A quick update on the latest transaction I've done since my last portfolio update:
As part of my ongoing resolution to rebalance my equities and cash allocation due to the recent market run-up, I have divested all my 10,000 shares for SCI at a price of $4.84 today. The counter will be going ex-dividend this Thursday so I will not be receiving the 11 cents/share dividends declared.
As part of my ongoing resolution to rebalance my equities and cash allocation due to the recent market run-up, I have divested all my 10,000 shares for SCI at a price of $4.84 today. The counter will be going ex-dividend this Thursday so I will not be receiving the 11 cents/share dividends declared.
Some of you might remember that I did a few valuations on SCI a couple of months ago which you can refer to the original articles below.
In the valuations, I input a few assumptions into the model and came up to an intrinsic value of $5.16. You can view the assumptions in the original article and tweak around as you deem fit. At a price of $4.84 which I divested today, it came up to a rough discount of 6% from the intrinsic value I calculated. Pretty fair more or less if you ask me. The stock valuation was much more attractiveback then when they were at the bottom $4 than now. Having said that, there are a few updates related to SCI since my last report in Feb which I have not factored in:
- Risks in SMM in regards to cancellations of orders, delivery delays and margin pressure from the Brazil drillship project.
- Oil seems to have bounce back from their recent low. Whether or not we'll see another trough will be for the future to predict.
- Sale of municipal water assets in UK. The company will record a one-time gain of $50m from the sale. However, the recurring utilities segment will be impacted at around 2% of the utilities earnings. Do note that UK remains the fifth biggest geographical segmental contributor after Singapore, China, Middle East and Rest of Asia. The water contribution meanwhile remains the lower end of the contributor to the utilities segment after energy power and energy gas & steam.
As far as price to earnings valuation is concerned, the company is now trading at a multiple of 10.8x which is in line with the long term average mean for the past 7 years. EV/EBITDA has gone up to around 7.9x which is slightly higher due to the weaker balance sheet and more borrowings on the books, mainly due to expansion from the marine and utilities segment which has not crystallised. Having said that, capital expenditure expansion should subdue in the next few quarters so we'll probably see more borrowings being repaid off.
The above capital reallocation has now increased the warchest portion to around 30%, which is at a much more comfortable level.
What about you? Still buying at this price?
The above capital reallocation has now increased the warchest portion to around 30%, which is at a much more comfortable level.
What about you? Still buying at this price?
