Author: 8% Value Investhink

What’s Wrong with HDB Prices?

So HDB prices are not overly expensive but everybody blames our Govt for the pitiful state of things. Now new couples cannot afford HDB, not to mention low and middle income families, old folks, the disadvantaged. If they cannot afford HDB, where are they going to live? How are they going to survive? The sentiment on the ground is definitely very different from what we have established in the last post. We shall look at a few issues that might shed some light into the disconnect: 1. Then and Now 2. Sour Raisins 3. Policy Blunders 4. Broken Dreams...

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Are HDB flats really too expensive?

With the election fever running high, it is probably apt to re-visit the property topic, a boiling hot button issue that is on everybody’s mind. While various statistics had been throw around by the media, nobody actually believes them. So here is an independent analysis of whether HDB flats are really too expensive. We shall look at a few measures: 1. Price to Income 2. Rental Yield 3. Absolute Prices 4. Housing Debt to Income Price to Income is one of the most widely used affordability measure. Basically it is just median housing price divided median income. (info from...

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Are HDB flats really too expensive?

With the election fever running high, it is probably apt to re-visit the property topic, a boiling hot button issue that is on everybody’s mind. While various statistics had been throw around by the media, nobody actually believes them. So here is an independent analysis of whether HDB flats are really too expensive. We shall look at a few measures: 1. Price to Income 2. Rental Yield 3. Absolute Prices 4. Housing Debt to Income Price to Income is one of the most widely used affordability measure. Basically it is just median housing price divided median income. (info from...

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Hyflux Preference Share

As with most people in the recent days, I have been googling around on Hyflux’s preference shares, but sadly nothing much can be found. One of the best analysis out there is done by this blogger: http://bullythebear.blogspot.com/2011/04/hyflux-preference-shares-part-1.html He has written a trilogy as well! Considering that the deadline for subscription is like 3 days from now, I guess this will be the first and last post for me. I will simply summarize the pros and cons briefly here: Here’s the good part first. 1. The dividends are cumulative – ie if they fail to pay one time, they must...

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The Nuclear Saga Continues

After 3 weeks of intense battling with the nuclear reactors, our heros at Fukushima aren’t really winning. In fact the situation is going from bad to worse. Radioactive substance is found in almost 100 different types of food, seawater is contaminated, tap water in Tokyo cannot be drunk, the area around Fukushima would probably be unlivable for the next 20 to 30 years. The final outcome might be similar to Chernobyl, ie pouring a few hundred thousand tonnes of concrete to entomb the reactors. Even that is just a temporary fix. Ukraine now needs financing for a permanent structure...

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A Long Nuclear Winter for Nuclear Stocks

The nuclear industry was one of the sexiest story for 2010. With the BRIC’s rising fast, the world’s hunger for energy looks insatiable. Renewable energy, bio-fuel, oil sands, nuclear were the buzz words. Nuclear was special though. It’s clean, cheap and scalable in a big way. It can contribute 25% to the global grid if the world’s govt put in the effort. Some developed countries are at that ratio. France, the No.1 nuclear supporter, is at 70%. Sadly for the world, today it’s still a miserable 14%. Undoubtedly it will go down below 10% in the next 10 to...

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Blue Ocean Strategy

This is the name of a popular book published about 5 years ago that helped improve how the top management of many companies think and how they should come out with strategies to help their company grow. I started reading this year (yeah, I know…) and found some intriguing ideas that I thought I should share it here. Here are some of those that would really help investors when they do some analysis on companies. 1. Blue Ocean Strategy simply refers to innovations that companies come out with that separate them from the competition. The strategies centre on creating...

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Colgate-Palmolive – Part 4

Finally, we have here a quick cheatsheet of Colgate’s financials. Basically, it’s a company earning USD 4bn on a revenue base of USD 16bn every year and we can expect this to grow maybe 13-15% for the next few years. This growth factors in all we have talked about, including P&G’s entrance, GDP growth etc. Toothpaste is a business that doesn’t need a lot of capex, so basically free cash flow is used to pay shareholders. It’s free cash flow is about USD 2.4bn, and the FCF yield is 6%. The interesting part about Colgate’s financials would be its...

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Colgate-Palmolive – Part 4

Finally, we have here a quick cheatsheet of Colgate’s financials. Basically, it’s a company earning USD 4bn on a revenue base of USD 16bn every year and we can expect this to grow maybe 13-15% for the next few years. This growth factors in all we have talked about, including P&G’s entrance, GDP growth etc. Toothpaste is a business that doesn’t need a lot of capex, so basically free cash flow is used to pay shareholders. It’s free cash flow is about USD 2.4bn, and the FCF yield is 6%. The interesting part about Colgate’s financials would be its...

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Colgate-Palmolive – Part 3

Every stock has its risks and here we talk about Colgate’s. Colgate’s biggest risk comes from its competitor – P&G. This company is the nemesis of Colgate, like Jedi vs Sith, Windows vs Mac, Man U vs Liverpool. You get the idea! P&G has 24% of the oral care market, just a tad smaller than Colgate’s 26%. P&G owns Crest – the other big toothpaste brand in US and some other parts of the world (but not in Singapore) and Oral B, the toothbrush specialist. As we can deduce from our own personal experiences with these brands, P&G probably...

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Colgate-Pamolive – Part 2

Colgate is very big in toothpaste. This is something that is well-known but yet underrated. When I tell people Darlie also belongs to Colgate, most people are pleasantly surprised. But what really surprised me was when I went down to my local supermarket and saw that the toothpaste segment basically sells just these 2 brands. I mean, Colgate and Darlie dominate the shelves! There are a few tubes of Sensodyne (by GSK), which is now competing with Colgate’s own Sensitive Relief Pro. And there is kids’ toothpaste. That’s it. The rest is all Colgate. Here’s Colgate’s market share in...

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Colgate-Pamolive – Part 1

There should always be an investment thesis behind every investment. An investment thesis is a statement to describe in a few words why you bought the stock. The investment thesis for Colgate would be something like this: Colgate-Pamolive is the biggest player in the oral care industry with a dominant market share in toothpaste globally. Colgate enjoys the stable growth of the consumer staples sector but has significant exposure to the growing emerging markets (Latam and Asia). Earnings is likely to grow at double digit for the next 3 to 5 years. After writing the investment thesis, it is...

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The Oral Care Industry

Value investors love mundane sectors and what could be more mundane than brushing your teeth? Nobody ever talks about brushing their teeth, how they enjoy it or how they look forward to it every morning. Well basically I think nobody does, that’s why it’s ever been talked about. But as far as investing is concerned, this is one of the best business to be it. We will talk about a few important points: Everyday Necessity (Consumer Staples) Well, first of all, everyone brushes teeth at least once a day right? Toothpaste runs out fast, and people just buy back...

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DB Brazil ETF – Part II

The second risk is China’s decreasing steel consumption. The last five years saw China’s big ambition to develop its infrastructure and mass market condos for its people and hence steel consumption went through the roof, resulting in the bull market in steel and shipping (of iron ore to make steel). That party is now probably going into its 11th hour and Cinderella is ready to drop her glass shoe. China needs to shift its economy from manufacturing to services, which would need less steel and hence less iron ore. Not to mention that after getting squeezed by the Australian...

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DB Brazil ETF – Part I

Last checked, there are now 75 listed ETFs in Singapore. As blogged a couple of times, ETFs present an easy way for lay people to invest into stocks and shares without having to put in too much effort (ie do a lot of study and research). Basically, you just buy into the regional/sector growth of the ETF. To learn more, simply click on the ETF label at the end of this post. Today’s post is about Deutsche Bank’s Brazil ETF listed on SGX. It seemed like this might be one of the cheaper ETFs out there amidst global bullishness on...

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