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How is the dividend payout? Is it sustainable?

Yield Watch: Telechoice revisited. Dividend Payout Sustainable? telechoiceyieldanalysis

Generally, if you are thinking of investing in Telechoice, you are looking for a good long term yield and Telechoice provides a long term of around 7-8%.

This is mainly because the share price ends up not appreciating and that the dividend payout remains the same!

Take a look at this chart of Dividend payout yield vs FCF (Free Cashflow Yield). For those that seldom come across free cashflow, it is the operating cashflow telechoice collected minus the capital expenditure needed in the year. This shows how much dividends a company like telechoice can payout, out of its normal operations.

Dividend yield have been consistent at 7-9% or so, but the free cashflow is wild. When the Red FCF is less than the Blue Dividend yield it means the profits from business are not able to fund the dividend after capex.

Yield Watch: Telechoice revisited. Dividend Payout Sustainable? telechoicecashflowanaly

Yield Watch: Telechoice revisited. Dividend Payout Sustainable? telechoicecashflowanaly

So how are they funding the dividend payment in those years? Judging by the balance sheets, its definitely not by long term debt.

There are 3 years where dividend payout is more than FCF. these are 2006,2007 and currently 2009.

In 2oo6, they fund that by using their 44 mil in cash holdings (see Cash from 44.6 mil to 28.9 mil)

In 2007, observe that there is a build up in current liabilities increase quite substantially (see current liabilities 46 mil to 85 mil)

The puzzling one is in 2009, because both liabilities have decrease and cash have increase. I did some digging and it would seem there is a divestment of a subsidiary perhaps thats why they have additional cash that goes to paying the dividends.

So is dividend sustainable? Hard to say. At current share price of 23.5 cents they always pay out around 9 mil for dividend. Their current cash holdings allow them to pay out for 5 years even if they are not earning money. I feel even if they want to sustain it they can take on some long term debts, but they probably won’t do that. In these cases, if you are looking for consistent 7% for 5 years, i would say it can definitely take it.

However, what i normally look for in my investments is a sustainable free cashflow greater than the dividend payout. A good example are the telcos in Singapore [Analysis here >>]

In that aspect i would rather invest in Starhub then this.

Let me know what you guys think.

http://www.investmentmoats.com/money-management/dividend-investing/yield-watch-telechoice-revisited-dividend-payout-sustainable/

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29-Oct-2010 14:18

TeleChoice Intl / Telechoice

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N E X T

DiViDEND
EX-DATE

3rd MAY 2011

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29-Oct-2010 14:15

TeleChoice Intl / Telechoice

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Yield Watch: Telechoice revisited. Dividend Payout Sustainable?

Posted by Drizzt

March 27, 2010

Telechoice is a yield stock that i notice quite long ago. I recall blogging about its full year performance in 2007. Since then i have invested and divested with it.

A note to all: All figures used in this analysis can be found in this spreadsheet here [spreadsheet here >>]

What does it do?

Its a stock that ties up with its parent ST Telemedia to offer Personal Communication Services to mainly ST Telemedia’s pet Telco Starhub and other engineering and network service to it.

What it means is that should Starhub sells more handsets or engage in more capex, it bodes well for Telechoice. Personal Communication Services (PCS) is VERY low margin. Although you can see that it earns quite a fair bit of revenue, its PCS profits are quite small.

Very Strong Share Price through Economic Crisis

Yield Watch: Telechoice revisited. Dividend Payout Sustainable? telechoiceprice

Click to see bigger chart

The surprising thing is that every tom dick and harry corrected big during that crisis but telechoice is still range bound. Even now during the recovery, it is range bound as well.

This is likely attributable to the demand for handsets and capex required by starhub for 3G infrastructure remaining strong.

What this means that although it came out of the economic crisis strong and relatively ok (if you are a shareholder holding the shares), a change in business condition might increase its business and profit risk

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29-Oct-2010 14:07

Genting HK USD / Genting HK US$

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INDONESIA shares' prIces are tOO hIgh nOw

tIme tO take prOfIt

vIetnam dOng is as weak as paper.

better tO earn Interest In vIetnam dOng depOsIt

[hIgh FD Interest Is gUranteed]

than tO bUy vIetnam shares

[very hIgh transactIOn cOst wIth lOw UPsIde]

epliew ( Date: 29-Oct-2010 13:36) Posted:

SINGAPORE: As more hot money flows into Asia, private equity investors are concerned that company valuations will become a bit too rich, leading to an overheated market. However, global experts say there is no bubble yet, as Asian private equity vehicles are only starting to see signs of growth. Josh Lerner, a professor at Harvard Business School, said that the average return for private equity globally stood at about 20 per cent. In comparison, returns for private equity in Asia are only 5 per cent, on average. With several Asian sovereign funds investing in private equity, experts expect the industry to triple in size in the next ten years with China and India leading this growth. "I think we will continue to see this pattern of hyper-growth in China for quite some time to come. And it requires real management challenges for many companies. To grow in a sustainable way, and not to be caught up in a bubble that can be so disruptive," said Professor Lerner. Some experts, like SMU Associate Professor Melvyn Teo, believe that Asian companies are growing too big, too quickly and that may pose some problems for private-equity investors. "Investment horizon is getting more compressed. In the past, for developed countries it used to be ten years. Now people are rushing to do their IPOs and getting it done within 5 or even 3 years. It gives investors a lot less time to do their due diligence before going into the deal," he said. Other than the two Asian giants - China and India - experts say private equity investors are also starting to look at investment opportunities in Indonesia and Vietnam.

not sure who is right, one minute too much money flow in and other minute it is not affecting our market......

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29-Oct-2010 14:02

Genting HK USD / Genting HK US$

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tOO many brOad market UNcertaIntIes nOw

US EU JAPAN CHINA

+ QE2 dIng dOng

+ SINGAPORE's Near ZERO Interest Rates

These are the SIDE EFFECTS

+ InvestOrs awaItIng tO sEE

REAL MONEY FLOW

IntO GENTING HK

[same sItUatIOn as GENTING SP was @ S$0.83

nOw peOple have sEEn the REAL MONEY FLOW

IntO GENTING SP]

epliew ( Date: 29-Oct-2010 10:35) Posted:

but why the price never cheong ?

pharoah88 ( Date: 29-Oct-2010 08:35) Posted:

GENTING HK is innovating its business aggressively.

It may even increase its stake in UNION BANK later and become a CASINO BANK.

Its listing of NCL in USA is an excellent move for increasing market valuation.

It has secured enough funds for all the expansions.

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29-Oct-2010 13:50

Genting Sing / GenSp starts to move up again

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Friday: 29 10 2010 mId-nOOn

GAP UP after lUnch ?

prOfIt taker

12:20:25 2.180 2,002,000 Sold To Buyer

InvestOr

12:15:50 2.180 1,835,000 Bought From Seller

12:15:45 2.180 1,000,000 Bought From Seller

cherry-pIcker

11:26:03 2.160 1,377,000 Bought From Seller

weak bUll

10:34:44 2.160 1,000,000 Sold To Buyer

pharoah88 ( Date: 29-Oct-2010 10:08) Posted:

Friday: 29 10 2010 prIce actIOns

prOfIt taker

09:15:59

2.180

1,302,000

Sold To Buyer

cheery pIcker

09:01:04

2.160

1,000,000

Bought From Seller

bIg dOnOr [gOOd KARMA]

08:59:03	2.150	2,951,000	Sold To Buyer
08:59:03	2.150	5,402,000	Sold To Buyer

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29-Oct-2010 13:33

Genting Sing / Traders Lounge - Daily opportunities for everyone

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dependIng on the partIcIpatIng fUnds cOmmItted

Back tO S$2.29 Or hIgher !

icetomato ( Date: 29-Oct-2010 13:03) Posted:

Gap up till where? 2.24 can or not? haha.

pharoah88 ( Date: 29-Oct-2010 12:54) Posted:

lOOks lIke

GAP UP

after lUnch ?

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29-Oct-2010 13:31

Genting Sing / Traders Lounge - Daily opportunities for everyone

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x 0

It's nOt me. You have mistaken.

http://www.youtube.com/watch?v=493ljyoox6o

I thInk It's BT

epliew ( Date: 29-Oct-2010 13:26) Posted:

u mentioned the last month forum, you open an CFD account near raffles place, standard chartered bank.....

can u give me some information, how do i open on cfd account too ?

before the starbucks meet up, thanks!

pharoah88 ( Date: 29-Oct-2010 13:17) Posted:

SGX

MAS

MOF

CASE

MPs

ALL nOt dOIng anythIng fOr the InvestOrs ? ? ? ?

there Is nO REAL cOmpetItIOn In thIs clOsed IndUstrIes ? ? ? ?

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29-Oct-2010 13:26

Genting Sing / Traders Lounge - Daily opportunities for everyone

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x 0

Raptor22 ( Date: 29-Oct-2010 13:21) Posted:

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29-Oct-2010 13:21

Genting Sing / Traders Lounge - Daily opportunities for everyone

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x 0

Insane

tO make InvestOr take rIsk

wIth REAL CAPITAL

and REAL LOSSES

In Order tO make a prOfIt

whIch Is lesser than cOmmIssIOn ? ? ? ?

pharoah88 ( Date: 29-Oct-2010 13:17) Posted:

SGX

MAS

MOF

CASE

MPs

ALL nOt dOIng anythIng fOr the InvestOrs ? ? ? ?

there Is nO REAL cOmpetItIOn In thIs clOsed IndUstrIes ? ? ? ?

cannotfind ( Date: 29-Oct-2010 12:59) Posted:

20lots 2.16 and sold at 2.18... very high commission...

that is why wait till BT to teach me how to use CFD then can cut the commission to almost 95%

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29-Oct-2010 13:17

Genting Sing / Traders Lounge - Daily opportunities for everyone

Go to Message

x 0

SGX

MAS

MOF

CASE

MPs

ALL nOt dOIng anythIng fOr the InvestOrs ? ? ? ?

there Is nO REAL cOmpetItIOn In thIs clOsed IndUstrIes ? ? ? ?

cannotfind ( Date: 29-Oct-2010 12:59) Posted:

20lots 2.16 and sold at 2.18... very high commission...

that is why wait till BT to teach me how to use CFD then can cut the commission to almost 95%

epliew ( Date: 29-Oct-2010 12:57) Posted:

how many lots, did u purchase or sold

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29-Oct-2010 12:54

Genting Sing / Traders Lounge - Daily opportunities for everyone

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x 0

lOOks lIke

GAP UP

after lUnch ?

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29-Oct-2010 12:51

Others / DBS Pref Share - New Issue

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