Author Archive

Posted on February 4, 2010 - by Sgbluechip

Analysis of SP Ausnet Part 1

Background of SP Ausnet (Source: http://www.sp-ausnet.com.au and http://www.singaporepower.com.sg/

SP Ausnet is a subsidiary of Singapore Power (with a 51% controlling stake) and its operations are managed by staff of Singapore Power in Australia. Singapore Power is a leading energy utility company in the Asia Pacific.

With assets of S$26.3 billion at end March 2009, it is one of the largest corporations in Singapore. It owns and operates electricity and gas transmission and distribution businesses.

SP Ausnet owns and operates electricity transmission and distribution networks and gas distribution assets in Victoria, Australia. It delivers a full range of energy related products and services to more than a million industrial and domestic customers. It was listed on SGX at $1.75 per share in Dec 2005. It current trades at $1.14 a share (03/02/10).

Electricity transmission network – carrying electricity from power stations to electricity distributors across all of Victoria via 12,800 high voltage towers and approximately 6,500 kilometres of transmission lines.

Electricity distribution network – carrying electricity from the high voltage transmission grid to over 600,000 customers across eastern Victoria. This network spans approximately 46,000 kilometres across an area of 80,000 square kilometres. Read more…

Posted on January 26, 2010 - by Sgbluechip

Portfolio Updates

My portfolio of invested amount went up slightly to breach the $400k mark last week when I took the opportunity to invest as STI fell. If you have read my post here, you would have realised that I need to invest $66k annually from 2010 and acheive return of 7.1% compounded yield before I can reach $1M in 2015.

This means that I need to invest another $10k more to reach my target this year.

Is that possible? I am not sure. Markets are volatile and the economic cycle seems shorter and shorter. My masters programme seems painfully slow to complete and I am literally struggling with my 14 hour job daily (including weekends).

I have switched to a new role (downgraded actually) in my company which means I have to be monitored closely. I hate that kind of feeling of being watched and assessed by goondos. This means that I am likely to tender my resignation and go into full time studies at the end of this year.

Where can I get $66k to invest if I have to be out of job for 6 months? Classmates will shun me too!! haha.. especially the girls!! Read more…

Posted on December 1, 2009 - by Sgbluechip

Is GDP a good measurement of life quality?

Consider the following (excerpted) statement by Robert Kennedy in 1968

…And if the Gross National Product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials… the Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile….

In Singapore, the government’s competency is assessed based on its ability to grow GDP year on year, quarter on quarter. Every civil servant’s bonus and salary increment depends largely on it. Does high GDP reflects high quality of living?
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Posted on October 28, 2009 - by Sgbluechip

Earn one million dollars (in 6 years time)

A reader pointed out that it is nearly impossible to turn my $350k portfolio into $1M in 6 years time as I would need an annual compounded return of 19.1% to reach that amount.

Am I being unrealistic?

To be honest, I could possibly set an impossible target judging from current circumstances, as most people think. However, to put things in perspective, perhaps there is a way (at least theoretically) to meet the target.
As a portion of my portfolio consists of CPF stocks as well, the following calculations will be based on CPF investment returns and reinvestments.

Considering I earn $80k per annum now. I spent approximately $24K a year, or $2000 monthly. I have a remaining $56k for investment.
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Posted on October 18, 2009 - by Sgbluechip

Jason Marine IPO

I seldom blog about IPO as I have never made money from it. Usually company owners who want to sell their business will weave a compelling story to entice people to invest. If I own a company that is really profitable, I would need an offer that I can’t resist before I sell it. I will never sell it at fair value. Hence, I never believe in get-rich talks because if I find a gold mine, I will not tell anyone about it until it is empty.

However, the IPO market can rarely be predicted using fundamental analysis. Based on my observations on current market sentiments, the IPO launches for the first day are largely positive.

Read more…

Posted on October 12, 2009 - by Sgbluechip

DBS 1% Unit Trust Sales Charge

DBS Unit Trust Sales Charge has been publicized widely recently on papers. This is 50% cheaper compared to the 2% charge by online portals and financial advisors. Moreover, financial advisors, especially independent ones quote a wrap fee that demands their clients to pay 0.5%-2% of their asset under management (AUM) annually. This is a hefty charge, considering a 1 million portfolio, you will be paying $10,000 (1%) to your financial advisor yearly, even if your portfolio is underwater, losing 10% annually. Also, the wrap fees force sells your best performing unit trust (even if it is in the red) to pay for the management fees quarterly.

Hence, engaging such portfolio advisors will mean feeding them as long as you live. Unless your advisor can earn you over and above the market expected returns of 8% per annum, you will be better off investing on your own.

As soon as I read the advertisements, I went over to Fundsupermart to search for good DBS fund house deals. One of the funds, DBS Global Properties Securities Fund caught my eye. This fund invests in REITS around the world and pays out quarterly dividend (in units) regularly.

Below is the payout history:
Read more…

Posted on October 6, 2009 - by Sgbluechip

The future of Starhub after losing EPL

Starhub lost the broadcast rights of EPL, ESPN, STAR Sports and STAR Cricket last week which explains the huge plunge in its share prices. It was down from $2.16 to a low of $1.94 on Friday before rebounding to close at $2.

Is there any future for Starhub?

Starhub is known for paying hefty dividends over the years and at 18 cents dividend per share, the yield is at 9%. Considering its bottom during the crisis was $1.76, $2 seems to be rather attractive buy for a yield and recovery play.

To put things in perspective, cable TV accounts for about 20% of Starhub’s revenue. It has about 550,000 pay TV subscribers and it is not known how many families actually subscribed cable TV purely for soccer.

Reports over the weekend showed that many subscribers and soccer fans will be hanging onto Starhub even though EPL can only be watched on Mio TV. Of course, the reports can be biased as we do not have the actual numbers or expected churn rate.
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Posted on September 19, 2009 - by Sgbluechip

How does statistics hide facts?

Statistics often make us believe wrong conclusion and misled us into believing silly correlations.
Let me tell you a story that happened in Country Blue Chips (CBC).

A freshly minted assistant professor (in statistics) “discovered” that drinking orange+apple juice makes you smarter. He runs a regression analysis after a grant by the largest manufacturer of juices in CBC. He then engages 10,000 pupils from CBC primary school, and split them into groups of 10 comprising of 1,000 pupils per group.

Each group is given different compositions of orange and apple juice. E.g., group 1 drinks 10% orange juice+90% apple juice; group 2 drinks 15% orange juice+ 85% apple juice and so on. If the professor can have a large enough sample, he can have an unlimited number of sample groups. He then realized that hey, drinking orange juice and apple juice daily for 1 year does not increase the entrance score of the local gifted programme for 9 groups of pupils. However, coincidentally, the last group that drank 15.5% orange and 84.5% apple juice actually had a 99% percentage of people entering the gifted stream. “Okay, I am going to use this statistic and write a paper on it! Based on a 99% confidence interval, the hypothesis that orange+apple juice can make your child smarter is true! 99% went into gifted stream after drinking the juice composition!” Read more…

Posted on September 17, 2009 - by Sgbluechip

Are HDBs affordable at all?

With reference to my earlier article, I have calculated that a couple who bought a decent 3 bedroom unit at Dakota Residences will have paid about $3.3M in interest and principal. It is an awful large amount of money. I would never even dare to dream I have that kind of money!

What about HDB?

Let us now consider the cost of HDB from a cost-salary historical perspective. I draw the following information from Lianhe Zaobao, 6/9/09, written by financial columnist Xu Li Qing.

In 1970s, a 3 room HDB flat costs $8,000. A fresh graduate then earns $1,000 monthly. It is about 8 times his salary. Of course it was extremely rare to have a graduate then!

In 1980s, a 3 room HDB flat in Ang Mo Kio costs $40,000. A fresh graduate then earns $1,600, which translates to 25 times his salary. Read more…

Posted on September 14, 2009 - by Sgbluechip

A visit to Dakota Residences

I visited Dakota Residences over the weekend. There was no crowd, just a couple of families looking at the showflat and the architectural model.
Currently Dakota has fully sold its 2 bedroom apartments and are left with few units of 3 bedroom apartments. 4 bedroom apartments are still plentiful as there are little takers.

I enquired about the 3 bedroom apartments. They cost a minimum of $1.16m or $889 psf for a low floor unit, with an area of 1313 square feet. Similarly sized unit but at 17th floor, costs $1.33m or $1014 psf.
Seriously, for a 99 year leasehold property I do feel that such prices are out of the reach of ordinary Singaporeans.

Let the numbers tell you why.
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