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Tai Sin Electric: Nibbling for a 6.3% to 6.5% yield.

Friday, May 8, 2015

I was first introduced to Tai Sin Electric by a guest panelist, Paul Chen, at the third "Evening with AK and friends". This was sometime at the end of March. I did some research into the company and also came across a well written article dated 24 Sep 2014 by Sean Seah. 

Since Sean's publication of his article, Tai Sin has paid dividend twice, 1.5c a share on 6 November 2014 and 0.75c a share on 25 March 2015. Having paid 2.25c a share in yearly dividends in the prior 2 years as well, it would seem that this could be the norm for Tai Sin Electric in the coming years, conditions permitting.

Looking at their half yearly results announcement on 11 Feb 2015, the EPS was 2.44c and if we were to expect similar performance in the following 6 months, then, full year EPS would be 4.88c. With a DPS of 2.25c, the pay-out ratio is 46%. This is pretty comfortable.

NAV per share has also grown as Tai Sin Electric retains a relatively big portion of earnings. NAV per share at the end of 2014 was 33.46c. This could possibly grow to 36c or so by middle of this year as I do not expect another dividend to be announced in that time, based on the timing of past pay-outs.

Visit Tai Sin Electric's newsroom: here.





Tai Sin Electric's share price has declined in the last few months since touching a high of 40c in September 2014. Looking at the charts, it seems that 34.5c could be the support to watch as the downtrend was broken in the second half of January 2015 and the share price could stay range bound for months until the next dividend announcement later in the year.

I believe that paying 34.5c to 35.5c a share for Tai Sin Electric is to pay a fair price to be a shareholder of a business that provides a combination of growth and income. If the support identified at 34.5c should break, then, the next band of supports are found at 32.5c, 32c and 31c. If they should be tested, I would probably be accumulating.

19 comments:

David said...

Nice analysis....I'm vested too.

Stock Hunter said...

Hi AK,
What is the gearing? Is it 18.3%

AK71 said...

Hi Stock Hunter,

I believe that the debt to equity ratio has gone up slightly from June 2014 to December 2014. As of 31 December 2014, the debt to equity ratio is 0.225x.

Dividing the total borrowings by total equity gives us this ratio.

LOL said...

Hello AK,

How did you determine the support by looking at the chart? Pardon my silliness, technical analysis and I have always had a rocky relationship :(

Thanks!

AK71 said...

Hi LOL,

34.5c was the lowest point in recent months, if I remember correctly. It was tested twice, actually, and held up as support. So, that should be the immediate support to watch. The rest of the supports, I used Fibo retracement lines to determine. :)

Unknown said...

AK71

Could like to bring to your attention that today 32.5 was hit. Did you buy? You have said that you would like to buy some at this price.

I am vested at 19c and 28c. Welcome you on board.

vic

AK71 said...

Hi Vic,

I was on board a cruise ship the last few days. It will take me a while to get up to speed again. ;)

betta man said...

Tai Sin hit $0.30 as of time of writing. Potentially 7.5% yield.

James Tan said...

Price hit $0.38, any idea what was reason behind it?
Is it time to divest??

AK71 said...

Hi James,

Your guess is as good as mine. ;)

Capricon said...

Tai Sin has a fairly good results for last FY, dividend increase a little.

Probably market has the news and that explains the recent price increase. ;)

AK71 said...

Hi Capricon,

That makes me happy. Looking forward to receiving some income here. :)

Kevin said...

Hi AK,

Trade receivables is (21,224) for 30 June 2016 under the cash flow statement. Does it mean that there were more cases of outstanding payments from its clients for this accounting period?

http://i.imgur.com/vvEPups.png

AK71 said...

Hi Kevin,

That would be a logical conclusion. :)

AK71 said...

From my Facebook wall:

Reader:
Hi AK, may I know your current view on your nibbled position such as Tai Sin Electric?
I think its an excellent company but I am uneasy when price chiong too much. PB is now 1.25 (near the last high in 2014) and dividend yield down to 5%. But PE remains attractive @ 8.85.
So what do you do for such scenarios?
I would love to sell and hopefully buy it back at lower price with better yield..

AK:
Always question your motivations. Why do you want to sell? If you sell because you hope to buy back at a lower price, the operative word is "hope". Do you want to do that? We should know what we are doing and we must be OK with it. Peace of mind is priceless.

jalan Jalan said...

Hi AK,

Results are out for the year. Both revenue and GP are down for Tai Sin.

The management doesn't sound too confident for the year ahead: Market conditions for the Group’s business segments have become more challenging in the face of theintractably difficult environment. Singapore, which accounts for the bulk of the Group’s business, is expected to see private sector construction demand remaining subdued as a result of the slowdown in the
property market and continued economic uncertainties.

In the next 12 months, we will take a more cautious and prudent approach to doing business in the face of
the prevailing uncertainties in the market.


What are your thoughts on their latest results?

AK71 said...

Hi JJ,

I have remained cautious regarding Tai Sin's prospects and have not added to my position since my initial purchase. I believe that at my entry price, it is a decent investment for income. So, I will keep the status quo.

Kevin said...

Hi AK and JJ,

The founder of the company just purchased 1 million plus shares via market transaction today. ;)

AK71 said...

Hi Kevin,

A vote of confidence? ;)

Let's see if Mr. Market goes into a depression.

I would be more comfortable adding if the share price retreats some 10% to 20% from here.

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