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Month: October 2016

SGX’s 1QFY2017 results

Creative Technology

On 19 October 2016, SGX reported 1QFY2017 results. Notwithstanding the net profit amounted to $83 million, the overall performance was poor. This is not surprising given that the bourse operator is a proxy to Singapore economy, which has been sluggish for the whole of this year.

Key financial indicators

Revenue: $191 million, down 13% from a year earlier

Operating profit: $97 million, down 17%

Net profit: $83 million, down 16%

Earnings per share: 7.8 cents, down 16%

Interim dividend per share: 5 cents, unchanged

Revenue had been dragged by declines seen in the Equities and Fixed Income and Derivatives segments, both recording a drop of 9% and 22% respectively compared to 2016. The slowing global economic growth and the political uncertainties arising from Brexit resulted in lower trading volumes.

Strength of SGX

However, investors should not judge SGX’s strength on the basis of one quarter’s financial performance alone. The group’s balance sheet is actually very strong – no borrowings and cash-rich. In fact, its current asset amounted to $1.53 billion and total liabilities stood at only $951 million.

SGX

Expenses decreased 8% to $93.7 million ($102.3 million), as all expense items declined year-on-year. Total staff costs decreased $2.4 million or 6% …

Will gold price surge with the new US President?

GST

8 November 2016 will be a destiny day for Americans when they cast their votes for their new President. Whether its Hillary Clinton or Donald Trump, it will be a tight race for sure. With so much uncertainties, will gold price surge with the new US President?

Most people assume that the popular Hillary Clinton will prevail and win the election hands down. But the American election voting system is not so straightforward. The candidate can win more votes but still lose the race. Why is this so? This is because of the complex US voting system – the Electoral College.

Under this profound system, Americans are actually not voting for the nominees directly. They are in fact voting for a group of electors representing their states. Each state has equal numbers of Congressman and Senators. The bigger the state, the more electors. At the state level, it is a winner takes all game. So the key is actually winning more electors, and not more voters.

This system is obviously very different in Singapore, whereby the number of votes determine the winner.

gold

Thus, it is important to note that because of this US complex voting system, the result on

Keppel Corporation will retrench even more staff

stock market

As Singapore business sentiments soured, retrenchments seem to be the buzzword nowadays.  This is certainly the case for Keppel Corporation, the world’s largest oil rig builder. The difference is that after letting go 8000 of its workforce for the first nine months of this year, Keppel Corporation will retrench even more staff.

The sheer magnitude of this “right-sizing” exercise illustrates the current state of the offshore and marine industry. The reduction in the workload resulted in the shrinking workforce needs and required Keppel Corp to be lean. In the 3QFY16 financial report, the CEO highlighted that the culling of workforce will continue due to the weak demand for oil rigs.

Wind of changes

The root cause of Keppel Corp’s decline is the collapse of the oil price since 2014. The CEO suggested that it could be a “long winter” for the oil rig giant but I see it differently. I don’t work in the oil and gas industry but the emergence of USA’s shale oil may be the ultimate game-changer for the industry.

stock market

The discovery of new drilling method in USA to produce oil from shale rocks created a huge capacity boom and this led to the current oversupply issue. …

Will SPH acquire The Finance SG?

SG Wealth Builder Membership

When SPH announced its plan to cull staff for the next couple of years, it was a sign of times for the media giant. Faced with falling revenues and declining daily newspaper circulation, SPH is grappling with the disruptions of the media industry. Nonetheless, it is important to note that over the past decade, SPH had made numerous acquisitions of online media platforms. Thus, will SPH acquire The Finance SG?

Ten years ago, SPH set the dot-com community on fire by acquiring IT media company, Hardwarezone, for a cool $7.1 million. The online magazine has a monthly pageviews of over 35 million and is widely considered one of the top websites in Singapore (in terms of traffic). The mega deal came at a time when the online entrepreneur scene was still reeling from the aftermath of the dot-com implosion. The deal set the stage for today’s fintech evolution and let many online entrepreneurs dream again.

SGX

In 2013, SPH splashed out a whopping $60 million for SgCarMart, Singapore’s leading online classifieds website for the automotive industry. The portal has an estimated number of 30 million pageviews per month. Whether this was a panic buy is subject to debate but through this …

Dealing with cancer

financial destiny

Yesterday, my colleague shared with me that his mother was diagnosed with Stage 3 breast cancer. I was shocked to hear this news but really didn’t know how best to advise him. So I thought the only thing I could do was to listen to his story.

Apparently, my colleague’s mum went for a diagnosis after feeling a lump in her breast two months ago. The preliminary tests revealed that she had breast cancer in the early stage. However, recent tests showed that the cancerous cells had spread aggressively and doctor advised that surgery was needed. Thereafter, she would also need to go for chemotherapy.

Understandably, my colleague’s mum is now feeling very depressed. After all, being diagnosed with a late stage cancer illness can be daunting. When a person is at this phase of her life, there are a lot of uncertainties and fear. It doesn’t help that my colleague’s father is a small-time business owner and needs to travel frequently. Thus, during this difficult time, his mother lacks the emotional support from her husband.

financial destiny

Being the eldest son, my colleague is the pillar of support for his family. The mother is a full-time house-wife. He has two younger …

SPH media business review

Ascendas REIT

On 17 October 2016, media conglomerate SPH finally dropped the bombshell. In a media release which highlighted the result of its business review, SPH announced that it will be “right-sizing” to reduce operating costs.

To put things into perspective, this is not the first time that the media company is downsizing. It had previously retrenched more than 100 staff in 2003. It is also no secret that SPH’s revenue has been decreasing at an alarming rate for the past 5 years.

Revenue for FY2012: $1.27 billion

Revenue for FY2013: $1.24 billion

Revenue for FY2014: $1.21 billion

Revenue for FY2015: $1.18 billion

Revenue for FY2016: $1.12 billion

Return on Equity (ROE) declined at an even worse rate, from a respectable 19.3% in FY2012 to a ridiculous 7.129% for FY2016. What exactly went wrong for SPH?

Make no mistake, the company is still making money. In fact, profit after tax for FY2016 was $306 million, a decrease of 17.4% compared to FY2015. The company is also giving out dividends as usual for FY2016.

But SPH investors must realize that it is not exactly business as usual for this media giant. The continuing decline in its business is not a cyclical problem, but …

SPH to retrench staff

Ascendas REIT

Today, Yahoo Singapore publishes an article that SPH is expected to retrench about 10 percent of its staff. If the move is official, the retrenchment figure will be higher than the 111 staff it retrenched in 2003.

The sheer number of SPH staff expected to be laid off is frightening. This is because back in 2003, the business condition was difficult due to Iraq war and SARS outbreak. In today’s context, the market condition is not well either but we don’t have any global wars or major pandemic flu taking place.

Thus, even though the Ministry of Trade and Industry (MTI) announced two days ago that Singapore is not experiencing recession at the moment, my concern is that the state of our economy is even more dreadful than what many people might have thought.

SPH

Bad economy and headwinds aside, SPH’s poor performance can be attributed to its management’s failure to transform the media giant into a digital power-house. The bulk of its average daily circulation is still in printed copies and its online subscriptions form a small percentage of its daily circulation. This is a worrying trend as Singaporeans lifestyle has changed and apparently, SPH is unable to keep up …

Lack of understanding on Medishield Life among Singaporeans

overseas properties

I came across the article by fellow blogger, Andrew Loh, on his recent medical bill. Andrew is a blogger whom I respected a lot because of his various quality articles in Yahoo Singapore website. Arising from his recent medical ordeal, I realized that there is a lack of understanding on Medishield Life among Singaporeans.

In his article, Andrew was very clear on the mechanism of Medishield Life. But several readers were puzzled as to why the Medishield Life payout was only $720 when the bill is $3959.19 after government subsidies of $6767.90.

Without verifying, many Singaporean readers took this opportunity to slam government policies and made baseless toxic remarks.

Firstly, Medishield Life has deductible and co-insurance portions that can be paid using Medisave or cash. Many Singaporeans thought that Medishield Life cover 100% of medical bill, which is untrue. The policy intent of the deductible is to keep MediShield Life targeted at large bills, and is only payable once in a policy year. Co-insurance ensures that policyholders are responsible for their medical bill.

insurance

Secondly, if you do not wish to pay the deductible and co-insurance fees, you can always opt for Integrated Shield Plans (ISP). Many of the ISP …

Should stock investors run for their lives?

GST

Every four years, money and power will have a showdown. October will be a nerve-wrecking month for Americans as the Presidential Election enters into the final leg. There are a lot of uncertainties as to who will be the most powerful person on earth. But regardless the outcome, investors dislike uncertainties. In view of this, should stock investors sell everything and run for their lives?

The US Presidential Election aside, there were already many warning signs of cracks forming in the stock market. In early January 2016, China stock market had two massive melt-downs, leading to forced trading halts by the regulators. Then entered Brexit. Pound experienced free-fall in value and dropped to decades low.

Next on the list may be Deutsche Bank, which has being ordered by US Department of Justice to pay $14 billion for its past practice in mortgage-backed securities that led to the Great Financial Crisis. Many analysts expressed concerns that Deutsche Bank episode could ignite another round of financial crisis but in my opinion, this is unlikely. This is because the German bank is too big to fail and very likely, the EU will bail out the banking giant.

gold

As a wealth builder, it is …

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