Car dealers unhappy with Land Transport Authority.

I read a commentary in The Business Times yesterday and found it amusing for various reasons.

It was a piece on how car dealers are unhappy with the Land Transport Authority (LTA) for what have been perceived as piecemeal announcements.

Honestly, I think they are more unhappy with the fact that the business environment has become very difficult for them, forcing many smaller dealerships to close in recent times.

For those of us who drive, we know that road traffic conditions have worsened remarkably and this is partially due to a motor vehicle population that has burgeoned in recent years.

More people also "seemed" to be "prosperous" as their demand for cars pushed Certificate of Entitlement (COE) prices through the roof just a few months ago.

The operative word here is "seemed" and not "prosperous". Why?

When "cooling measures" were introduced last year, demand fell dramatically. It shows quite obviously that many people were only able to afford cars here in Singapore when they had access to much bigger loans and 100% LTV (loan to value) was also available.

One complaint a car dealer had was about the categorising of cars not just by engine capacity but also by engine output. This caused brands like BMW to be completely pushed out of Category A which is where mass market cars compete for COEs.

Is this a bad thing?

Well, bad for the rich or those who want to appear rich. For most of us average folks, I think it is a good thing. Actually, for the rich, it might not even have mattered.

Imagine a middle income family buying a 1.5 litre Japanese make mass market car competing for a COE with a millionaire who was buying an entry level BMW for his son's 18th birthday. Something feels wrong here. What is it? I wonder.

So, the categorisation criteria are better now. I am not saying that the system is now perfect, of course, but I feel that it is better. More equitable, won't you agree?

Related posts:
1. First time car buyer? Get a Mercedes Benz.
2. Cooling measures for cars: Buying pre-owned.
3. Cooling measures for cars spurned.
4. Cooling measures for cars.
5. If we are not rich, don't act rich.

Marco Polo Marine, Mermaid Maritime and Jaya Holdings.

Someone asked me recently why didn't I buy into Mermaid Maritime or Jaya Holdings which are in the same industry as Marco Polo Marine?

He suggested that I look stupid now that Marco Polo Marine's share price is still languishing while those of Mermaid Maritime and Jaya Holdings' have shot through the roof.

Well, like I always say, I don't have a working crystal ball, only a working bowling ball and I am not even a very good bowler. Sometimes, my bowling ball ends up in the gutter. OK, ok, frequently, my bowling ball ends up in the gutter. So embarrassing.

Anyway, if you had bought shares of Mermaid Maritime or Jaya Holdings' and made a bundle, congratulations. Celebrate! Always good to make money.

I have said that fundamentals look strong for the offshore and marine industry, supporting buoyant demand in the oil and gas industry. Prospects look good for the next couple of years at least.

I haven't studied Mermaid Maritime or Jaya Holdings in detail but with Mermaid Maritime now trading at about 23x earnings and Jaya Holding's stock price at a 5 year high, Mr. Market has to be very optimistic indeed.

For example, he must be expecting the earnings of the former to at least double in the next 12 months in order for a 23x PER to be reasonable now. Is this possible? I suppose anything is possible. What is the probability? Anyone?

There could be explosive growth in business in the future for both Mermaid Maritime and Jaya Holdings but I cannot tell if it is going to happen. So, I rather prefer to buy cheaply.

If I am able to buy a company's stock at a PER of 8x in the same industry which has earnings growth visibility over the next 18 to 24 months, isn't that a better deal? Well, I think so.

Now, which stock could this be?

Let me ask my bowling ball.

Related posts:
1. Marco Polo Marine: Exciting times ahead.
2. When to BUY, HOLD or SELL?