SBS Transit: opening of Downtown Line (DTL) will boost profits

2017 brings several positives to SBS Transit. It will be the first full-year of operation under the Bus Contracting Model and the Bus operations should end the year with respectable profits.

SBS Transit will benefit from the first full-year of operation under the Bus Contracting Model

The year will also witness the opening of the third and final phase of the 42-km Downtown Line. The start of revenue service on the DTL will bring a surge in profits for Rail.

For the first time in many years, 2017 will see all cylinders firing at SBS Transit and the pace will accelerate through the following year. Record profits expected in 2018.

The certainty that both bus and rail segments will be profitable makes for a strong case to invest in SBS Transit, and given the simplicity of its business model, the merits of the investment is quite straight forward!

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Delfi Limited: scores big with JV partners Yuraku and Orion!

Delfi is a market leader in chocolate confectionery in Indonesia

Delfi Limited (formerly Petra Foods Limited) manufactures, markets and distributes chocolate confectionery in its core markets of Indonesia, Philippines and Malaysia.

In the past year, Delfi has announced joint-ventures with Orion Corporation of Korea, and Yuraku Confectionery of Japan to bring their popular products to Southeast Asia. Orion and Yuraku are established brands which have wowed taste buds for decades at home and abroad.

Delfi is a well-managed company with a record of strong growth. Delfi’s management is cautious about the company’s results for 2017 but it is the following years, when the JV’s contribute to the bottom line, that hold promise. At current prices, Delfi’s stock represents low-risk and rich rewards.

Once the JV’s are operational Delfi’s will sprint ahead of competition. Its stock, at current prices. represents low-risk and rich rewards.

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Q&M Dental : Growth funded by debt?

Q & M Dental operate dental clinics in Singapore, Malaysia and China

Q & M Dental Group operates over 70 dental clinics in Singapore and a smaller number in China and Malaysia. For 2015, their revenues came from Singapore (70%), China (23%) and Malaysia (6%).

Q & M’s growth has accelerated in recent years as they sought to increase their market share by acquiring established dental practices. The purchase agreements stipulate that the existing dentists continue to run the practice and responsible for achieving profit targets.

On this front, 2015 was a busy year for Q & M! They acquired a string of clinics in Singapore for close to $60 million of which $34 million was satisfied in cash while the remaining $26 million was in new shares. Following these transactions, Debt/Equity Ratio rose from 32% to 76% while intangible assets, mostly goodwill from acquisitions, doubled to $76 million and constituted a significant 30% of the company’s $ 232 million in assets.

Q & M’s strategy of growth through acquisitions is flattering the headline but hurting the bottom-line. Total income for FY16, less gains, fell 34% y-o-y.

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Vard : on the mend?

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VARD built vessels mainly for the offshore industry, and had a reputation for constructing specialized vessels, many of them based on their in-house design. Their shipyards are in Norway, Romania, Brazil and Vietnam.

Vard was hard hit by the prolonged slump in the price of oil: new orders dried up, customers went bankrupt, and confirmed orders were either cancelled or deferred. To make matters worse, Vard’s loss-making shipyards in Brazil were dragging the company down.

Vard responded to the downturn by diversifying into building vessels for the cruise and fishing industry. Their current order book, with a majority of new orders coming from outside O&G, reflects the success of their diversification strategy. Meanwhile they have restructured their operations and, after several wrenching quarters, expect to be profitable in 2017.

Their current order book, with a majority of new orders coming from outside O&G, reflects the success of their diversification strategy.

Vard is not out of the woods yet, but nevertheless offers an interesting opportunity to invest in a prospective turn-around. Majority shareholder Fincantieri’s unconditional offer is proof of the company’s improved prospects, as is the fact that only about one-third of the share capital not previously controlled by Fincantieri chose to accept the offer.