stocks for long term, this move was made in order for me to free up some cash for my new purchases. I believed that the market was going to fall further given the fundamental weakness in the world now.

How long will the stock market remained low? I've no idea. But I have a hunch that this will not be a short instance. China's PMI is slowing down and it affects a lot of the world's economy.

New purchases

Colex. I finally bought some Colex, this is despite Colex registering a strong half-year result and the price barely nudged upwards. Instead, it fell lower and I felt that it was a great opportunity to scoop some Colex.

DBS. I've bought DBS because I felt the price was fair. I was deciding between UOB, OCBC and DBS (all so yummy!!!) but I went for DBS instead. If only I had a bigger war chest ready for this buffet session.

Pace yourself and stick to the plan

I'm still pacing myself in purchasing stocks. CMT, PLIFE, 3 banks, Singtel are all on my watch list and many have already hit very attractive prices. However, I'm taking my pick and pacing myself in case there's further decline in the stock market.