Happy Chinese New Year! I hope all of you had enjoyed the long weekend with endless feasts and the wonderful company of friends and relatives. While we’re in the midst of celebrating this important festive occasion, it might be useful for us to keep our eyes peeled to all the companies that help make our Chinese New Year possible. In the process, we might even encounter highly-cash generative businesses. Here are three such companies that I’ve managed to observe. Supplying your Chinese New Year goodies Have you seen the crowds in Dairy Farm International Holdings Ltd’s (SGX: D01) Giant hypermarkets…
Happy Chinese New Year! I hope all of you had enjoyed the long weekend with endless feasts and the wonderful company of friends and relatives.
While we’re in the midst of celebrating this important festive occasion, it might be useful for us to keep our eyes peeled to all the companies that help make our Chinese New Year possible. In the process, we might even encounter highly-cash generative businesses.
Here are three such companies that I’ve managed to observe.
Supplying your Chinese New Year goodies
Have you seen the crowds in Dairy Farm International Holdings Ltd’s (SGX: D01) Giant hypermarkets during the pre-Chinese New Year period?
With its chains of super- and hypermarkets in Singapore and other parts of Asia, Dairy Farm can be considered as one of the main suppliers of nearly everything we need for Chinese New Year.
It’s not always easy to run a retail operation, but Dairy Farm has managed to do it with aplomb judging from its US$10 billion in annual revenue in 2013 and its ability to generate positive free cash flow for its shareholders over the years. In fact, Dairy Farm has seen positive free cash flow since at least 2001 – that’s 13 years and counting.
Source: S&P Capital IQ
Investors interested in stable businesses might want to take a closer look at Dairy Farm.
Connecting you with loved ones
The advent of mobile devices has helped make communication with others easier. Now with the ubiquity of smartphones and internet connections, we can even share our happy moments with our loved ones anywhere, any time.
We have to thank companies like telecommunications service provider Starhub Ltd. (SGX: CC3) – they help to connect all of us by providing the infrastructure and network needed to let us share our special moments with people who are literally continents away.
While the $2.3 billion in annual revenue Starhub had earned in 2013 is impressive, it’s not nearly as impressive as the company’s ability to generate consistent free cash flow.
Source: S&P Capital IQ
With Starhub’s ability to produce cash consistently comes the capability to pay out stable or growing dividends. The telco’s dividend has been steady at 20 cents per share over the past four years between 2010 and 2013 and had actually grown from just 9 cents per share in 2005.
At Starhub’s current price of $4.37, shareholders can enjoy a dividend yield of more than 4.6%.
Ensuring a smooth flight for you
Buying an air ticket to fly and meet your relatives for Chinese New Year is easy – as such, we tend not to realise that it actually takes a massive amount of effort from airlines and others to ensure that air travel is safe.
In Singapore, an important player in the maintenance of aircraft is SIA Engineering Company Limited (SGX: S59).
The company, which also repairs and overhauls aircraft, has recorded annual revenues in excess of S$1 billion since its fiscal year ended 31 March 2008 (FY2008).
That strong revenue has not been put to waste by SIA Engineering as it has managed to convert its revenue dollars into positive free cash flow; as the chart below shows, the firm has had positive free cash flow in all but two of its fiscal years since FY1997.
Source: S&P Capital IQ
Although we are touched by the three companies above during most Chinese New Years when we shop, travel, or call our loved ones, they are not something we think about conscientiously.
But, once you take a closer look at them, it is not that hard to understand why they have been so successful in what they do. After all, they are providing essential products and services that we use every single year (sometimes every single day).
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.