The Sexy VJC Girl Analyses Cambridge Industrial Trust

The SEXY Victoria Junior College girl has been spending a lot of time with us. Out of the blue one day, she emerges with the maximum value that one should pay for Cambridge Industrial Trust. ( She is really quite interesting and surprising!And she like to determine the Value of anything. For example, she even determines the value of playing tennis vs spending time with us and she comes up with a figure.) Anyway, she told us that her teacher says females are better at investing and guys suck cos guys monitor the stock market too much and think too much and rationalise too much. She also told us her teacher says its the female species that will bring the world out of recession cos her species spend and spend and spend and spend. We got to admit she is right. Just go to a shopping center near you and see who are the ones spending? Its the girls......

Ok let's understand how our SEXY VJC student determined the maximum value of Cambridge. Any amount paid more for Cambrige, you are likely to lose money. ( based on Discounted Cash Flow analysis, excludes Market Irrationality).

Based on Colliers International data above, it is logical to assume that the rental income growth rate g of industrial properties is 0%, by looking from 2001 to 2006F. ( just a cursory glance, she did not do a regression line. Keep it simple. It looks negative actually but let's be nice.).

Based on the above from SGX, the average dividends, D, of Cambridge Industrial Trust for 2007 and 2008 is $0.0616.

Let's use DBS preferential shares of 6% as our required rate of return, K.

Now, let's look at the average number of years that the assets of Cambridge Industrial Trust have to their expiry as all of them are leasehold except for Lam Soon Industrial which is Freehold. (We will assign 999 years to this freehold property. This is just a judgement call.)

From above, the average number of years left to expiry is 65 years. Therefore, the formula we will use is :

Using Excel spreadsheet and plugging in the values, the Fair Value (V) for a Cambridge Industrial Trust share is $ 1.00341. Thats the maximum amount one should pay and it assumes that Cambridge is able to sustain the average occupancy of its premises currently. It also assumes that the rentals do not drop and stays constant. It also assumes no exceptional things like volcanic eruptions or earthquake or fire or Tsunami or Terrorist attack happens on any of its site. So the market price currently as of close 28 Nov 2008 is $0.205. Is it enough for you?

Analysis done by The SEXY VJC GIRL (Aspiring Future Venture Capitalist- who wants to hire her as an intern?)

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

List of SGX Stocks with their Intrinsic Values

Click Here for SGX list of stocks with Intrinsic Value based on Benjamin Graham's simple formula.

We will be continually adding counters and updating the intrinsic values when new data has been released from Reuters AND when time permits on our end

We urge you not to believe these figures as this is our own opinions.

Think Independently and Anchor on the Right Prices!

How to compare companies from different sectors using the PEGividends Ratio!

When comparing among stocks of companies from different sectors, does a low P/E ratio mean the stock is a better investment? Financial literature such as CFA states that a high P/E ratio suggests a growth stock and a low P/E suggest a value stock. So what now? Growth sounds good. Value sounds good too? We are confused!

Actually, its simple. The answer lies in whether the company or sector is really growing when we deem it a growth stock that justifies a high P/E. Therefore a measure called PEG ratio emerges which takes into account the growth factor. ( [Price/earnings] divided by Estimated Growth per share). The lower the PEG ratio, the better.

Now, what if a company has a low PEG ratio and a low dividend yield, while another company has a high PEG ratio and a high dividend yield. Which is a better investment now? Confused? Enter the pegividend ratio which takes into account the dividend yield too.

PEGIVIDEND RATIO =
([Price/earnings] divided by [Estimated Growth per share + dividend yield]).

The beauty of the pegividend ratio is that it can be used to compare companies from different industries/sectors unlike when using the P/E ratio which is commonly used to only compare companies from the same sector such as TADA..the telecoms industry:

Let's put this into practice, shall we? Let us compare Singapore Airlines with Keppel Corp. Here we go!

Data For Singapore Airlines ( A Great Way to Fly!)Above

Data for Keppel Corp ( Remember Christopher Lee as the iceman in the channel 8 show!) above

PEGividends ratio for SIA = 6.86 divided by (29.05 + 14.91) = 0.156

PEGividends ratio for Keppel = 6.10 divided by (29.73+6.88) = 0.167

SIA wins! ( marginally though. Also the dividends yield we use here is for the recent year, according to reuters. It may be more prudent to take the average dividend yield among several years, such as {( year 1 dividends + year 2 dividends + year 3 dividends) divided by 3 years} divided by the current price of the share so as to smooth out the lumpiness of the dividends.)

The PEGividend ratio method is from Ryan Barnes who has worked with Merrill Lynch, Charles Schwab, Morgan Stanley and many others as an institutional trader. You can check out his site at http://epiphanyinvesting.com/.

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team