Added a little today at SGD0.90.
I am investing in the economic moat of toll roads in China.
The company buy toll roads and operates them. Warren Buffet love businesses that exhibit "toll bridge behaviour", as they offer only one option for local consumers, use it or you don't cross the bridge at all...
So how about investing in the "real thing", the "toll road itself"?
The PE ratio is about 7, and dividend yield more than 6%.
I think it is undervalued and intrinsic value should be more than SGD1.
I am also anticipating dividend growth from this company which is continuing to grow.
The company has announced that they are aiming for a listing in HK, and to qualify they will need to continue to acquire more toll roads.
The gearing is high, but mitigating factor is the economic moat of this type of business which provide the company with steady and consistent cash flow.
One risk I suppose is that this is a S-chip, I suppose it being a S-chip has also something to do with it being undervalued...
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