Thursday, February 22, 2024

VICOM Limited FY2023 Earning Result

VICOM Limited ("VICOM") reported their FY2023 earning result yesterday [here].  Here is a quick dive into the numbers:

Numbers in S$ million unless stated otherwise.
Twelve Months Ending 31 Dec 2023 31 Dec 2022 % Change
Revenue 111.90 108.30 3.3
Profit before tax 34.07 32.55 4.7
Net Profit 28.01 26.56 5.5
EPS (in cents) 7.90 7.49 5.3
DPS (in cents) 5.5 6.4 (14.1)

FY2023 revenue was S$111.90M (FY22: S$108.30M), +3.3% y/y.  Profit before tax was S$34.07M (FY22: S$32.55M), +4.7% y/y.  Net profit was S$28.01M (FY22: S$26.56M), +5.5% y/y.  VICOM indicated demand for vehicle testing and related work is expected to be strong.  Demand for non-vehicle testing is also expected to increase with the anticipated recovery of the manufacturing sector.  However, the company cautioned that profit margins will remain under pressure due to inflation and greater competition.  In view of the capital expenditures required, which include the building of a new testing and inspection centre at Jalan Papan, the Board has adjusted the dividend payout ratio from 90% to 70% of Net Profit.

My Thoughts
Revenue performance was satisfactory.  Dividend cut was understandable, given the capex requirement.  Overall, a boring but solid business as VICOM enjoys a triopoly market in Singapore for vehicle testing and inspection (together with STA and JIC).  Margins and ROE remain in comfortable double digits.  Will continue to stock up when an opportunity arises.

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