If only VICOM inspection came with this kind of carwash. 韩子萱

VICOM : Check out my Vezel

Since the STI has gone past 3500 and there's not much value to be found in small caps, I have been looking a bit at the big caps. Most big/mid caps can't be valued on NAV, but they can be valued on the usual revenue/growth/earnings and dividends.

VICOM (SGX:V01) 
Stock is currently trading at $6.11.

I was quite surprised to find a couple of bread and butter / defensive stocks still giving good yields and one of them was VICOM.

For a good overview of this company, follow the link below to this article from 2015. Most of the aspects of VICOM's business has been covered and I will not be wasting time talking about those.

Investing in VICOM: What You Need to Know About its Business Before You Invest

If you have read the above, you will now have a rough idea of what VICOM does and where its revenues come from.

Furthermore this stock has been written about by Fool.com.sg

Vicom Limited Is Trading Close To Its 52-Week Low Price: Is It A Good Business?

So why do I think VICOM is attractive as a dividend play?

Well check out this chart below

After a few years of highs from 2005-2008, the GFC came around and suddenly there was a decline in new car registrations from 2009 onwards all the way up till 2014. New car registrations really started picking up only in 2015. And whilst Cat A registrations seem to be tapering off at 50k in 2017, it seems CAT B new car registrations have hit highs again ~45k in 2017. This give us a grand total of >90k CATA/B and >100k new car registration in the past year.

As new cars start being inspected afer 3 years, the rising new car registations from 2015 onwards will hit the inspection requirement in 2018. As such, we can expect business to start improving for VICOM's inspection business. On top of that, contribution from their other segment is expected to remain stable as well.

To note, most of the gains in this stock would have been made post GFC as the stock went from $2 to peak at $6.70+ in Aug 2014. The stock has then slowly trended down, going as low as $5.70 in 2016 and has more or less stayed there for the past 2 years.

Of course it would have been better to pick up this share last year @$5.70 price range, but with a yield of around 5.89% at closing price of $6.11, it would make sense to accumulate this stock as part of a long term dividend portfolio. Revenue and profits are very likely to rise in the coming years and this stock should be very resilient should the economy slow down in the near future. And given that local investors are often pretty yield hungry, VICOM could be bought up till its yield becomes 4%, especially if revenue and profits increase in the coming years, as the high number of new Vezels, I mean cars, from 2015 to 2017 hit the inspection market.