Thursday, March 14, 2019

Open Electricity Market - Why Cheaper Than Singapore Power?

By now, many of you would have heard of the open electricity market and have seen the roadshows by many of the new electricity retailers who are offering much lower prices than Singapore Power (SP) group's current electricity tariff. There are as many as 13 different new retailers now apart from SP group. Many of you might have seen the prices and know that it is indeed lower but is there a catch to all these lower prices? Should we all be switching to these new electricity retailers to take advantage of the lower prices?

To answer all the above electrifying questions, we have to understand what is the open electricity market first. I know there are lots of info out there and it is confusing so in this article I will explain why electricity retailers can offer rates cheaper than SP group and why SP group could not in a simple to understand way.

What is Open Electricity Market (OEM)?

Before OEM was opened to residential estates, we could only buy power from SP group. However, OEM is not new in Singapore actually. Prior to OEM being opened to residential estates, business consumers with an average monthly consumption of at least 2,000 kWh (approximately $400 in electricity bill) can buy electricity from other licensed electricity retailers already.

There are 3 main players in the industry. Firstly is power generation companies, then electricity retailers and lastly are the consumers. Power generation companies are power plants that generate electricity. In the wholesale electricity market, they bid to sell their power to electricity retailers in bulk. Then, electricity retailers compete to sell it to consumers like you and me.

Why new electricity retailers can offer cheaper rates as compared to SP group?

In the OEM, we could buy power from other electricity retailers other than SP group. These new retailers are either the retail arm of power generation companies or independent retailers who buy power from these power generation companies at wholesale prices. Previously, SP group is the only company who buys power from these power generation companies and in turn sells it to us.

With the OEM, we can now buy electricity directly from power generation companies instead of going through a middle man like SP group. It is like we buy goods from a wholesale warehouse instead of from a retail shop who also gets the goods from the wholesale warehouse and sells it to us at a higher price after accounting for their manpower and rental costs etc. Independent retailers who do not generate their own electricity but buys from power generation companies and sell to us can sell cheaper than SP group because most of their operations are online with low overhead costs.

If we look at the chart below, we can see that SP group is paid 5.71 cents per kWh, out of 23.85 cents per kWh paid by households. This comes to about 25 per cent of the tariff. About 70% of the regulated tariff goes to power generation companies. Whether we buy electricity from SP group under the regulated tariff or through retailers, the SP component collected from consumers is still the same actually.

Why can't SP group offer consumers electricity at lower rates?

Electricity tariffs are not set by SP group, but are regulated by EMA to recover the long-term costs of producing and delivering electricity to consumers. This includes fuel prices, building and operating power plants as well as maintaining the power grid. In layman terms, it means they are stuck with this kind of situation as regulated by the authority.

Isn't it unfair for them and won't SP group get into trouble if everyone switches out from them? The answer is no. As mentioned earlier, whether we buy electricity from SP group under the regulated tariff or through retailers, the SP component collected from consumers is still the same actually. This means SP group still gets its share of about 25% of electricity paid by us. SP group can now also take advantage of the situation and offer customer service solutions to these new retailers and in turn charge a fee for the services. Instead of earning from households, they can go into the business of earning from retailers in the open electricity market.

We can actually buy wholesale electricity from SP group also but the price will fluctuate every half hourly which is confusing for most consumers. It becomes we have to monitor the electricity rates across the day itself and manage our usage accordingly. In an average day, electricity prices will be highest during the day when the demand is the highest and should drop at night when demand is lower. This is how the wholesale electricity rate fluctuates.

Where can I compare the best OEM price plan if I want to switch?

I have helped my parents switched our electricity from SP to Geneco fixed price plan which is 30% lower than the current SP rate. I did not do any comparison beforehand as I think the competition is intense enough and most of the retailers are offering roughly the same package. Just make sure to read the terms and conditions properly as some retailers do charge admin fees or collect deposits. Nevertheless, if you want to compare the prices, you can do so easily too.

Besides the many road shows on the streets which you can walk around and compare the prices, you can also compare the best price plan from the official OEM website here:

3/4 of the population can now switch to enjoy lower electricity rates. Here are the zones as well as when you can start to switch:
  • Zone 1 - Postal code 58-78, From 1st Nov 2018
  • Zone 2 - Postal code 53 – 57, 79 – 80, 82 – 83, From 1st Jan 2019
  • Zone 3 - Postal code 34 – 52, 81, From 1st Mar 2019
  • Zone 4 - Postal code 01 – 33, From 1st May 2019
In conclusion, the open electricity market allows us to buy electricity directly from power generation companies without going through a middle man. This definitely lowers the cost of electricity for the consumers. To enjoy sustainable long term low cost on our electricity bills, I think its better to sign up with those retailers who are the direct retail arm of power generation companies with big power plants. In this way, they can always offer cheaper electricity rates as compared to other companies who just resell the electricity to us.

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Friday, February 22, 2019

Hyflux Restructuring Plan - A Ruthless Elimination of Retail Investors?

Hyflux has been the talk of the town lately due to its cash flow problems which triggered a restructuring process. This process is getting more and more hot after it announced the details of its restructuring plan. Retail investors now face as much as 90%-97% loss of their investment capital with this plan.

The Hyflux restructuring plan unveiled

For every S$1,000 invested, a holder of Hyflux’s perpetual securities and preference shares will recover S$106.54, or an implied return rate of 10.7%, under the company’s newly announced restructuring proposal. Out of this 10.7%, only 3% is paid in cash and the other in shares of Hyflux. For medium term note holders who are ranked higher on the creditors' list, they will get 24.6% where the cash component is about 13.9%.

Sadly, I am one of those affected as I've invested in the Hyflux 6% cumulative preference shares just 8 months before it was suppose to be redeemed in April 2018. I invested the smallest amount which I possibly could as there were some elements of risk for this but it was a risk I thought I could take betting on the sale of TuasSpring to redeem the perps. After all, Hyflux is a national pride dealing with water, which seems like a strategic asset in Singapore and this was a well known name too. Losing money is painful nonetheless even if it doesn't really affect my financial health as I had diversified my investment portfolio. Net net after writing off this investment, my investments are still in the positive but my returns will drop because of this episode.

Stories of plight of retail investors revealed

The Hyflux saga affected more than 34,000 retail investors, many of them are mom and pop investors who are in old age and probably retired. Many have even invested their hard earned life savings into it. Let me share the following which was posted by Straits Times today:

Madam Loo Leong Hun was 55 years old when she was given a list of corporate bonds in June 2012 by a DBS relationship manager to invest in as she had savings in her POSB account.
"Hyflux preference shares was on the list, and it was strongly recommended as it was a strategic and national asset. The money was to facilitate expansion and build desalination plants. I thought I had invested in a good company... which was our nation's pride," Madam Loo, now 62, told the High Court yesterday. 
One of some 34,000 registered holders of Hyflux perpetual securities and preference shares, Madam Loo was allowed yesterday by Justice Aedit Abdullah to voice her concerns, which he said are "shared by many of you". 
She cited the case of another elderly investor who had invested in 2,500 preference shares. "She is 86, lives alone in a one-room flat and... has mobility problems. She used Hyflux dividends to pay off some of her daily expenses. Now, she has no more earning power,"she said.
Madam Loo is just one of the 34,000 retail investors who are affected. She proposed a plan to waive off the coupon payment for the perpetual and preference shares but hopes that this group of people will not be eliminated from Hyflux books once and for all.

I do not know why Hyflux had to go into such extreme that they have to accept a proposal by SM Investments Pte Ltd to eliminate the retail investors once and for all. Are there any other solutions or maybe they really have no choice? Throughout all the communications sessions which Hyflux had, the message is clear that if this restructuring plan is not voted through, then the company will face liquidation where perpetual and preference shares investors will not get a single cent back.

I do not have the full picture of what is happening behind when Hyflux selected SM Investments Pte Ltd proposal our of the 16 who approached them. Are there really no other better offers? In Hyflux's investor relations website, it stated that Hyflux’s board unanimously agreed that in the circumstances faced by Hyflux, SM Investments Pte Ltd proposal was the best way forward for stakeholders. From a layman point of view, getting 60% of the company for $530 Million and eliminating $1.7 Billion of debt sounds like a good deal. Without the debts, SM Investments Pte Ltd can then really run the business well where they won't face anymore cash flow problems. Of course, this is done at the expense of the retail investors who loss all the hard earned money they have put in.

What happens moving forward?

Hyflux will hold a third round of town hall meetings with holders of its notes, perpetual securities and preferences shares, as well as ordinary shares on Mar 13. The scheme meeting will be held on 5th April where everyone will come together to vote Yes or No for the proposed restructuring plan. 

To pass, the scheme will need to be approved by at least 50 per cent in number and 75 per cent in value of each creditor class. “If one class fails, the scheme fails,” said Hyflux’s legal advisor. I'm not sure if its easy to pass the scheme and whether retail investors will accept the meagre recovery amounts. There is already a petition ongoing, started by some retail investors to appeal to the Singapore government for help. Many of them are saying they will vote No and rather see Hyflux go into liquidation then let them restart by eliminating the debts. All eyes will be on this voting which will probably be a media sensation in Singapore's history. A popular household name with rag to riches stories may be going back to the rags again this time.

I feel sad that some investors are really losing all they have and some even have their whole families having invested in Hyflux together. Though all investments comes with risk and we should manage our risk by not investing everything into one basket, it is very hard for the average man on the street to know what risk means especially when they are already at a certain age. Nobody likes to lose their life savings which is painful to begin with. Will there be hope for these retail investors who are invested heavily in Hyflux? Time will tell what will happen next.

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Monday, February 18, 2019

Far East Hospitality Trust Latest DPU up 3.1%

Far East Hospitality Trust should not be new to readers here as I've blogged about this stock on several occasions. I first wrote about investing in the hospitality industry back in April 2017 in this post. I went on to invest in CDL Htrust and Far East Htrust thereafter. Both have been performing well since then and providing good and stable dividends for the past few years.

Let's focus on Far East Htrust. This company has done well in its latest results which prompted CIMB, OCBC and DBS to write and cover the stock the past few days. Net property income went up 13.9% Q on Q with DPU up 3.1%. With this good set of DPU, dividend yield is now about 6.5% for this stock.

For hospitality stocks, it is important to look at the RevPAR which is the revenue per available room. For Far East Htrust hotels segment, this has gone up 7.5% due to an uptick in overall market demand, the positive impact from the addition of Oasia Hotel Downtown to the portfolio and the recent renovation of Orchard Rendezvous Hotel (formerly known as Orchard Parade Hotel). Average occupancy has also increased from 85.4% to 86.2%.

For its serviced residences segment which has not been performing that well previously, there are also signs of improvements where Revenue Per Available Unit (RevPAU) also increased 7.5% and average occupancy increased from 78.2% to 84.3%. This increase was driven by online bookings from the leisure segment.

Far East Htrust has enjoyed 4 quarters of consecutive DPU growth. It is trading at 0.8x price to book value which represents a discount of 20% to book value. I've invested additional 7000 shares in this hospitality trust at $0.61 back in December 2018. Besides the newly acquired Oasia Hotel Downtown, they also just newly opened Outpost hotel at Sentosa which will further strengthen the DPU growth in the future.

Newly opened outpost hotel Sentosa
I believe Far East Htrust will continue to do well moving forward. In fact, this is just the beginning of its growth story which I've waited 2 years for it to materialise. This stock is now the 2nd largest in my portfolio which is paying good dividends with potential for growth in the near term. Singapore Tourism board also recently released its tourism statistics which shows that visitor arrivals to Singapore has hit an all time high due to the Trump Kim Summit and the release of Hollywood movie, Crazy Rich Asians which was filmed in Singapore. This has put Singapore in a good light and attracted many tourists to come to Singapore for holidays.

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Thursday, February 7, 2019

Free Access - Asia Wealth Virtual Summit 2019

Happy Lunar New Year to all! Chinese new year holidays went pass just like that. I hope all of you had an enjoyable time getting or giving ang baos and visiting your relatives in this new year.

Chinese new year is always associated with wealth and prosperity. While it doesn't happen by chance, some knowledge on how to grow our money will help in this financial journey. Some people pay thousands of dollars just to attend seminars but actually free ones are equally good out there. In this new year, there's this wealth summit where you can learn more about finance and investments. The best thing is you can learn from the comfort of your home and its totally free with no terms and conditions attached.

Honestly, this is the first time I heard of a virtual summit with great speakers including a keynote with legendary investor Jim Rogers who will be sharing where he will be putting his money for investments in 2019. Other speakers include Alvin Chow from Dr Wealth and many other topics such as value investing, trading and economics will be covered.

If you want to learn how to make your money work harder for you this new year, click here to register and get your free access to this virtual summit happening on 23 February 2019.

Wednesday, January 30, 2019

Why I Started This Blog And What Will Happen Going Forward?

Looking back at my first post on SG Young Investment back in 2013, I was only 25 years old back then. How time flies, this is my 6th year of blogging and I'll be turning 31 this year. Till now, when I meet new people, often I'll be asked the question: "Why did I start blogging?" The answer was simple, because I was inspired by other financial blogs out there and wanted to contribute towards financial education too.

As time goes by and as life gets busier and also life changes along the way, it gets harder to blog as frequently as before with the limited time I have. As I document down my journey towards financial freedom, I also start to realise how hard it was. This is the reality of life because it is not as smooth sailing as what we would want it to be. Many ideas were written and said before but implementing it and seeing it through is another thing altogether. Many long time bloggers are not writing as frequently too and some have even taken a break indefinitely. They are all good people whom I've known for the past few years.

Blogging has enabled me to reach out to more people than I could have ever imagined. It has been an eventful 6 years where I have managed to meet many different people in the finance community. The community has evolved and the outreach is far wider now which attracts a lot of young people who are interested to manage their finances well with finance websites or groups such as Seedly, Dr Wealth, DollarsAndSense etc. They are operating full time and have much more capacity to outreach to more people as compared to part time bloggers like me who only write in their free time. We are all friends in this community.

If I look back at how many posts I have actually posted since SG Young Investment started, it stands at 483 currently. I would have covered all aspects of financial planning including personal finance, investments, housing, macroeconomics, insurance and so on. It becomes harder and harder to write new stuff and I sometimes feel I sound like a broken recorder repeating myself over and over again. Sometimes I sit in front of my computer and find that I have nothing to write or if I have ideas to write, I feel that I have not enough time to really sit down and write like how I do before. I have more important things to do in my life such as clearing my work, planning for wedding and most important resting and leisure as work is tiring enough for the week.

I have significantly reduced the amount of times I post articles for the past 1 year and I would think this would be the case going forward too. I do not think I know a lot in terms of investing and my philosophy for investing is very simple, to make it as fuss free as possible. Throughout the years, I've built up a rather passive portfolio which I don't really need to monitor at all and it still continues growing. It becomes really boring and there is nothing much to write about on investments when a portfolio is like that. I just do the same old thing over and over again and make sure I don't make stupid mistakes which I did just recently on an investment in Hyflux which I most likely have to write off . Still, life goes on and the portfolio will continue itself just that I have to remind myself to make it boring and not look for shortcuts and become greedy again.

I thank all readers who have supported me and many of you have been really kind to leave encouraging comments and even emails to me to say how my blog has inspired you. While in blogging there will always be negative comments too, I really appreciate the people who have encouraged me to continue writing. I may be blogging lesser but I will still continue to write.

Chinese new year is coming in just 1 week's time. Here's wishing everyone Gong Xi Fa Cai and happy CNY in advance!

Sunday, January 20, 2019

Homemade and Handmade CNY goodies

Chinese New year is just around the corner. I like CNY as its the festival to spend quality time with our family with good food surrounding each family reunion table and lots of goodies too.

Recently, I got to find out about Poon Confectionery where we can purchase CNY goodies online and have it delivered right at our door steps. Poon confectionery was started in 1971 back in Pahang, Malaysia and they recently expanded to Singapore to offer the same delicious goodies to us.

Their CNY goodies are homemade and handmade which makes them different from the ones we buy at retail shops outside. Being homemade and handmade, the goodies do taste quite different from the ones I've tried before. I got to try the Almond cookies, Green pea cookies, pineapple tarts, peanut love letter and salted egg chips all with courtesy of Poon Confectionery and

The cookies were so soft and tasty and to be honest its quite different from the ones I tasted before anywhere. The cookies are quite brittle and breaks easily which makes it extra tasty when eaten. I like the pineapple tarts especially as the pineapple filling is fresh and the outer layer is soft. I must say they really know how to make goodies and being handmade is really different from machine made.

A close up shot of the green pea cookies shows the texture of the cookies itself where you can definitely see its not machine made as its not in the best of shape but taste the best. Check out their website at and see what they can offer. They also offer free tasting at their retail shop located at 502 Macpherson Road, Singapore 368204. Feel free to drop by and have a taste of the delicious handmade cookies.

* The CNY goodies are with courtesy from Poon Confectionery and All views on this article are from SG Young Invesment. 

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Monday, January 7, 2019

Cashback vs Airmiles, Which Is Better? - Deal of the year 2019

I am always looking out for good deals and playing the cashback game has enabled me to spend smarter plus get the best value out of my money. This is definitely one of the must do if we want to manage our finances well. How about Airmiles for those who are playing the miles game? Does it let you redeem free air tickets easily or enable you to upgrade to business class or even first class for a more luxurious travel?

With increased competition, the deals out there gets even more attractive for consumers like us. I could even order food for free through Grabfood when they had the $18 promo code for first time users. Free Grab rides were even possible when there were lots of promo codes. Besides all these freebies which emerge out recently, the best thing offered is still free CASH! Banks have been actually giving out free cash for the longest time and with so many banks in Singapore, we can always rotate around and continue getting free cash.

Deal of the year 2019 - Team challenge Starts Now!

For the year 2019, the competition heats up with a special challenge by Singsaver among the financial bloggers. Yes, I am part of this challenge and you can be part of this too. As a run up to Chinese new year in February, lots of Ang Bao $ will be given away for this challenge. All who participate in this challenge will be entitled to guaranteed rewards up to $200, bonus angbao of up to $50 and special giveaway of $888 cash.

This challenge is called team Airmiles Vs Cashback - Which Team are you in? I choose to be in team cashback as I think its a safer, easier and sure win way to be smarter with our money.With cashback credit cards, getting cashback is easy as often there are no hidden conditions to fulfil, no minimum spend required. You get instant cashback on your spending to offset your next credit card bill automatically. Its that simple.

For now, let me introduce the cashback cards available for this challenge and the perks that comes with each application:

1. Citi Cashback credit card
  • $200 vouchers for new Citibank customers
  • $30 vouchers for existing Citibank customer
  • $150 cash + $100 cashback = $250 for new SCB customers
  • $50 cash + $20 cashback = $70 for existing SCB customers
  • Singsaver Exclusive: $150 cash for new and existing AMEX customers
  • $20 CapitaVouchers from Bank if you apply via MyInfo
  • 3% cashback for first 6 months
  • $150 cashback for new HSBC customers (T&Cs Apply)
  • $100 cashback for existing HSBC customers (T&Cs Apply)
  • Bonus 5% cashback on contactless payments
  • $50 cash for new and existing UOB customers
  • $100 cashback for new OCBC customers

The sign up bonus are attractive as usual. The difference is this time there is a mechanism that if Team Cashback or Team Airmiles win, those who sign up for the respective card will receive additional angbao. The angbao bonus starts with minimum $20 for each person who applied for a credit card in the winning team. It can go up to $50 bonus for each person if total card applications is more than 1000. I'm not the only blogger participating in this challenge, there are probably 5 other bloggers who are also in this so its quite possible that we can get more applications together. 

So which cashback credit card is good?

Personally, I've tried 2 of the cashback credit cards above. They are the AMEX True Cashback and Standard Chartered Unlimited credit card. The AMEX true cashback credit card boost a high 3% cashback for any spend for the first 6 months, up to $5000 total spend. This will come in handy for the upcoming Chinese New Year spending or if you're planning to buy some stuff for the start of the new year. For $5000 spent, you will get back $150 cash in your credit card statement. For every application now, you will also get $150 instant cash reward. Sounds like a good deal isn't it? 

For the Standard Chartered unlimited credit card, I still own this card and I must say this is the most fuss free cashback card I've ever had. It gives 1.5% unlimited cashback on all eligible spend with no minimum spend required. Basically, I just use this card to pay for everything and I will get cashback for every dollar I spend. For each application now, you will get $250 cash & cashback instantly, which is the most attractive offer among all the cards here. If you don't have this card and are new to standard chartered, then this deal is really good for you.

I'm also considering the HSBC advance card which gives 2.5% cashback if you spend more than $2000 per month or 1.5% cashback for any spend below $2000, no minimum spend required. HSBC has good offers with partners such as Golden Village to offer special rates movie tickets at $9.50 on weekends or $7 on weekdays. We can also get Gold class tickets at $24.50 for weekdays and $34.50 for weekends. This is good for those who love to watch movies at the cinema. 

Bonus: Ang Bao & $888 Cash Giveaway for 2019 Team Challenge - Cashback vs Airmiles

The team challenge will run from 7 Jan to 31st Jan 2019. The status of the Ang Bao per application will be updated daily at this link as seen in the image below. As long as either Cashback or Airmiles wins, the minimum Ang Bao payable is $20 and up to $50 per card application. Do remember to check the link daily.

Share this with your friends as the more applications we have, the more Ang Bao each one of us will get!

To stand a chance to win $888 cash, comment and tag 3 Friends on this post on why you think Airmiles or Cashback is better. The top 3 most creative answers from the winning team will each receive $888 cash!

Apply for a cashback credit card and join the team challenge

If you do not have a cashback credit card or looking to get other bank's cashback card, this would be the best time to do it with such good deals on the table. Personally, if you do not have any cashback credit cards at all, the Standard chartered unlimited credit card will be the best for you. Its $250 cash given to you instantly after you apply for the card and additional Ang Bao $ if cashback team wins. I am quite confident that cashback team will win as its a more common credit card among the masses in Singapore as compared to Airmiles cards.

Let's make cashback team a winning team to start off 2019 with good luck and prosperity!

Apply for your cards here today.