Vicom

Vicom: Maybank-KE issued an unrated report for the counter, citing that valuation appears rich, amidst the unfavourable structurals of the Singapore car market. Historically, VICOM's core vehicle inspection business was powered by a 5.6% annual growth over FY08-13, driven by the rising demographics of cars in Singapore. As of Aug 2014, 276k or 45% of cars are 7-10 years old. Going forward, the house opines that Singapore's new-car market is expected to be revived, as older cars are taken out at the end of their 10-year COE lifespan. New cars enjoy a honeymoon in the first three years with no inspections required, and this is expected to drive down inspection volumes. However, upside may potentially come from higher inspection prices or a revival of the COE market for cars older than 10 years old. Inspection prices are not regulated and were last raised in 2007. But until then, Maybank-KE believes the market could react negatively to VICOM's falling inspection volumes. At $6.03, VICOM is valued at 18x trailing P/E, significantly above its 10-year average of 11.9x.