A Comparison of Shipping Trusts’ Business Models

You might be wondering why I am still writing about shipping trusts' business models when there is only 1 shipping trust left. This is because for investors in First Ship Lease Trust (FSL), it is useful to understand the differences between the business models of FSL and Rickmers Maritime to assess whether FSL would go the way of Rickmers Maritime and be wounded up. On the surface, both FSL and … [Read more...]

Sustainability of First Ship Lease Trust’s Cashflows

Last week, I blogged about the estimated current valuation of First Ship Lease Trust (FSL) and mentioned that since the current market value of the ships exceeds the loan amount, the probability of successful refinancing is quite high. However, the more important factor in determining successful refinancing is whether future cashflows are sufficient to meet the loan obligations. In this post, I … [Read more...]

Valuation of First Ship Lease Trust

A reader recently alerted me to the undervaluation of First Ship Lease Trust (FSL). It is a stock that lost a lot of money for me, having bought it at $1.27 in Oct 2007, averaged down at $0.42 in May 2009, before finally throwing in the towel at $0.225 in Jan 2012. Together with Rickmers Maritime, the shipping trusts were the worst investments in the 19 years that I had invested in the stock … [Read more...]

Globalisation, Technology and the Home Bias

I have both active and passive investments in my cash account. The active investments are in local equities while the passive investments are in global/US equities. Part of the reasons is because I understand that passive investments, especially using index funds, can lead to better performance over active investments. In recent years, I have come to realise that there is another important reason … [Read more...]

Possibly The Worst Time to Invest – 3 Years On

This is an annual blog series that I started 3 years ago to document the worries about investing at the wrong time, which would bring losses and headaches. The blog series track the performance of 2 passive portfolios invested in index funds using the portfolio rebalancing strategy. Both portfolios comprise of 70% allocation in stocks and 30% in bonds. The plain vanilla portfolio invests in global … [Read more...]

Early Retirement Maybe A Luxury That I Cannot Afford

I have blogged about early retirement in the past 2 years, but I really do not intend for this to be an annual series. Moreover, I do not intend to retire early and sit back and do nothing. Nevertheless, there are fresh insights on this topic and it is good to write them down for future reference.  In the past 1 year, I have read a few books such as "Capital in the 21st Century" and "Rise of … [Read more...]

Breaking My Valuation & Position Limits

It is official! I have broken my valuation limits on buying & selling stocks and position limits on individual stocks! Previously, I mentioned in What is My Target Price? that I have valuation limits of 1.8 to 2.0 times book value for buying stocks and 3.5 to 4.0 times book value for selling them. In Jan this year, I had broken these rules with the purchase of M1 at 4.7 times book value and … [Read more...]

I Didn’t Let My Alma Mater Down

How time flies. This is post no. 208, which makes it the 4th birthday for this weekly blog. This is a time for celebrations and reflections. Today's story is about my studies in the Singapore Management University (SMU)'s Masters in Applied Finance (MAF) programme. I enrolled in the programme in Jul 2004. The stock market had just recovered from a 3-year slump due to the dot.com crash in 2000, … [Read more...]

The Investigative Approach to Stock Investments

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There are a couple of quantitative methods for analysing stocks, such as the Dividend Discount Model (DDM). A lot of people use them for stock analysis and investment as they are relatively simple to use and do not require qualitative analysis of the business strategies, competitive environment, corporate governance, etc. For a very long time, I was also a keen user of such methods, looking at … [Read more...]

Challenging Times Ahead for Starhub’s Dividends

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When M1 announced its results in end Jan, I went to buy both M1 and Singtel, but I did not buy Starhub. The conventional wisdom is that between M1 and Starhub, Starhub would be better able to manage the competition from the fourth telco, as it has Pay TV, broadband and enterprise fixed services besides mobile services. That is true provided the other business segments are generating stable, … [Read more...]

Is Pay TV Still A Reliable Cash Cow?

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For the past 6 weeks, I have been blogging about the mobile services segment of telcos. It is time to move on to the next segment -- Pay TV. I will analyse Pay TV using Starhub's results, as Singtel has more business segments and operates in many countries. The figure below shows the no. of Pay TV subscriptions in FY2015 and FY2016. Starhub is kind enough to disclose its market penetration rate … [Read more...]

Telcos From A Consumer’s Point of View

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In previous weeks, I have been blogging about telcos from an investor's point of view. This week, the focus will be on a consumer's point of view, which actually provides some useful insights into how telcos price their services. Telco charges (inclusive of handphone, mobile data, broadband and fixed line) have been one of the biggest bugbears for my monthly expenses. Part of the reasons is … [Read more...]

Do Telco Investors Need to Fear the Fourth Telco?

Ever since the Government announced that they would allow the entry of a fourth telco, share prices of the 3 existing telcos have been on a down trend. In Dec 2016, the name of the fourth telco was made known; it would be TPG Telecom. Do investors of the 3 telcos need to fear the fourth telco?   Firstly, some background information about TPG. TPG is the second largest internet service provider … [Read more...]

The Telco Landscape in Singapore

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The telco regulator in Singapore, Infocomm Media Development Authority (IMDA), regularly publishes a list of facts & figures about the telco industry. It is interesting to look at the figures occasionally to understand the trends affecting telcos and review whether telcos worth investing. Mobile Services To investors of the 3 local telcos, the most important figure must be the no. of … [Read more...]

Can Telcos Stop the Decline in Profitability?

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All 3 telcos have reported their financial results for the quarter ending Dec 2016. Both M1 and Starhub reported a significant drop in net profit of 27.1% and 33.2% respectively while Singtel reported a slight 1.8% rise in net profit. Starhub even dropped a bombshell by announcing that dividends for 2017 will be cut by 20% to 16 cents. Can telcos stop the decline in profits, or will profits … [Read more...]

Impact of Data Upsize Plans on Telcos

Competition among the 3 local telcos used to be fairly stale, until things started to heat up in Mar 2016 when all 3 telcos launched data upsize plans as a way to pre-empt competition from a potential fourth telco. The upsize plans provide subscribers with more data with the payment of an extra monthly fee. How does that impact the revenue and profitability of telcos? As M1 is closest to a pure … [Read more...]

Impact of SIM-Only Plans on Telcos

I recently switched my telco subscription plan from the regular ones to SIM-only plans. How do these SIM-only plans impact the revenue and profitability of the 3 local telcos? Before we begin, let me explain what are SIM-only plans. As the name implies, SIM-only plans only provide voice, SMS and data but do not come with subsidised handphones. The tables below show the amount of voice, SMS and … [Read more...]

A Prediction About Properties 13 Years Ago

Before I became a blogger in 2012, I contributed to the Straits Times (ST) Forum Page once in a blue moon. My first letter was written in Dec 2004 and discussed the issue of whether downgrading homes was a viable means of providing for retirement. I was 29 that year. Certainly, I was not thinking of retirement then, but what aroused my interest a few years earlier was whether properties could be a … [Read more...]

Another Year That Ends with 7

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You probably have heard of the folklore -- whenever the year ends with 7, the stock market would crash. In 1987, Dow Jones Industrial Average went through the Black Monday in which it crashed 22.6% in a single day on 19 Oct 1987. Stock markets worldwide followed suit. In 1997, Asia went through the Asian Financial Crisis which did not end until nearly 2 years later. The STI went from 2,216.79 on … [Read more...]

Betting Against the STI Component Stock Changes

Buying and holding a stock index is considered as passive investing. However, the STI is not entirely passive. Every quarter, the STI would be reviewed to determine whether certain stocks should be dropped from or added to the index. This can be likened to active stock selection. How have the stock selections of STI of the past 3 years performed? Over the past 3 years, there have been 6 changes … [Read more...]