Saturday, July 28, 2018

The Nail Of Life - How I Got Out Of Painful Situations in Life

I've not been writing much about my life lately as many things happened and I wanted to at least wait for things to settle down before I pen my thoughts down. This will probably be a short post to summarise my life in general.

Life is full of ups and downs as always. Readers would know I had a bad year end in 2017 where I saw how fragile life was. It was a struggle for me to understand and digest and accept what happened. You can read about what happened last year here. The start of the year was extremely painful for me too as I had to handle the emotions of not just myself but of my loved ones as well. I struggled to stay happy even though I know happiness is a choice.

I used to write about life lessons on my blog but realised I haven't been doing that for a long time. Oh well, when I cannot handle myself what right do I have to tell people about happiness? This was what went through my mind which stopped me from writing more. I had thoughts to just get out of Singapore and travel alone so that I can escape from the world but didn't do that in the end.

Work didn't come easy either. My department was restructured and the manpower was cut into half. Half of us were transferred to another department. I was one of those being transferred. I thought I could learn more by doing new things but the department was fire fighting all day long with back to back meetings for the past 2 months. I've had maybe 20 meetings in the past 2 months and some lasted as long as 12 hours. It was extremely difficult to absorb and learn the information myself while I struggled to understand what is going on in the meetings. It didn't helped when the management didn't gave clear direction of what they wanted to do either.

For investments, the market had a significant sell down a few weeks back and my portfolio went down by the thousands. Thankfully, the market went back up again and dividends were paid recently too. The worst investment this year which I made had to be in Hyflux where I invested in its preference share. I went to the town hall session just last week and it is still unknown whether they will pay back the money. It was a really bad town hall with the place very hot and stuffy and the management didn't really gave clear directions on what would happen. It seems like they were as lost as us even though they had the best legal, accounting and C-Suite level professionals in the town hall session. I hope the CEO will keep to her word where she said she will want to take care of the minority stakeholders interest as much as possible.

Then, things started to turn around. Some good news happened just this week. I was so sick and tired of everything that I told myself enough is enough. I am going to get out of my situation and move forward. Just 2 weeks back, 2 recruiters called me and proposed jobs which I may be interested in. I went for one of it and may get a job offer soon. I am really contemplating to leave and will think about it and see how it goes when they call back next week. Its a meaningful job where I get to make impact in the lives of others.

I saw a video on Facebook which talked about "How to Un-Stub Your Toe on the Nail of Life". Are you in situations where you feel pain but you still stay on the pain and unable to get out of it? Watch this short 3 mins video and hope it motivates you in your life:

If you've been in pain for the longest time in your life, now is the time to say enough is enough, I am getting out and moving forward in life again. Turn your failures in success today!

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Wednesday, July 11, 2018

Looking More Closely At Singtel - Is Singtel A Good Investment?

Singtel is really a big company. Its market cap is worth $50 Billion with over 650 Million mobile customers in 21 countries. Singtel was the first stock which I purchased when I started investing. That was probably 8 years ago now. The telecommunication industry is facing some headwinds and all 3 listed telcos share prices have fallen significantly. Singtel took the hit too and many investors added to their position hoping to get good value investing in a stable blue chip company with more than 5% dividend yield.

In this article, I will dissect Singtel's businesses so that we can understand it more on what is happening and what may happen in the future. Let's start off with its share price. Share price of Singtel has mostly traded in side ways until recently in early 2018 where it plunged to new low. It hit $3 before coming back up to above $3.20. Currently, share price of Singtel is at a 5 year low with dividend yield of more than 5%.

Financial Highlights FY2018

For FY2018, Singtel achieved an operating revenue of $17 Billion, which is a 4.9% increase from previous year. EBITDA came in at $5 Billion which is 1.8% higher than previous year. However, underlying net profit declined -8.4% from previous year due to lesser share of associates profit.

Share of associates pre-tax profit declined from $2.88 Billion to $2.46 Billion. This is a 14.6% decline which is quite significant. Earnings from Airtel India and Telkomsel were impacted by intense competition and mandated reduction in mobile termination charges in India, as well as lower contribution from NetLink NBN Trust following the reduction in economic interest of 75.2% in July 2017. The decline was partly mitigated by higher contribution from Intouch (acquired in November 2016).

For Singapore, Singtel achieved lower EBITDA of $2.18 Billion from $2.21 Billion in the previous year. This is a slight decline showing the resilience of its Singapore's business despite the tough competition. Optus, a wholly owned subsidiary in Australia achieved higher EBITDA of $2.90 Billion as compared to $2.78 Billion in the previous year. This is quite good performance at the Australia side.

In terms of revenue contribution, Singapore only makes up 29% of its underlying profit with 47% coming from regional associates and 24% coming from Australia.
Singtel is quite a well diversified business and as we can see from the breakdown below, they are not just a mobile communications company anymore. Only 34% of its operating revenue comes from mobile communications and 20% comes from data and internet. They also have ICT and digital business which contributes about 23% in total to its operating revenue.

Dividend has been stable for the past 4 years at 17.5 cents. Singtel also made a commitment to continue giving 17.5 cents of dividend at least for the next 2 years. Looking at its group free cash flow (FCF) of $3.6 Billion which has increased from $3 Billion, I have no doubt Singtel can continue to give dividends in the future. Dividends paid to shareholders was about $2.8 Billion which is lower than its free cash flow. The free cash flow is the cash generated from operating activities minus the CAPEX. It is important to look at FCF to know the actual cash which the company has at the end of the day.

Singtel's Business Segments

Let me briefly go into Singtel's business segment to have an appreciation of the type of company it is becoming today. In fact, in its 2018 annual report, its theme was "ready, set digital". This shows the resolve it has to transform its business from a traditional telco company into a digital company. I believe this is the right was to go as areas such as cyber security, ICT, digital marketing and data analytics will be a huge market in the future.

Singtel has mainly 3 business segments for its business. They are group consumer, group enterprise and group digital life. Group enterprise consist of its ICT, cyber security, cloud and smart technologies business segments. Lastly, for group digital life, this consist of digital marketing (Amobee), regional premium OTT video (HOOQ) and advanced data analytics and intelligence (DataSpark).

Group Consumer

Group consumer is its business on mobile communication and all the telecommunication things which it has been doing all along. Operating revenue and EBITDA grew 2.7% and 2.3% respectively with growth in Australia partly offset by decline in Singapore.

In Singapore, operating revenue fell 2.7% impacted by fierce competition in mobile services and continued decline in voice services due to data substitution. Australia on the other hand did well where the increase in operating revenue was driven by strong customer additions in mobile and fixed broadband, increased Equipment sales and higher National Broadband Network (NBN) migration revenues despite the temporary suspension in connecting and migrating customers to NBN’s HFC network. Optus also gained 384,000 customers in FY2018.

Group Enterprise

Group enterprise achieved stable operating revenue with growth in ICT and and equipment sales offsetting decline in traditional carriage services. ICT services had good contributions from cyber security, cloud and smart cities business.

Group Digital Life

For group digital life, this is still a growing business with strong operating revenue growth. This is a segment to take note of as its operating revenue doubled to $1.08 Billion driven by first time contribution from Turn (acquired in April 2017) and strong performance from Amobee’s media and social businesses. While operating revenue is strong, EBITDA and EBIT still declined but at a lower amount.  Amobee achieved positive EBITDA for the year while HOOQ’s losses narrowed on higher operating revenue.

I believe group digital life will see a positive EBIT soon if revenue continues to have strong growth. Losses has narrowed from $190 Million to $120 Million.

Breakdown and analysis of Associates profits

The decline of associates profit of 14.6% is a concern and this, I believe is what is sending the share price down. The associates are in various countries as below:
  • Telkomsel (Indonesia)
  • AIS (Thailand)
  • Globe (Philippine)
  • Intouch (Thailand)
  • Airtel (India & Africa)
Of all the associates, most are stable and growing except for Airtel's India business. There was intense competition and aggressive pricing by a new player which caused Airtel's revenue in India to drop 13%. In Africa, operating revenue is stable. 

For other associates, Telkomsel had 5% revenue growth and 2% EBITDA growth. AIS had 5% revenue growth and 11% EBITDA growth. Globe had 7% revenue growth and 11% EBITDA growth. Intouch was newly acquired in November 2016. Intouch’s post-tax contribution was S$86 million.

Is Singtel A Good Investment?

Singtel is weathering the change in the telecommunication industry. As we can see, apart from the competition in Singapore, else where around the world, India also has intense competition which affected its associates revenue. Singtel is rapidly expanding into other areas of business especially in the areas of cyber security and digital business. The future world will be really focused on smart nations where capabilities such as cyber security and data analytics will be in demand. I believe Singtel will see tremendous growth in these areas of business not just in Singapore but other parts of the world too. 

At current dividend yield of more than 5%, this represents a good opportunity to invest in a blue chip company with strong free cash flow. Furthermore, the management has made a commitment to pay 17.5 cents of dividends for the next 2 years. I have added to my investment in Singtel on various occasions. This investment makes up the base of my portfolio now where I can look forward to stable dividends. I will be looking closely at the associates profit (mainly Airtel's India business) and the impact from the entry of the 4th telco in Singapore. 

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Thursday, July 5, 2018

Ascendas Hospitality Trust - An Opportunity To Invest Again

Share prices of various stocks have come down significantly in the past few weeks and this include Ascendas Hospitality Trust (AHT). This has been one of my favourite hospitality trust investment which I bought back in 2014. It has been a 4 years investment now. AHT made some significant developments in the past 1 year which they have summarised in their recent AGM last friday. I wanted to make a trip down but was too busy at work so I couldn't take time off for this AGM. Nevertheless, I managed to get the slides presented during the AGM which gives quite good information on the developments over the past 1 year.

I believe AHT share price of below $0.80 presents a good opportunity to invest in a hospitality trust with stable dividend yield of more than 7%. Let's discuss in detail on why is this so.

Park Hotel Clarke Quay in Singapore owned by AHT

Brief introduction to AHT

AHT has 10 hotels located in Australia, Japan, Korea and Singapore. In terms of portfolio valuation, Australia makes up 38.7%, Japan at 38%, Singapore at 18.1% and South Korea at 5.3%. In its opening address during the AGM, they mention specifically 3 highlights:
  1. Divested Beijing Hotels for 2.0x valuation
  2. Effective interest rate significantly lower at 2.7%
  3. 3.2% DPS y-0-y improvement
Earlier this year, AHT did divest away their 2 Beijing hotels at much higher valuation. It was the talk of the town as its share price shot up because investors believed that its Net Asset Value is much higher than what they have put in their balance sheet. However, this was short lived when its Australia properties did not do as well and what made it worse was Australia hotels collectively made up the largest contribution to its DPU. Its Australia net property income declined -6.4% in FY2017/18 as compared to FY2016/17.

Its other hotels in Singapore and China did relatively well and Japan 's hotel was unchanged with a slight decrease. Overall, DPU increased 3.2% mainly due to savings in finance cost  and look fee received in connection to the divestment of Beijing hotels.  

One thing to note is that I can see REVPAR is increasing for all its hotels in all countries including Australia. This is an encouraging sign. Its Australia's hotel in Sydney still performed well. One of its Sydney's hotel was also undergoing renovation so this affected DPU in the past 1 year. Moving forward, DPU should continue to be good as the renovation is already done. 

*To understand why REVPAR is important, you can read this article here

Healthy Balance Sheet 

AHT's gearing is at 30.8% which is a decrease from the previous 32.2% after it divested its Beijing hotels. One significant thing to note is that its effective interest rate came down to 2.7% from the previous 3.1%. This is an important factor in this rising interest rate environment which I wrote in another article here

Net Asset Value remains stable at $0.92. This means that the current price of AHT at $0.79 is trading at a discount. For its debt profile, 77.2% is on fixed rate while 22.8% is on floating rate. Most of its debt are in AUD and JPY which is not that affected by interest rate movement so far. Japan still has one of the lowest interest rates in the world currently. It might be interesting to note that Japan's key short term interest rate is actually at -0.1% as at June 2018. 

Hotel Acquisition for Growth

After its divestment of its Beijing hotels, AHT continues to pursue growth opportunities by acquiring DPU accretive hotels. It made its maiden entry into Seoul, South Korea by acquiring a hotel that is strategically located in the prominent Dongdaemun area. The acquisition is DPS accretive by 1.7% on pro forma FY2017/18 basis. This is a midscale hotel which was completed in 2015 and it is freehold. 

Separately, it also purchased 3 other hotels in Osaka which is DPS accretive by 4.3% on pro forma FY2017/18 basis. Osaka is a key financial centre both in Japan and globally and also a popular leisure destination. International visitors arrivals in Osaka reached 11.1 million in 2017 and has a CAGR of 43% over the past 5 years. Overnight stays in Osaka also grew by 8% on average, every year for the past 5 years. 

I believe Ascendas Hospitality Trust will continue to grow both in terms of portfolio valuation and also in terms of DPU. A stock price of below $0.80 represents a good 7%+ yield as well as trading below its book value. I will be looking to add more to this investment if it comes down to below $0.75. My last purchase price was at $0.72 and this represents a 8.1% yield which I have been getting for the past 4 years.

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Tuesday, July 3, 2018

More Financial Assistence For Those Severely Disabled And Additional Information on Careshield Life

Eldershield has been renamed Careshield life with additional enhancements to provide for better long term care financing in the event of disability. I have got some additional information from MOH which I will share in this article.

To read up more on the basic of what Careshield Life is about, you can refer to a previous article I wrote here

This article will focus on:
  1.  The premium structure for those who are already on Eldershield and; 
  2.  Financial assistence for those who are currently disabled and do not have any Eldershield at all. 
Why the need for the disability income?

Careshield life to me is a form of disability income. For those who have disabled family members at home, you'll probably understand the advantages of having this as all the different cost that adds up can be quite significant in the long run. For those of us who do not have disabled family members at home, we should prepare in advance just in case something happens. This is the purpose of insurance in itself. 

Singapore is facing an ageing population issue. To make premiums affordable and still provide some sort of safety net, Careshield life was introduced. This is like the enhanced Medishield life which was introduced and became compulsory for everyone to be insured for hospitalisation insurance. By risk pooling, premiums could be made affordable. However, if you've read on the news, there has been several discussions on the premiums of hospitalisation insurance increasing in the future as those insurance companies suffered more losses for the second straight year. This is another issue altogether which I will not discuss in this article.

Premium structure for Existing Cohorts

Now back to Careshield life, more information has been released on the premium structure for existing cohorts. There are generally 3 groups of people n this existing cohort which is estimated to be around 2 Million Singaporeans. This group of people are those who are born in 1979 or earlier and do not have any existing disabilities. 

Let's go into detail on 3 different groups of people in this existing cohort.

Group 1: If you are on Eldershield 400

Those who are on Eldershield 400 and never opted out will pay only a base premium, which increases over time until age 67. 

Those who join at age 59 and above will have a 10 year premium payment term, so that annual premiums are more manageable.

Group 2 & 3: If you are on Eldershield 300 or not on Eldershield at all

For those on Eldershield 300 or not on Eldershield at all, besides paying a base premium as above, they will pay an additional Catch-Up Component, because they paid less premiums than those on ESH 400. Catch-Up Component is a fixed amount paid over 10 years. 

You can refer to the below illustration for a better understand of the premium structure for existing cohorts:

Participation Incentives For Existing Cohorts

For existing cohorts, it is not compulsory to join Careshield life. This group of people can continue being insured on their Eldershield or not be insured at all. Careshield life is only compulsory for those born on or after 1980. However, those who are on Eldershield 400 and aged 41 to 50 in 2020 and not severely disabled will be auto-enrolled in 2021. They can still opt out within 2 years of auto-enrolment and receive premium refund

It is important to note that most people who are on Eldershield 300 or 400 will only receive $300 or $400 per month for up to 6 years only. This coverage might not be enough for most people as disability is more often than not, a long term healthcare issue. To encourage this group of people to join Caresheild life, there will be a participation incentive of up to $2500 which can be used to offset the premium payable. This participation incentive will only be applicable if existing cohorts join within 2 years from 2021. 

Here are the various participation incentives payable:

How about those who are born in 1979 or earlier and are disabled and cannot join Careshield life?

For those born in 1979 or earlier and are disabled, they have no insurance protection at all and it can be financially straining for their family members to handle. Good news for this group of people is that there will be additional support for them. 

1. MediSave Cash Withdrawals for Long-term Care

Firstly, MOH will allow the withdrawals of cash from Medisave for long term care needs moving forward from 2020. They can withdraw up to $2400/year (or $200/month) as cash for each severely disabled individual. This can be from individual or spouse’s account. This is subjected to a minimum Medisave balance of $5000 which means for those who have $5000 or less in thier Medisave account, no amount can be withdrawn. 

The eligibility criteria will be: "unable to perform 3 or more ADLs, similar to CareShield Life"

You can refer to the below table on the monthly withdrawal quantum for various Medisave balances:

This Medisave withdrawal also applies to those who have Eldershield or join Careshield life later. 

2. Elderfund

MOH will also set up Elderfund for lower-income Singaporeans (aged 30 and above) who are severely disabled and need additional support for LTC costs, from 2020. They can get up to $250/month for life for as long as disability continues.  

This is targeted at those who are not able to join CareShield Life, or have low MediSave balances and insufficient savings for their LTC needs.  Singaporeans who are still unable to meet their LTC needs after these subsidies and assistance schemes can still tap on MediFund or ComCare. 

Looking Ahead

There are a few timeline which we will be looking at for this Careshield life. I belong to the compulsory group who are born on or after 1980. 


  • Singaporeans born between 1980 and 1990 will be enrolled in CareShield Life, with younger cohorts enrolled when they turn 30
  • MediSave Withdrawals for Long-term Care and ElderFund will also be implemented

  • Singaporeans born 1979 or earlier can join CareShield Life

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