Singpost has a long-term debt of $502.977 million against a net profit of $165.741 million as of FY2010. Their cash and cash equivalents on their balance sheet was $390.220 million. By deducting their long-term debt and cash, we have a net debt of $112.757 million. Their long-term debt comprises of $200 million 10-year notes that they released in March 2010. I was wondering why are they taking up so much of debt. I could not find any news about any imminent investments by Singpost. Is the debt to be used to pay their dividends that they have consistently been paying (a ridiculous move!) or are they looking to buy up smaller overseas logistics companies? I don’t really know. Maybe someone can shed some light on this.
In FY2004, their dividends paid in total was $319.988 million. Their payout ratio was a whooping 307%! This figure is much more than their cashflow, net profit or cash in hand, so I’m wondering where they got the money from to pay so much dividends (anyone knows how this works?). Furthermore, Singpost has always been in a net debt position rather than a net cash position that value investors prefer.
Some things I like about Singpost is that their net profit margin is very high and they have lots of free cash flow with low CAPEX.
I’m also going to re-read some investment books that I read long time ago to reinforce the theories on how to thoroughly analyse companies that throw up funny situations. I don’t have any accounting background so from books are where I learn the accounting principles from. When I re-read, statements and ideas that didn’t warrant my attention previously will be reinforced.
Hopefully, I have analysed Singpost correctly and if seasoned value investors spot any mistakes, do let me know so that I can learn from it as well.