SG Wealth Builder

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Month: February 2015

Gold; silver 

The Silver Bull Market: Four Investment Factors to Consider Before Buying Silver or Gold

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In Shayne McQuire’s The Silver Bull Market, he highlighted four important factors to consider before buying silver or gold:

1) Investment safety refers to your capital protection from the financial market risks. Most people always lament that owning silver or gold bullion does not provide dividend incomes. However, they don’t realize that precious metals allows you to remove wealth from the financial system. This is because gold and silver have historically been used as store of wealth and gold in particular, is seen as an effective tool to beat inflation. Take the current Euro crisis as an example. Greece is facing possible exit from the Euro because of its massive national debts. The country had been previously bailed out with a $275 billion international loan and is now asking for fresh fund of $10 billion euros in short term financing. Clearly, the country’s plight shows that the Europe economies are not doing well and holding on to the Euro currency might be risky as it could face possible devaluation if the crisis spreads across Europe.

Silver Bull Market2) Investment potential refers to the ability for the price of silver or gold to rise over the long term. It is interesting to note that while Warren Buffett disdains gold for its lack of utility, he views silver differently and even purchased 130 million ounces (at low price of $6) in the late 1990s, one fifth of the global production at the time. He would have made a lot of money in the period of 2008, the year of the worst global financial crisis in recent memory. This was because silver performed extremely well against other investments.

3) Liquidity risk refers to the ease of buying and selling silver or gold. This can be an important consideration as who would want to buy something …

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Stocks 

How to estimate fair value of a stock

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Many finance bloggers like to quote Warren Buffett’s saying “price is what you pay; value is what you get”. However, knowing this is one thing, practicing it is another matter altogether which requires some level of deep analysis. The fact is that you can’t determine the intrinsic value of a company just by staring at the figures stated in the quarterly or annual financial statements. According to MorningStar’s “Why Moats Matter”, there are generally two approaches when it comes to valuation concepts.

How do investors identify great companies? One of the simple tools to value company is through using earnings yield, or more commonly known in the investment community as Price/Earning (P/E) ratio. This simple method requires only current share price divided by the last 12 month’s earning. Companies with high P/E ratio are considered growth stocks.

There are pros and cons in using P/E ratio to measure the value of a company. Whilst this metric is relatively easy to calculate, this approach might not be appropriate for companies whose profits swing significantly from year to year. This is especially for for high growth stocks and cyclical companies like the airlines and IT companies.

Another approach of measuring the intrinsic value of a company is to determine the discounted cash-flow, or DCF. To do that, we need to establish that the Return on Invested Capital (ROIC) exceeds the Weighted Average Cost of Capital (WACC). This is because the fundamental aim of investing is to generate returns that exceed the cost of capital required. To derive ROIC, we need to divide Earning before Interest (EBI) by Invested Capital (IC): EBI/IC.

Next, we need to determine the WACC. From investopedia, the formula for calculating WACC is as follows:

Weighted Average Cost Of Capital (WACC)

  • Re = cost of equity
  • Rd = cost of debt
  • E
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Lippo Malls Indonesia Retail rust
Stocks 

Singtel reports robust Q3 earnings growth

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Singapore Telecommunications Limited reported group earnings results for the third quarter and nine months ended December 31, 2014. For the quarter, the company reported group revenue of SGD 4,427 million compared to SGD 4,263 million a year ago.

EBITDA was SGD 1,229 million compared to SGD 1,264 million a year ago. Underlying net profit was SGD 970 million compared to SGD 910 million a year ago. Net profit was SGD 970 million compared to SGD 872 million a year ago.

Free cash flow was SGD 669 million compared to SGD 569 million a year ago. Profit before EI and tax was SGD 1,285 million compared to SGD 1,236 million a year ago. Net profit rose 11.2% boosted by higher mobile data revenue and bigger contributions from its mobile partners in Australia and elsewhere.

The company delivered a solid third-quarter performance and successfully increased mobile data revenues with better networks, technology, content and service. Post-tax profit of its associates rose 29% to SGD 458 million, led by Telkomsel in Indonesia and Bharti Airtel.

Singtel

For the nine months period, the company reported group revenue of SGD 12,884 million compared to SGD 12,720 million a year ago. EBITDA was SGD 3,817 million compared to SGD 3,858 million a year ago. Underlying net profit was SGD 2,830 million compared to SGD 2,690 million a year ago. Net profit was SGD 2,843 million compared to SGD 2,754 million a year ago. Free cash flow was SGD 2,585 million compared to SGD 2,381 million a year ago.

Profit before EI and tax was SGD 3,966 million compared to SGD 3,756 million a year ago. Net debt as at December 31, 2014 was SGD 7.9 billion. The company provided consolidated earnings guidance for the year ending Match 31, 2015. Revenue from Core Business (comprises Group Consumer and …

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Property investment; Singapore market; 

Singapore private property prices decline for the first time since 2008

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According to data released by URA on 23 January 2015 for 4th Quarter 2014, the prices of private properties declined by 4% for the year of 2014 as a whole, compared to an increase of 1.1% in 2013. The report also highlighted that there were price decrease across all segments of the private residential property market, including the central region, which seen drop of 0.9%.

Source: URA

The current market trend is in line with what most analysts predicted last year and the market mood is expected to continue to be sour moving forward. With the slew of cooling measures firmly in place, many property investors are still adopting a wait-and-see approach. Because of this, for the whole of last year, developers sold 7,316 units, a figure much lower than the 14,948 units sold in 2013.

Source: URA

To make matter worse, if we include the 14,220 Executive Condominium (EC) units in the pipeline, there would be a total of 83,180 units in the pipeline. Also, based on the completion dates reported by developers, about 24,796 units (including ECs) will be completed this year and another 25,717 units (including ECs) are expected to be completed in 2016. Clearly, the data indicated that the supply is outstripping the market demand since 2010 as reflected below.

Source: URA

My view is that prices would still continue to decline gradually by 5-7% until end of this year. Even so, this does not mean that this is a buyer’s market because most developers did not slash prices and the additional stamp duty, coupled with the Total Debt Servicing Ratio (TDSR) Framework, continue to put off investors. So it is a stalemate for both investors and developers. Unless developers “price to sell” their projects, they may face difficulties in attracting serious buyers or investors to …

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Gold; portfolio management 

Why Singaporeans always lose money in gold investments

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Ignorance is one of the main reasons why investors consistently lose monies when it comes to investing because the biggest risk comes from not knowing what you are doing. The second factor is greed, which causes investors to lose sight of the risks involved in alternative or exotic investments. In the pursuit for higher returns for their monies, those who are greedy overlook or underestimate the risks involved. Thirdly, arrogance is the ultimate downfall for those who don’t respect the market. Always remember the golden rule that you can never win the market consistently, so avoid leveraging your investments if you don’t have the holding power. Yes, leveraging can increase the profit margins, but it can also backfire and widen your losses when the market turn against you.

In early February 2015, news broke out that more than 250 Singaporeans lost an estimated $35 million in yet another flopped gold buy-back scheme operated by Suisse International. Unhappy investors gathered outside the police headquarter trying to lodge police reports to the Commercial Affairs Department (CAD). It was amazing that after so many widely reported cases of gold buy-back scams, Singaporeans still fell prey to such schemes. There were a few who even claimed to borrow a few hundred thousands from the banks to invest. Some even encouraged their friends to invest in the programme.

In my view, it is unlikely that the investors would get back their hard-earned monies. Losing money from scams or flopped investment schemes is a painful feeling but investors who learn from this experience would come to understand how to invest in gold in the right way. The reason why Singaporeans consistently lost money in gold investments is because of the above factors – ignorance, greed and arrogance. Most investors do not know much about gold-back schemes …

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Moomoo Trading Futu
Stocks 

Investing in SingTel

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Nowadays, I am extremely fed up with M1 network services. No matter where I go, the 3G network coverage is terribly poor for my mobile phone. As a result, sometimes I could not receive messages from my loved ones and friends.

I suspect the drop in the network quality may be because I cancelled M1 4G subscription recently – previously it was offered to me free-of-charge when I renewed my subscription plan but M1 stated that it would charge me $10 extra from January 2015 onward. If not for the fact that I have to pay hefty penalty for cancelling my subscription plan contract, I would have terminated my line long ago.

From the consumer’s point of view, if I am not satisfied with a company’s services or products, I would not invest in their shares. For a knowledge-driven economy, internet data access is critical in Singapore and if M1 is unable to provide reasonable network service level, it don’t deserve any investment merits. Notwithstanding the dividend track records, if M1 is unable to retain customers, its economic moat will only erode over the long run.

SingTelThe saturated Singapore market and the fierce competition among the three telecommunication companies (SingTel, M1 and Starhub) reinforce the importance of economic moats in this sector. In terms of scale and market share, SingTel is considered the leader because it used to be a wholly government-owned carrier before it became a listed company. Having the scale, in terms of subscribers and network infrastructure, allows SingTel to lower its overhead costs per customer. For example, the more the subscribers on its network, the lower the marketing costs and interconnection fees.

Of interest to note is that the government restricts the number of players in the telecom services to three, and thus this allows the three …

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Gold 

Gold Bars traded without spread in Singapore – A world’s first!

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Below is a press release from BullionStar Pte Ltd, a Singapore registered bullion dealer offering GST exempted precious metals for savings and investment. The Singaporean government exempted precious metals in 2012 with the objective of making Singapore a trading, transit and storage hub of precious metals.

Gold Bars with No Spread!

Today, BullionStar launches a unique new opportunity to buy and sell physical 100 gram gold bars without any spread between the buy and sell price! The BullionStar 100 gram gold bar is the world’s first physical 100 gram gold bar to be traded with no spread.

The gold bars are minted by the Swiss LBMA accredited refinery Argor-Heraeus for BullionStar with the text “Money since 4000 B.C.” on reverse indicating that gold has been money for some 6000 years.

When you buy 10 or more of these gold bars there’s no spread between the buy and sell price whatsoever. For purchases of less than 10 bars, there’s a small spread of 0.6 % which is still significantly less than normal for 100 gram bars.

BullionStar Mint – Gold Bars with No Spread – 100 gram
    
The gold bars are minted by the renowned Swiss refinery Argor-Heraeus and comes sealed in a tamper-proof Certicard blister package.

The gold bars have an appealing design following the belief that gold is money indicated by the text “Gold since 4000 B.C.” on the reverse.

Sale with Reduced Prices on the following 2014 items:

Australian Gold Lunar Series 2014 – Year of the Horse – 1 kg – Reduced to only spot + 3.89 % – 1 coin left only
Australian Silver Lunar Series 2014 – Year of the Horse – 10 kg – Your chance to own a massive 10 kg silver coin – 4 coins left only
Australian Silver Lunar Series 2014 …

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Investments 

Singapore investors set to lose $70 million

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According to today’s Property Guru’s news article, 400 Singapore investors are suing Ecohouse for investment losses of up to $70 million. Apparently, the company had an office in Suntec Tower and managed to attract many first time retail investors hoping to make money from overseas property investments. Investors were sold investment schemes that promised to deliver “20% in 12-months on its S$46,000 social housing property investments”.

To put things into perspective, many of these Singapore investors are not your typical mom-and-pop types of investors who are uneducated and ignorant. Most of the victims are middle-class people with high incomes seeking to enhance their wealth through schemes that promise high returns within a short time frame. Usually the scheme involves pooling of investors funds and the money is typically managed solely by the operator. The first principle that investors should always bear in mind is that if something is too good to be true, it is! Retail investors should first of all check whether these schemes are regulated, instead of just focusing on the rate of returns.

Ecohouse managed to sell more than 1000 of their investment schemes in Singapore and other South East Asian countries in 2012 and 2013. That was the period when the property market was in blistering red hot form in Singapore and also coincided with the slew of cooling measures implemented by the government. Due to the unfavorable investment climate for real estates, Singapore investors hoping to make money from overseas real estate investments were lured by schemes that promised 15 -25% returns within a year. In fact, last year one of my friends had an interest in investing in Japan property market but I warned him that his lack of knowledge in the Japan market and the language barrier would pose a huge risk. …

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