Saturday 16 December 2017

Transaction - Design Studio (SGX:D11)

I recently did a purchase on Design Studio (D11) at a price of $0.535. So why did I do it? I have to say that the main reason is due to the dividends (very attractive) and also because I believe it is a rather good company fundamentally.

Some background about Design Studio Group before I talk more about why I did a purchase. Design studio first started as a company that manufactures joinery products basically joining wood pieces to create a complex item. They slowly advanced to design living spaces while maintaining the joinery manufacturing.

They now have 3 main core business segment firstly being residential property projects, hospitality projects and retail and commercial projects. Their businesses are generally in Singapore and a substantially amount of earnings are from Singapore as well.

The good:

1. High and consistent dividend payout

Design Studio has managed to provide a good and consistent dividend payout from 2013 to date. 

2. No long-term debt

So this brings me to my second point, Design Studio does not have any long term debts hence I believe that they will be able to provide consistent and substantial dividends. 

The not so good:

1. Lower Earnings

Their main earnings are from Singapore and in FY 2016 as seen from the chairman's statement, Singapore earnings declined 14.1% or 20.0 million. Judging from the Chairman's Statement for FY 2016, business appears to be challenging due to the economy and estate-cooling measures. Meaning that the residential core would not perform as well whereas the hospitality core would perform better due to tourism.

Overall, I believe that design studio can add value to my portfolio and I believe that it can sustain it's business over time as it expands into China.


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  2. I think they will cut the dividend for FY 2017 due to bad earnings