Monday, January 30, 2012

Cerebos Pacific Limited (CPL) & SingPost

Dear readers,

Jac wishes all a prosperous dragon year. May all investors reap in good profits this year.

CPL and Singpost announced results yesterday. I shall talk about SingPost first.

Singapore Post's Q3 net profit declined 5.2%, still manageable. They are still giving out an interim quarterly dividend of $0.0125 per share, that is, a 10,000 shareholding will earn $125 on 29 February. Anyway, SingPost is a dividend stock, as of now. I am still looking at how the company is going to invest the cash they have in hand. If you were to buy SingPost shares at $0.94 last month, the expected dividend yield for 2012 will be 5.3% per annum. This percentage is calculated using 5 cents total dividend for this year. There may be more dividends in the 4th quarter.

As for CPL, it is a bit more complicated than what is reported. The company compares only their Q4 results, hence reporting a net profit drop of 20%. Why did CPL compare only Q4 rather than the full year results? It was because CPL has changed their financial year from September 30 to December 31. In 2010, the company reported a total of 15 months results instead of the usual 12 months. Hence, it is very difficult to compare a 12 month results to a 15 month results.

However, as investors, we shall be a little more hardworking than anyone else. I have compiled a 12 month results for CPL for 2010. I took the company's results for four quarters in 2010 and add them up to make the result of one financial year of 12 months. Only then, we are able to make comparisons of results year on year.

As we know Thailand's massive flood has caused almost all the companies there to be affected. Cerebos did not escape this disaster either. In fact, their sales were adversely affected by the distribution disruptions. A stronger Singapore dollar against Thai Baht also affects the profit as Thailand is the group's largest market for Cerebos' products.

Comparing year on year, CPL's 2011 revenue was $977 million compared to 2010's $936 million. This is actually a 4.4% increase. Net profit attributable to shareholders for 2011 is $100.1 million compared to $108.7 million last year. This is a drop of 8.0%. It is still considered acceptable. Earnings per share dropped 8.3% from $0.3442 to $0.3155. As a shareholder of CPL, I am still comfortable with the drop in earnings, due to the natural calamity. Of course, the shareholders hope that this dragon year can bring better results.

CPL will be distributing a dividend of $0.25 per share in middle of May 2012. Holding 10,000 shares will earn the shareholder $2,500. The elderly couple that is still holding to their CPL shares has gained a dividend yield of 5.6%. This high dividend yield is due to the fact that they bought the shares at the price of $4.48 per share. In total, this elderly couple earns a total of $0.58 per share dividend for investing in the company for 2 years. Including the increased in share value, the couple's investment into the company has grown by 31.7% for two years. Their invested savings have compounded at a rate of 14.8% per year for two years. Not a bad defensive investment after all. 

Disclosure: Jac is holding on to CPL and SingPost shares at the time of writing this post.

Disclaimer: This post should be used as a reference to educate novice investors. Any kind of investment involves risks. Investors are advised to exercise their own discretion when investing their money. 

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