*Official* MasterLeong Thread - Part 2

[MasterLeong]

Golden question on Starhub

But curious man, how they maintain their dividends despite lower earnings

Starhub if u look at the history sometimes they earn less than 20 cents, earn maybe 18 or 19 cents yet they still pay 20 cents dividends

this is because cash dividends are paid from cash flow, not from account earnings


example if you look at reits, sometimes their earnings very low.. u see like 20 or 30 times earnings.. yet they still pay out 6-7% yield, how come?

this is because earnings is an accounting number, after collecting rentals you minus off stuff like depreciation and amortization which do not affect your cash flow but affects your earnings only


same for telcos, your cable tv biz, your teleco infrastruture you already paid up and built up... but these are hard assets that by accounting you have to depreciate say over 20,30 years.. the depreciation lowers your earnings, but does not lower your free cash flow to pay dividends

Cheers
Master Leong

 

[goh6570]

many ssi warriors on leave today

jin shiok

you on leave?

 

[akwl88]

you on leave?

at work

very little pple in office

can pcw today

hahahahha

 

[MasterLeong]

Anyway curious, what's the difference between capital mall trust and CapitaLand itself?

CapLand = parent company and a property developer... cyclical business, during boom... build a lot, during bust... build less

CMT = Reit, stable asset for collecting of rents... same as how you will hold a condo to rent out for rents

 

[goh6570]

at work

very little pple in office

can pcw today

hahahahha

yaloh, same here
many on leave

 

[MasterLeong]

Portfolio notes

M1 had weak results which very much disappoints me... I intend to reduce this stake from 15,000 to 10,000 if the price is right.. say 2.20 maybe?

MCT posted insanely good results and rocketed upwards to become my 2nd largest position. In the short term I have no intention to divest it, unless valuations becomes too high... currently book value is near 1.35 so if it goes to say 1.2 times book I may reduce this position a little at 1.62 from 20,000 to 15,000

The other 4 reits have maintained DPU and I will continue to hold them for dividends.

I have not done much trade this year as I am waiting for full year results and a complete picture. below are the coming results annonucements

Starhub friday 3 feb
Singtel thurs 9 feb
comfort fri 10 feb

ocbc 14 feb
dbs 16 feb
uob 17 feb (note that banks are all pre market)

 

[akwl88]

the fear is real

-1% coming

 

[Retireready]

10kkj

Golden question on Starhub



Starhub if u look at the history sometimes they earn less than 20 cents, earn maybe 18 or 19 cents yet they still pay 20 cents dividends

this is because cash dividends are paid from cash flow, not from account earnings


example if you look at reits, sometimes their earnings very low.. u see like 20 or 30 times earnings.. yet they still pay out 6-7% yield, how come?

this is because earnings is an accounting number, after collecting rentals you minus off stuff like depreciation and amortization which do not affect your cash flow but affects your earnings only


same for telcos, your cable tv biz, your teleco infrastruture you already paid up and built up... but these are hard assets that by accounting you have to depreciate say over 20,30 years.. the depreciation lowers your earnings, but does not lower your free cash flow to pay dividends

Cheers
Master Leong

 

[chowck]

Golden question on Starhub



Starhub if u look at the history sometimes they earn less than 20 cents, earn maybe 18 or 19 cents yet they still pay 20 cents dividends

this is because cash dividends are paid from cash flow, not from account earnings


example if you look at reits, sometimes their earnings very low.. u see like 20 or 30 times earnings.. yet they still pay out 6-7% yield, how come?

this is because earnings is an accounting number, after collecting rentals you minus off stuff like depreciation and amortization which do not affect your cash flow but affects your earnings only


same for telcos, your cable tv biz, your teleco infrastruture you already paid up and built up... but these are hard assets that by accounting you have to depreciate say over 20,30 years.. the depreciation lowers your earnings, but does not lower your free cash flow to pay dividends

Cheers
Master Leong

Yes indeed true. But still cash flow derives from earnings without which there wont be cash. So the question remains: do SH pay out the dividends more than the annual FCF?

 

[Dividends Warrior]

Yes indeed true. But still cash flow derives from earnings without which there wont be cash. So the question remains: do SH pay out the dividends more than the annual FCF?

SH free cash flow for 3Q2016 was 13.2 cents. That's an average of 4.4 cents per quarter, which means around 17.6 cents for a full year. I predict SH reducing its dividend payout to 4.5 cents per quarter this year if they fail to improve free cash flow.

http://infopub.sgx.com/FileOpen/PS3Q2016.ashx?App=Announcement&FileID=427366

 

[MasterLeong]

Golden question on Starhub



Starhub if u look at the history sometimes they earn less than 20 cents, earn maybe 18 or 19 cents yet they still pay 20 cents dividends

this is because cash dividends are paid from cash flow, not from account earnings


example if you look at reits, sometimes their earnings very low.. u see like 20 or 30 times earnings.. yet they still pay out 6-7% yield, how come?

this is because earnings is an accounting number, after collecting rentals you minus off stuff like depreciation and amortization which do not affect your cash flow but affects your earnings only


same for telcos, your cable tv biz, your teleco infrastruture you already paid up and built up... but these are hard assets that by accounting you have to depreciate say over 20,30 years.. the depreciation lowers your earnings, but does not lower your free cash flow to pay dividends

Cheers
Master Leong

question from investingnote

bgting :
How about debt?




FelixLeong :
debt affects cash flow greatly, if borrow from bank you get a lump sum of cash inflow
but paying interest monthly is cash out flow... must see how the companies manage the debt
SH and M1 are not considered highly geared, generally analysts look at debt over EBITA (raw earnings)
raw earnings is around 700 mil, while operating cash flow is around 600 mil
the total debt is only around 2 times of that, which is pretty manageable

SH pays around 350 mil dividends a year, at worst case they do not pay dividends for 3 years should be able to clear all debt and become net cash.. but that is not efficient use of capital.. as debt is cheap telcos generally use a decent amount of debt to improve shareholders returns

less

 

[akwl88]

SH free cash flow for 3Q2016 was 13.2 cents. That's an average of 4.4 cents per quarter, which means around 17.6 cents for a full year. I predict SH reducing its dividend payout to 4.5 cents per quarter this year if they fail to improve free cash flow.

http://infopub.sgx.com/FileOpen/PS3Q2016.ashx?App=Announcement&FileID=427366

that will be a 10% cut in div

 

[MasterLeong]

Yes indeed true. But still cash flow derives from earnings without which there wont be cash. So the question remains: do SH pay out the dividends more than the annual FCF?

SH operating cash flow is around 600mil per year

dividends pay out is only 350mil per year

operating cash flow is more than enough to cover dividends, so I am not worried

HOWEVER, the main cash sucker is CAPEX, which is capital expenditure

so where is the money spend on? it when to areas like building mobile and fibre infrastucture, bidding of spectrum, investing into new areas (example purchase of MM2 stake)


the big question is... if operating cash flow FALLS due to competition from 4th telco, management has 2 paths to take

1) pay less dividends while maintained investment/capex rate (this is the path m1 took)
2) pay same dividends while reducing investment/capex rate



investors are worried of 1), and we shall see which path management takes

Cheers
Master Leong

 

[MasterLeong]

that will be a 10% cut in div

erm...obviously... he does not know what he is talking about

go read my post better

I already post in detail about the starhub's cash flow

with table from research report

 

[MasterLeong]

BEAR BEAR LAI LIAO

STI DOWN 1%

ARE YOU READY FOR CNY BLUE CHIP SHOPPING???????????

 

[Takodoro]

BEAR BEAR LAI LIAO

STI DOWN 1%

ARE YOU READY FOR CNY BLUE CHIP SHOPPING???????????

Secretly loaded Thaibev at 0.845.

If XD drop may hoot more using FCL funds.

 

[MasterLeong]

Secretly loaded Thaibev at 0.845.

If XD drop may hoot more using FCL funds.

wow ok jia you


btw I thought u already had thai bev... u so fast average down ah?

maybe in future can consider to only average down if it dropped 10%, like that the bite is bigger, cheers

 

[Takodoro]

SH operating cash flow is around 600mil per year

dividends pay out is only 350mil per year

operating cash flow is more than enough to cover dividends, so I am not worried

HOWEVER, the main cash sucker is CAPEX, which is capital expenditure

so where is the money spend on? it when to areas like building mobile and fibre infrastucture, bidding of spectrum, investing into new areas (example purchase of MM2 stake)


the big question is... if operating cash flow FALLS due to competition from 4th telco, management has 2 paths to take

1) pay less dividends while maintained investment/capex rate (this is the path m1 took)
2) pay same dividends while reducing investment/capex rate



investors are worried of 1), and we shall see which path management takes

Cheers
Master Leong

Never look at SH Cashflow statement in details. But dividend payout should be under financing cashflow typically. Though FRS7 permit it to be placed under operating cashflow also.

Typically a good company should have huge positive operating cashflow, substantial negative investment cashflow, and moderate negative financing cashflow (best is primarily due to dividend payout).

 

[MasterLeong]

Never look at SH Cashflow statement in details. But dividend payout should be under financing cashflow typically. Though FRS7 permit it to be placed under operating cashflow also.

Typically a good company should have huge positive operating cashflow, substantial negative investment cashflow, and moderate negative financing cashflow (best is primarily due to dividend payout).

under which side to me no difference
most important is the numbers are real and I understand whats happening

but sadly most investors... I would say like maybe over 90% DO NOT look at company balance sheet and cash flow statements at all

cold hard truths

 

[MasterLeong]

btw investing note I redeem a $30 ntuc voucher liao to see if its real

once I get it, will GPGT

huat ah $$$$$$$$