After selling off NeraTel, I shopped around for another company to take its place within my portfolio. Enter Tai Sin Electric.
A company selling cable and wire products, Tai Sin operated mainly in the South East Asia region. Looking at the financial report, Tai Sin shows remarkably consistent performances in the past 5 years, with revenue, Return of Assets, Return on Capital and EBITDA staying within a narrow band. While this might not be appealing to a growth investor, it shows a stable, matured company which allows for a stable dividend yield, ideal for an income investor like me. indeed, for the past 4 years the dividend has been a steady 2.1 to 2.2 cents per year, translating to a dividend yield of 6.92%. However one thing to take note of would be that the payout ratio has increased quite dramatically, from 22% in 2012 to 57% in 2015.
At the price of $0.33, Tai Sin shares are selling at a P/B and P/E ratio of 0.931 and 7.851 respectively, which are relatively cheap valuations for a stable matured company. Tai Sin also has no long term debt, which adds a margin of safety a la Ben Graham.
Business outlook for the company looks good, with the opening up of the Myanmar economy (new buildings etc), as well as projected increase in government spending on infrastructure and construction in Singapore. Buildings need electricity, and electricity requires cables and wires, positioning Tai Sin to make a good profit, should they secure projects.
In buying Tai Sin, I have loaded up on a company which in the near to mid term is likely to experience some growth, a dividend yield that is reliable, and a certain margin of safety. Doesn't hurt that the dividend yield in this case is higher than NeraTel's. Will be keeping an eye out for the stock prices and accumulate as and when weaknesses strike.
Vested with 2000 shares.
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