Bad Days are Over for SMRT?

smrt-logo

The share price for SMRT increase by a whopping ~20% last Thursday from $1.025 to $1.20. Although it is still far away from its ~$1.70 in end 2012, many fellow investors are asking if this could signify a turning point for this counter.

Analysts from various stock broker firms were quick to generate a report to give their commentary regarding this sudden price hike. The reasoning were as follows:

1. Speculation that SMRT will be privatised/ nationalised and therefore, be delisted from SGX.

2. SMRT submitted their interest to adopt the new financing framework that was introduced by the government in 2010. Under this framework, Singapore government would own the assets of SMRT (Railway tracks etc.), and be responsible for maintaining them. This proposal if successfully go through would free SMRT from having to sustain huge capital expenditures on asset replacement, which has been eating their top line and drastically affecting their bottom line of its Profit and Loss statement. 

The verdict was that the first possibility is unlikely to happen, whereas the second possibility is the one that investors should be betting on.

SMRT (S53) - A sharp increase in price

SMRT (S53) – A sharp increase in price

What’s Next? The Bear Argument

In the most recent announcement for the third quarter, SMRT fare related profit was reported to be at a loss of $9 million, while non-fare related profit reported to be at a profit of $27 million. As a result, the company’s net profit dropped to S$14 million.

The loss for the fare segment was mainly due to a rise in operating expenses, which went up 10.6% to $284 million on the back of higher staff costs and depreciation expenses.

In my opinion, even if the submission is to get approved, it will still require a few years for this stock to shine or in investor’s jargon to be a multi bagger. There are still several challenges that SMRT has to grapple with such as increasing manpower expenses which went up 10.6% to $284 million. SMRT also has to get their tainted reputation back on track with the disappointment events that had happened.

What’s Next ? The Bull Argument

On the other hand, it is indeed a stock worth to look at after several good news released recently (from 6 Apr fare hike and this new financing framework).  Furthermore, SMRT does has a huge pie in the public transport sector in Singapore. Using porter five forces analysis, you would realise that there is no doubt on why SMRT can be a good bet in the long run.

Porters_five_forces

 

The transport sector, especially the railway train service, is highly regulated by the government. This limit the number of players in the market (currently the only competitor is SBSTransit, even though so, they are serving different routes). With the COE at ridiculously high price, people are forced to sell their private car and take the trains instead. We as customer/commuters although can sound out our displeasure on squeezy and stuffy trains, at the end of the day, we still need to take the train to work or school. The best point is that even though the train is still breaking down now and then with the track is still as faulty, we cannot stop the fare from rising.

Conclusion

The question on whether to buy or to sell largely depend on your investment horizon and risk appetite. In short-term wise, the price has run up quite much, so if you are holding you might consider to sell to pocket in some profits. In long term perspective, there is still room for upside. As long as there is no teleport machine being invented, majority of us, the working class will still have to take trains to work. That will means endless business for SMRT.

Cheers~

The Need to Work Less for More

A recent conversation with a veteran with over 30 over years of experience has sparked an interesting food for thought. To him, all these years, work has not been a breeze. The motivation, when he was younger, was that to work harder during his younger days so that when he get old, he will have an easier life. However, he shared that as he progresses up the corporate ladder, responsibility and work has been loading him, causing his life to only get busier. Eventually, he comes to realise that he has devoted a large part of his life into working, missing out other important things in life.  Therefore, he urged juniors like us to while working, we should not neglect our family, well being and personal time for own growth.

This advice has leads me to another thought which sometimes it get me wonder that with the advances in technology over the past century, how come workers are still working just as hard or even harder than in the past. Worst still, many peers shared that sometimes the reasons for working over-time might be for stuffs that are non-enriching or not contributing to the true productivity of the organisation. Example is like spending time over editing a presentation.

The reason for OT?

The reason for OT?

Studies have shown that working for longer hours do somehow has negative effect on our level of productivity. With the fatigue and frustration, we are subjecting ourself to less time and energy to uncover our creativity that might have the chance of reaping greater benefits for us and the society.

Working longer hours has also shown to associate with poor health and higher mortality rates. Chronic stress could lead to unnecessary anxiety and worry that result to depression. In other words, we might be risking our lives by working pro-longed hours!

Are you sure you are going towards your right goal in life?

Are you sure you are going towards your goal in life?

This possibly strikes the outcry for the need of work-life balance among employees. But with all the clamours for this balance why isn’t this happening in an instance? David Spencer, a professor of Economics and Political Economy gives five reasons why is it so:

1. Employer Power

The decline of unions coupled with a more flexible labour market (meaning less job security) have granted employers more power to maintain work hours that suit their economical interests.

2. Consumerism

Workers are swayed by mass advertising and sophisticated marketing to demand more goods and services – this, in turn requires that they work more

3. Inequality

Workers are more likely to enter into competitive forms of consumption and to feel more pressure to work longer where levels of inequality are high. Evidence shows that countries with higher inequality tend to have longer work hours.

4. Household Debt

The buildup of household debt, especially in US and UK, has put added pressure on workers to work longer.

5. Technology

Gadgets such as iPhones and laptops have meant that workers an be at work even when commuting to and from work or at home.

Conclusion

No matter what reason you are working for, your passion, business, money, do remember that it should not be eating up your entire time. Other aspects of life are equally important such as your health, your relationship with family and friends, your own personal time for growth and creativity. All these will give you a complete and better life and for sure, your level of happiness and satisfaction will be higher. In turn, your company will stand to benefit from having happy and satisfied employees around in the organisation.

Cheers~

Buddha said “You are free person and a master of your own actions”

This entry I am going to talk about being able to live freely from others’ emotions, and it is not an easy task. As you would have heard “no man is an island”, therefore every day we have to face our family, friends, colleagues and fellow commuters, inevitably we will get affected by what is going on around us.

With the occurrence of train breaking down higher than the probability of rain, can you recall the last train (SMRT) breakdown incident, and think about how did you get affected by the situation? Frustrated? Worry about running late from work? To make the matter worst, did the anger churning out from the rest of commuters add fuel to the burning fire in you. You started to realise people around start to frown, fight and get into an argument with each other, and there goes your ‘Good Morning’ of the day.

In our work, we will get into disagreements with fellow colleagues and superiors at times. However, engaging in productive debating might lead to higher efficiency and effectiveness in operations but getting too emotional will bring no good to anyone, including your organisation.

So how can we break freely from getting affected by others? Especially situation that brews negative emotion that you do not wish to get yourself involved? The answer might be to just tune your own thinking to change your perception to your thoughts. Below is a good story that I found in the internet to illustrate my point:

Once, Buddha was walking through a village with his students, where the opponents of Buddhism lived. The people of the village surrounded Buddha and his students and started insulting them. In respond, the students also started rising up and wanted to get back at them, but the presence of Buddha calmed them down. The words of Buddha confused not only the students but also the villagers.

He turned to his students and said:

You disappointed me. These people are doing their thing. They are angry. They think that I am an enemy of their religion and their moral believes. These people are insulting me and it’s obvious. But why are you angry? Why did you let these people manipulate you? Now you depend from them, therefore you’re not free.

The people from the village were completely at loss and asked:

But we were insulting you, why aren’t you mad at us?

Buddha smiled:

You are free people, and what you did – is your business. I am also a free person and a master of my own actions, which is why I have my own right not to react to manipulation and be free from anger.

Conclusion

Hence the next time you meet with a difficult situation or people, do remember that you are a free person and you have the prerogative to think for yourself. Whether to get frustrated or not, is up to your own mind, how do you want to perceive the situation.

Last but not least, I would like to share an interesting YouTube video with you. Hopefully, it will change your mind if you are to  get caught up with another train breakdown incident.

Cheers~

Update on Capitaland: The Acquisition of CapitaMall Asia

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I have introduced Capitaland and its portfolio in my earlier post, in which I shared about Capitaland growth story in China and its future expansion plans.

This post is about one of the most exciting financial news that released this week, which will be Capitaland multi-billion dollars deal over CapitaMall Asia (CMA). The offer was a $2.22 per share which worked out to be a 22% premium to $1.80, the price at closing last Friday.

Capitaland’s CEO, Lim Ming Yan, explained the intention to privatise CMA is to provide the group with more agility to react to increased opportunities in integrated project in Singapore and China. Integrated projects refer to mixed property development such as residential apartments build on top of a shopping mall (widely seen in Singapore) or town development in China.

Why am I excited about this deal?

If you are staying or visited Singapore regularly, you will know how rapid CapitaMall Asia has transformed the local retail shopping sector. From owning the top 2 most profitable malls in Singapore (Tampines Mall and Junction 8, source: The Business Times 24 March 2014 page 9) to successful transformation of shopping malls such as J-Cube (one of the 2 ice skating venues in Singapore), Bugis Junction and Bugis+. There is also a potential increase in future earning from the most recent built Westgate Shopping Mall in Jurong area to the upcoming Project Jewel to be situated near the famous Changi Airport.

Project Jewel- A future shopping mall in Changi Area

Project Jewel- A future shopping mall in Changi Area

These successes of CapitaMall make me wants to hold a share of the company. However, due to limited resources, I was torn between Capitaland and CapitalMall Asia. However, the news of Capitaland going to acquire CMA gives investor like me a bonus. If this deal is successful I will have exposure to residential, commercial and retail sector just by owning one counter.

How is it going to benefit Capitaland?

First of all, it is going to strengthen CapitaLand’s financial report card. This deal once cast and stoned will immediately raise the return of equity from 5.4% to 6.7%, which is a good news to all existing Capitaland’s shareholders. Even market analyst are bullish about Capitaland long-term growth in the property development sector.

Secondly, it streamline the group’s operations and strengthen the group focus on how it manage the available resources. For example, there will be no competing of land resources and its intended use (residential or retail) once the deal is confirmed. Both parties now become one entity to develop the land for the highest overall return on property, be it retail, residential or mixed development.

Conclusion

Whether or not to put in your hard-earned cash, you are going to make your own decision and judgement when investing. After all, there are a few potential headwinds that Capitaland has to face with such as the cooling of China’s economy and the various cooling measures roll out by the Singapore government to curb the rising price of residential property in Singapore.

In my opinion, these are just short-term risks and challenges. Looking forward, the growth should outweigh the weakness in the long-term.

Have fun investing! 🙂

When Life is Pulling You Back

This quote is a powerful one.

Let’s just admit that we do experience setbacks now and then in life. When happen,  the feeling can be a demoralising one.

I hope this quote will give you an energy boost. It serves as a reminder that the outcome of an event is always depended on how we perceive the situation rather than the actual event itself.

Always remember that “What’s holding you back, might be the force that propel you forward!”

Charge! Keep fighting!~

To Retire at 55 or not?

Business Times reported result of a survey that 2 out of 5 Singapore Employees want to retire at the age of 55 which is 7 years earlier than the retirement age set by the government.

Interestingly, when the interviewees were asked what factors would motivate them to stay on in the workforce, the results are ranked as follows:

  1. Workplace offered a more realised schedule
  2. Friendlier atmosphere
  3. Fewer work hours

What surprised me is that none of the respondent mentioned about the ability to retire instead? Is either the respondent did not think of it or the survey left this line out, as in who will think about retirement when you are still in your 20s and 30s, right?

However, I am going to say out the hard truth, if you really want to retire early, you will need to start planning for your retirement as early as possible! More likely you will continue to be working at old age if you have not saved enough during your younger days, even if the working environment is harsh and stressful.

But not to be despair. It is always good to have an end in mind so that you can plan to succeed, rather than leave it to fate. To be able to retire early, you will need to have the financial power to continue supporting yourself and your dependants when you stop working. This has to come with effort and determination in following the recipe to success. The ‘ingredients’ are but not limited to the following:

  • To understand yourself

In the process of understanding yourself, you will need to create your monthly statement of income and expense so to understand your own cash-flow as a gauge of your lifestyle needs and wants.

  • To have solid financial saving and investment plans

Once you know yourself, you will need to save and investment to meet the lifestyle that you desired. Based on how much you spend, you can roughly  calculate how much you will need when you retire. Also, remember to account for inflation to get the true value that you need to accumulate. It can help by having a profitable investment portfolio in which it can provide you with capital growth or passive income through dividend distribution.

  • To have adequate protection plans in place

We need to have adequate insurance plans as part of our risk management in financial planning. Crisis does happens, and when it strike, it will disrupt any plan you have in place. Therefore, I would recommend you to be prepared for it rather than to regret not doing so earlier.

Above are the three points that I deemed to be the more important criteria you should have if you want to have an early or a comfortable retirement. Try to work on them and have the answer to the following questions:

1. How much do you need for your retirement at age 55?

2. How much do you have now?

3. How much do you need to save/invest each year to fill up the gap (retirement sum – current sum)?

4. What’s the rate of return, return of investment that you are looking at?

Cheers~