Author: (The) Boring Investor

Understanding the Safeguards of Astrea IV 4.35% Bonds

Astrea IV 4.35% bonds are unusual retail bonds as they are backed by Private Equity (PE). There are 5 safeguards put in place by the issuer to ensure that cashflows from PE investments are adequate to meet the obligations of the bond. These are: Reserves Accounts Sponsor Sharing Maximum Loan-to-Value (LTV) Ratio Liquidity Facilities Capital Call Facilities To understand why these safeguards are important and necessary, let us consider a hypothetical scenario in which I wish to issue Boring Investor bonds to retail investors to raise capital to invest in public equities listed on the SGX. Cashflows for the...

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Would I Invest in Astrea IV 4.35% Bonds?

Recently, Temasek launched a Private Equity (PE) bond for retail investors known as Astrea IV 4.35% bond. It is the first PE bond open to retail investors. Would I invest my money in this bond? First of all, let us understand what this bond is all about. This bond is issued by Astrea IV Pte Ltd, an indirect wholly owned subsidiary of Temasek, to hold a portfolio of PE investments. The investments are managed by 27 General Partners in 36 PE funds and invested in 596 companies. 86.1% of these funds are invested in buyouts, with 12.3% in growth...

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Possibly The Worst Time to Invest – 4 Years On

This once-a-year post probably sounds like a broken record, but 4 years after I thought it was a bad time to invest (due to record high Dow Jones Industrial Average and record low interest rates then), the DJIA has not crashed yet, despite a series of corrections along the way, with the most recent one in Feb. I have 2 passive portfolios invested in index funds and adopting the portfolio rebalancing strategy. The plain vanilla portfolio has 70% in global equities and 30% in global bonds since Dec 2013, while the spicy portfolio has 70% in US equities and...

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Who Moved Starhub’s Cheese?

Starhub has been facing declining profitability in the last few years. It even had to cut its 20-cent annual dividend last year, a dividend which it had held steady for 7 years. Why did Starhub face declining profitability and who moved Starhub’s cheese? To discuss these questions, we need to first understand what were Starhub’s competitive advantages in the past and how have they changed. Starhub’s Moats Traditionally, compared to its 2 rivals, Starhub has the advantage of using its cable network infrastructure to deliver both cable TV and cable broadband services, thus enabling it to spread out the...

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A Satisfied M1 Investor

I started investing in M1 in Jan last year. At that time, it was to take advantage of the crash in telco stocks due to fear of the fourth telco. Since then, I have added to my positions several times. My current position is now 5 times the initial one. This is because despite all the headwinds that telcos face, from SIM-only plans, data upsize plans, Mobile Virtual Network Operators (MVNOs) to the fourth telco, M1 has performed admirably. Below is a summary of what I like about M1. SIM-Only Plans When M1 launched SIM-only plans in Jul 2015,...

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NB-IoT – The Next Frontier for Telcos

NB-IoT sounds like the name of a robot, but it stands for Narrowband Internet of Things. You probably have heard of Internet of Things (IoT), in which every device is collecting data and connected to the internet. As an example of the benefits of IoT, an IoT fridge can keep track of the groceries stored inside. If any grocery were to run low, it can place an order for fresh groceries to be delivered to your home automatically. You do not need to worry about groceries running low any more. It is an exciting future, isn’t it? For the...

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No Competition for M1’s Big Data Plans

Usually, the 3 local telcos are very competitive. Whenever 1 launches a new service, the other 2 will follow quickly. However, for the new big data plans that M1 launched in Aug 2017, the follow-ups have been fairly feeble. Starhub launched its unlimited weekend data plans immediately, but that came with additional monthly subscription fees of $5.10. Only Singtel came up with something close, offering a Data X Infinity add-on for unlimited data for additional $39.99 per month 2 weeks later. However, that add-on only applies to higher mobile plans. Let us look at the offerings from each telco....

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Do M1’s Acquisitions Make Sense?

It is a well known fact that competition among telcos has been heating up in the last couple of years. All 3 telcos have been finding new sources of revenue outside their traditional telco businesses. They have been busy acquiring companies, such as Singtel’s acquisition of Turn for USD310M in Feb 2017 and Starhub’s acquisition of D’Crypt for up to SGD122M in Dec 2017. In comparison, M1’s acquisitions have been very small. So far, their acquisitions are as follow: Aug 2016 – SGD3.0M for a 30% stake in Octopus Retail Management, which provides Point-of-Sales (POS) solutions for retailers and...

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Where Art Thou, TPG?

Just when I thought TPG was very quiet in its plans to roll out its 4G network, it suddenly announced on 19 Mar that it would provide the elderly with a free mobile plan for 2 years that includes unlimited calls and 3GB of data. That sounds really good on paper, but is TPG’s 4G network ready? According to the terms of the spectrum auction, TPG has to achieve the following network coverage by certain dates following the commencement of its spectrum rights on 1 Jul 2017: Coverage Quality of Service Duration Date Street Level 95% coverage 18 months...

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How Long Can (The) Boring Investor Blog Continue?

This is post no. 260, which represents the 5th birthday for this weekly blog. In past years, this would have been a joyous occasion, as it means that I have blogged for another 52 continuous weeks. This year, however, there is a tinge of sadness, as there is a realisation that all things will eventually come to an end, including this blog. Regular readers of this blog would know that I like to string all posts with the same theme together, such as the telco theme of recent weeks. However, to have something useful to blog about, I need...

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Will MVNOs Cannibalise Telcos’ Business?

How many telcos are there in Singapore currently? If you answered 3, that is incorrect. There are currently 6 telcos — 3 traditional telcos that operate their own telco networks, namely, Singtel, Starhub and M1, and 3 Mobile Virtual Network Operators (MVNOs) that buy network capacity from the traditional telcos and resell to retail customers. Ever since the first MVNO, Circles.Life, set up shop in May 2016, things have accelerated in the MVNO space. In a short span of 3 months, we have had another 2 MVNOs springing up, namely, Zero Mobile and Zero1. You probably have heard of...

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Is Starhub’s Dividend of 16 Cents Sustainable?

A few bloggers have written about whether Starhub’s dividend of 16 cents per year is sustainable when Starhub released its results in Feb. This time last year, I reviewed the prospects of its various business segments and concluded that challenging times were ahead for Starhub’s dividends. See Challenging Times Ahead for Starhub’s Dividends for more info. In today’s blog post, I will update the review and discuss whether Starhub’s dividend of 16 cents is sustainable. Although mobile services is the largest business segment, I will discuss it last, for reasons explained later. Pay TV If you read Is Pay TV Still...

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Will SIM-Only Plans Cannibalise Regular Telco Plans?

It has been a year since I last wrote about telcos. Looking back at what I wrote, it has been gratifying to see that I was right about M1’s revenue/ profits bottoming out sometime in 2H2017 and Starhub facing challenges in its Pay TV and broadband businesses. See Challenging Times Ahead for Starhub’s Dividends for more info. Even so, there have been hits and misses in my analysis. One of the misses is the Impact of SIM-Only Plans on Telcos. There, I wrote that “for each subscriber who chooses to switch (from regular telco plans), SIM-only plans will result...

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How To Select a Housing Loan Package

After selecting our desired condominium, the next step is to choose a housing loan package. There is a variety of loan packages, such as fixed or floating interest rates. For fixed interest rate packages, you could choose whether to fix the interest rates for 1, 2 or 3 years, after which the loan reverts to floating interest rates. For floating interest rate packages, you could select whether to peg the interest rates to the Singapore Interbank Offered Rate (SIBOR), Swap Offer Rate (SOR) or fixed deposit rates. Assuming that you choose a SIBOR or SOR package, you have to...

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How Much is Proximity to a MRT Station Worth?

In my last 2 blog posts, I discussed the price differential of different ages of condominiums, size of units, as well as how long is the leasehold of the condos. See Areas Where We Saved for Our House Purchase and Could We Afford a Freehold Property? for more info. In both posts, I mentioned my preference for proximity to a MRT station, as there are usually more amenities such as shopping centre, market, hawker centre, etc. Staying close to a MRT station also means that we save on a car, which could potentially cost $200K or more in future expenses....

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