EARNINGS don't represent actual cash that comes into the company. Cash flow does.
EARNINGS are more easily manipulated by savvy CFOs and CEOs Earnings contain all kinds of non-cash expenses. Things like depreciation, amortization and stock-based compensation are expenses that affect earnings, but do not impact cash flow.
CASH FLOW is a more accurate representation of a company's performance. Dividend investors will like to see that companies have ample cash flow to pay the dividend.
To calculate cash flow per share:
You'll find a company's cash flow reported on its statement of cash flows. Divide it by the number of shares outstanding (found on the income statement) to figure out what the cash flow per share is. Then, just like the P/E calculation, you divide the price of the stock by the cash flow per share.
MY SRS $84K CONTRIBUTION HAD GROWTH FURTHER TO $308,800
My last contribution for my SRS account was in 2014, total contribution stayed at $84k. Altogether I had withdrawn $170k from my SRS account. $110k withdraw previously. Last year withdraw $40k and this year $20k.
My shares in my SRS account plus cash balance as at end August 2017 add up to $138,800.
Since end August 2015 I had sold off Cordlife shares. I had bought into Trendlines. My stocks holding in my SRS account are as following:
Hai Leck - 42,500 shares
Hai Leck share price was affected by low oil price as its depends on oil and gas business. The company is still profitable, cash-rich and debt-free. Dividend paid out last year - 5 cents. (3 cents special dividend)
Straco – 90,000 shares
Straco a cash-generating machine.
Trendlines – 109,800 shares
A key catalyst for the stock price would be exits and the resulting dividend payouts. Exits will pick up pace given that within Trendlines' expanding portfolio of companies, more start-ups will reach higher levels of business development. Trendlines expect to receive royalty payments to stream in from 1H 2018.
Valuetronic – 20,800 shares
Valuetronic is back on growth path in revenue and profit.
Dow Jones had hit all time record high of 25,295. ST Index hit 3,500, 2.5 years high. Market investors certainly sense that 2018 will see a continuation of a global "Goldilocks economy". Why?
There is little evidence of increasing inflationary pressures. Interest rates are likely to remain at close to historically low levels.
Crude oil price increase above US$60 which is profitable for oil relate business & supporting economic activities.
There is the gentle recovery in economic growth and increasing demand for companies products across the major drivers of the world economy - Japan and the Asian emerging markets; the Eurozone and, most importantly, America.
There is the continuing stable expansion of the China economy.
During 2015 and early 2016 the rapid stock market suddenly sell-offs led by the precipitate collapse of the Chinese markets. So this round we need to be at our most vigilant.
For now, the bulls are in charge and the bears are quiet.
Stay Invested For Long Term, Not Trade Or Speculate.
• Investors should take a long term view.
• Investors should think like a fraction business owner.
• Investors should seek out long term compounders and sit on them for as long as the companies are growing & profitable.
• Investors should remain invested or miss out.
• Invest in perpetual dividend riser stocks.
• Investing for dividend - Company requires strong enough balance sheets to be able to pay out dividends. However we have to distinguish between those companies that are over-reacting to pay dividends and companies that have the ability to sustainable grow their payouts.
• Investors should stay away from companies that take on a lot of debt.
• Investors should avoid or sell off stocks that faced fundamental issues that have been challenging to resolve.
KNOWING WHEN TO SELL:
• Sell when the overall stock market trend changes. (Economy or financial crisis resulted in overall stock market changed)
• Sell when a better investment opportunity arises.
• Sell when made an investment mistake. (Bite the bullet & willing to cut lost)
• Sell when companies face stiff competition, increase in business costs, etc which affect its bottom line.
• Sell when there is “red-flag” raised in the company. (Don’t let EGOS get in our way)
• Sell when companies fundamental reverse.
• Gradually sell off stocks which had over-priced its fundamental.
These are the 2 Healthcare Stocks I’m vested:
ISEC Healthcare & Singapore O&G
ISEC FY 2017 Result:
Revenue = 39.98m (+20%)
Gross Profit = $17.5m (+19%)
Gross Profit Margin = 47.3%
Net Profit = $7.885m (+22%)
Net Profit Margin of 21.3%
— No debt —
Cash = $24.824m
EPS = 1.53 cents
Full Year Dividend of 1.2 cent
Share Price close @ 31.5 cents
Dividend Yield = 3.8%
PE Ratio = 20.58
Reasons For Vested In ISEC:
• Yearly growth in top and bottom lines.
• Very good gross & net profit margin of 47.3% and 21.3%
• Over past 4 years, 2014 to 2017; profit growth from $2.0 million to $7.885 million, increased of 394%.
• At 31.5 cents it is trading @ PE of 20.58 PE which rank among the cheapest in healthcare stocks.
• Dividend yield of 3.8% is much higher than bank and CPF interest rate.
• ISEC can be classified as “Perpetual Dividend Raisers.” Over the past 3 years’ dividend paid out are; 0.44 cents, 0.99 cents and latest 1.2 cents.
• Company has zero debt and net cash of $24.824 million.
• Company is ‘asset-light, strong cash flow business model’ that is why ISEC able to maintain dividend paid out of 75%.
Singapore O&G FY 2017 Result:
Revenue = $29.9m (+4.3%)
Net Profit = $8.51m (-3.4%)
Net Profit Margin = 28.45%
--No debt--
Cash = $16.43m
EPS = 1.78 cents
Full Year Dividend of 1.5 cents
Dividend Yield = 4.0 %
PE Ratio = 21.0
Reasons For Vested In Singapore O&G::
• Revenue growth from $8.6 million in 2013 to $29.9 million in 2017 over 5 years.
• Net profit growth from $3.12 million to $8.507 million in 2017 over 5 years. (2017 Profit was impacted by higher depreciation & other operating expenses mainly because of 1 new laser machine and 3 ultrasound machines being acquired. Other operating expenses rose because of increase in rental expense owning to new corporate office and clinics.)
• Attractive net profit margin of 28.45.
• Yield of 4.0% @ share price of 37.5 cents is attractive for healthcare stock.
• At 37.5 cents it is trading @ PE Of 21.0
• Company has zero debt and net cash of $16.42 million.
• Assets light business, dividend payout of about 80%.
ISEC Healthcare (517.1m Shares)
2Q/1H 2018
$10.4m/$20m (+13%/+13%)
G. Pf = $5.1m/$9.7m (+17%/+17%)
G. Pf Mg 2Q/1H = 49%/48.5%
N.Pf =2.27m/$4.4m (+16%/+22%)
N. Pf Mg 2Q/1H = 21.8%/22%
EPS = 0.43 cts/0.83 cts
——- no debt ——-
Cash flow from $22.1m to $26m
NAV = 13 cts
Int Div = 0.78c ex on 17/8 & Pd on 28/8
(Int div. 2017 = 0.5 cts)
SINGAPORE O&G Ltd (476.8m)
2Q/1H 2018
Rev = $8.6m/$16.8m (+19%/+18%)
N. Pf = $3.75m/$6.2m (+75%/50%)
N Pf Mg 2Q/1H = 43.6%/36.9%
——- no debt ——-
Cash flow from $17.65m to $18m
EPS = 0.79 cts / 1.31 cts
NAV = 9.54 cts
Int Div = 0.8 cts ( 0.61 cts) Ex on 16/8
Dividend of 0.8c = $3.814m. Pd on 3/9
ISEC Healthcare @ 30 cents:
G. Profit Margin increased from 47.3% to 48.5%
N. Profit Margin increased from 21.3% to 22%
PE ratio of just over 15x
Int. Dividend increased from 0.5 cts to 0.78 cts.
Prospective yield of about 5%
Cash flow from $22.1m to $26m
SINGAPORE O&G Ltd @ 36 cents:
N. Profit Margin increased from 28.45% to 36.9%
PE ratio of below 15x
Int. Dividend increased from 0.61 cts to 0.8 cts.
Yield about 5%.
Cash flow from $17.65m to $18m
I have been accumulating these 2 Healthcare stocks at bargain price. The fear of trade wars & increase in interest rate may affect the stock markets worldwide. Buying into Healthcare stocks with increasing cashflow, zero debt, prospective yield of 5% and trading around 15x PE make sense!
