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Posted on August 6, 2010 - by Drizzt

Starhub Q2 2010 Results:Declining Earning Escalating Costs

All data found in this report can be reference @ this Google Doc>>

Starhub announced its Q2 Report and here are some notable observations:

1. Revenue is doing well. Revenue have been improving since last year’s Q2 as well as last quarter
2. Cost have been climbing higher. On a half yearly note, cost have increased from 855 mil to 991 mil. Its not significant, but you will see in the next observation how it affects profits.
3. Profit overall fell 25% from 148 mil to 109 mil quarterly. You will have to go back to Q1 2010 or Q1 2005 to find a profit this low. What this means is that it is definitely not a good sign as competition gets tougher.
4. The balance sheet presents 2 significant figures. While short term bank loans differ from Q2 2009 by a reduction of 180mil, long term bank loans balanced out in Q2 2010 by an addition of 150 mil. In terms of debt finance, not much changed there.
5. On a group balance sheet, the total equity is 57 mil! The question is will we reached zero or negative equity??? Do take note that at the company level Total equity is at 1.1 billion. I have an old reply from Starhub’s investor relations talking about their low equity to debt situation.
6. Net Operating Cashflow fell from 217 mil(2010 Q2) to 154 mil(2009 Q2). In a sense, working capital was higher in 2009 to the tune of 40 mil. So that should partly account why cashflow is lesser in 2010. Read more…

Posted on July 19, 2010 - by Drizzt

M1 Limited Q2 2010 Results:Increases customer base

It looks like the iPhone and Smartphone sales are controlling M1’s biggest problem the last few quarters, which is high churn rates. Here is a summary of what I think of their results:

1. Revenues improve since 2009, as well as from first quarter
2. Net Profit remains largely the same as previous quarter
3. On the balance sheet, net cash position is actually worse.
4. At Current liabilities, there was a 50% reduction in current liabilities attributable to lower short term debts.
5. This reduction was largely offset by a 250 million long term debt borrowing. M1 Limited have kept their debts fixed at 250 million.
6. This is where it matters. Due to Trade Debtors increase and a reduction in Trade Creditors, Net Operating Cashflow fell from 58 mil to 20 mil!
7. Comparatively, Free Cashflow is worsening from 2009 or previous quarter. It is negative 55 mil.

So judging by the results, although the subscriber base is growing, its not actually improving their situation.

The ability to pay dividends conservatively depends on how much free cashflow they have. Read more…

Posted on July 13, 2010 - by Drizzt

Cost of Car Ownership Calculator

I used to think that buying a car involves paying for car loans and paying for petrol. It turns out that there is more spending and budgeting that needs to be done when it comes to planning for car ownership.

As a finance blog, my research is not to show you the best way to choose a car or the best car recommendation to you. At Investment Moats, we hope to equip you with a good estimate of how much it will cost you to own your prospective car.

What is Cost of Car Ownership Calculator?

My cost of car ownership calculator aims to provide you with a summary of information detailing:

• How much is your car loan
• How much you have paid in interest + car loan
• How much is your total expenses in car ownership
• How much is your yearly or monthly total cost of car ownership as a portion of your income

This will be a good budgeting tool to estimate whether you can afford a car comfortably monthly. It is design more towards a Singapore user but is flexible enough for other country’s car owners. Read more…

Posted on July 6, 2010 - by Drizzt

Decreasing Term Life Insurance can be your low cost insurance solution

Insuring so that your dependents not able to pay huge financial burden can be cheaper than you realise

As a working adult aged 20-35, some of the hardest financial risks you are likely to face is:What if you are not around leaving your wife and kids to pay for the biggest financial burden, your mortgage.

One can argue that there are other big ticket credits that you can take up such as

1. Student Loans
2. Credit Card Loans
3. Car Loans

But with home prices fluctuating around 400k, a single bread winner will be severely  tested.

The solution known to many

The common solution, which is likely to be sold by most financial advisors you will meet is to take a whole life insurance.

The problem with that is to insure against a 300k mortgage payment, you will require a whole life plan of at least SGD 400 per month.

Folks who do not earn that much or have competing financial priorities will feel pressurized by that figure.

How can a decreasing term life insurance help?

A Decreasing Term Life insurance is a unique life insurance that provides a lump sum payment should the person is hit with death, TPD and in certain cases Critical Illness.

You will need to pay a fixed rate of premium payment for the limited duration that you and the insurer decide to insure against.

The unique thing about a decreasing term compare to a level term is that the sum that you are insured for decreases over time. Read more…

Posted on June 24, 2010 - by Drizzt

Trend Watch:STI looks very topish with a head and shoulders pattern

Alot of sites are pointing that head and shoulders pattern, which is a bearish pattern, is observed on numerous indices.

I think lets trade with skepticism in mind, plan when it comes to fruitation and plan when it does not. This pattern have not been confirmed yet so until we see confirmation this is very likely still very bullish.

Here is a chart from Wealth Buch. What i observe is that the potential left shoulder volume seems to be equal to the current volume. Although probably due to world cup the volume on the left should is lesser (though i can’t really tell). Head and shoulders normally have that volume profile: Read more…

Posted on June 15, 2010 - by Drizzt

Yield Watch:Starhub surprises, First REIT doesn’t

I did an update on my Singapore Dividend Stock Tracker today and were surprised by Starhub’s strong performance.

Haven’t they and Singtel overpaid for the World Cup broadcast rights? Wasn’t there alot made about their expensive packages?

Many are still waiting hard like what the analyst were predicting that it will fall to $2 or $1.90. That will be the historical low. But it seems that this is not the first time people are selling down Starhub due to negative news. Time and again it managed to hold within this $2.00 plus range. Read more…

Posted on May 11, 2010 - by Drizzt

Stock Valuation and Dividend Sensitivity Analysis:How does price and dividend affect each other?

Data on this article can be found in the Google Spreadsheet here >>

Introduction

When you sometimes buy a stock for dividends, you look only at the current yield of the stock and take it for granted that it is like a fixed desposit where the interest rate fluctuates little.

The common psychological thinking is that the stock IS EXPECTED to maintain the dividend payout, but that isn’t usually the case.

Dividend per share per year (DPS) fluctuates.

In a growth company, what start off as a small DPS relative to share price might grow and grow so much so that its dividend yield is eventually higher or equivalent to some stock that pays high yield. MacDonald’s and Pepsi comes to mind. Their dividends just grow and grow for 20 years plus. Great investment.

In a mature company, the dividend payouts tend to fluctuate. When business is good they pay out more than average, else they pay out less. In Singapore, most of the companies such as UOB, DBS and SembCorp is like that.

Then you have your dividend companies that you buy for its consistent cashflow, companies such as Telcos, Utilities, REITs, MLP. Their DPS is consistent and makes then easy to value. A trend that we see is that these companies find it very difficult to value create and grow their profits and cashflow with the existing resources.As such DPS tend to stagnate or in difficult times go down. So what start off as a high yield at your purchase price ends up big very small.

For stocks that consistently pays dividends more or less, their share price will reflect the expectations of investors and this affects you as an investor both trying to get in or already vested in the company.

Case Study: Starhub

I decide to use Starhub since it is one of my vested holdings and recently they announce a first quarter results that is less than satisfactory [Report here >>].
(more…)

Posted on April 20, 2010 - by Drizzt

First REIT: Hedging Inflation and Geographical Risks

A forumer over at ChannelNewsAsia was asking about how does First REIT handle the events of an earthquake?

Aging population trend is irreversible and it is going to get worst.
I am optimistic abt First reits business.

what i am only worried is earthquake in indonesia.

any one know whether Insurance is covered for earthquake?
(what i know is Insurance does not cover Act of God but there are insurance that covered against earthquake).

I thought that the best way to settle this is hear from the management’s perspective. Incidentally, the person that handles Investor Relations happens to be their Chief Finance Officer Mr Victor Tan.

Questions:
Read more…

Posted on April 19, 2010 - by Drizzt

M1 First Quarter 2010:I am not seeing what analysts is seeing

Note: Figures mentioned in this report can be found in this M1 Spreadsheet here

So M1 Limited announced first quarter results today.

• Revenue was higher by 33.4%. This is due to the handset sales. iPhone! iPhone! iPhone!
• Expenses was up by 41.4%.iPhone! iPhone! iPhone! One thing you would notice is that handset expense can make up quite a sizable chunk of expenses.
• Cash holdings increase from 7mil to 14 mil. It is still anemic compared to Starhub. Can’t understand why alot of people say their cash position better than Starhub.

Lets take a look at some reporting in detail.

Profit Margin, ROIC and ROE  much lower

ROIC is lower at 10.75%. This is compared to Q1 2009 which is at 29% or last quarter which is at 25%

ROE is lower at 10.23%. This is compared to Q1 2009 at 24% or last quarter which is at 25%.
(more…)

Posted on April 15, 2010 - by Drizzt

Of Starhub’s ENORMOUS debt explained

Photo by filtran

Note: All data mentioned in this article can be found in this spreadsheet over here.

I get this alot and to tell you the truth, I did ignore Starhub in the past because of this. The debt is enormous!

2009 Long Term Debt = 605 mil

2009 Assets = 1732 mil

2009 Equity = 125 mil

Debt to Equity Ratio = 605/125 = 4.85 times !!!!!

This is enough to put off investors since a high debt company is a dangerous company to own.

It is likely that they will face alot of refinancing problems in the future and they will refinance at a higher cost thus eating into the investors dividends.

I was in this discussion at Channelnewsasia forum on this topic and was asked what is Starhub’s take on their so called debt situation.

since i am not the best person to answer this question, i contacted Starhub’s Investor Relations and Ms Jeannie Ong was kind enough to explain to me:

The question i post: (more…)