SG Wealth Builder

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Month: November 2016

CSE Global’ share price crashed to six years low

dividend stocks

In a sign of how far the oil and gas sector has declined, systems integrator CSE Global’ share price crashed to six years low after the company announced a set of poor financial results for the quarter ended 30 September 2016. Profit after tax decreased by a whopping 52.7% year-on-year while revenue dropped 21.6% year-on-year.

I have previously covered on CSE global before in my blog. CSE Global operates in two business segments: process controls (74.0%) and communications and security (26.0%). The company used to be the electronics arm of Singapore Technologies (ST) but after a successful management buy-out in 1997, the company was listed in the Singapore Exchange in 1999. Following a string of acquisitions made over the last two decades, CSE Global has evolved into a technology giant with 30 offices across the world and generated more than 95% of its revenues outside Singapore market.

stock market

Currently, CSE derived more than half of its revenue from Americas and about one-third of its revenue from Asia-Pacific. In terms of business sector, CSE derived 76% of its revenue from the oil and gas sector. Therefore, even though CSE has diversified business segments spanning across oil and gas, infrastructure and mining, …

Boustead Singapore horrifying 2Q17 results

SG Wealth Builder Membership

One of Singapore venerable companies, Boustead Singapore, announced a set of horrifying 2Q17 results. Net profit for 2Q17 was 32% lower year-on-year, while 1H17 net profit was 30% lower year-on-year. The infrastructure-related engineering and geo-spatial services company was still making respectable level of profits but its recent performance decline reflects the depressing state of the oil and gas sector.

Strong balance sheet

Notwithstanding the challenging environment, Boustead Singapore managed to clock in an impressive operating net cash flow amounting $48.6 million, due to cash inflows from working capital. As a result, cash and cash equivalents increased $25.1 million to $296.7 million.

Current assets stood at $500 million while current liabilities was $231 million. The total borrowings are only $90.9 million. With such strong balance sheet, Boustead Singapore is poised to ride out the storm in the oil and gas sector. The Net Current Asset Value Per Share (NCAVPS) is about $0.32, while Net Asset Value (NAV) is $0.583.

Not surprisingly, the root cause of Boustead Singapore’s poor performance was the ailing oil and gas sector. Year-on-year, its energy-related engineering recorded a 73% decline in profit before tax, while its geo-spatial technology arm recorded a 17% decrease in profit before tax. …

The signal to buy gold bullion

BullionStar

This will be a quick post to provide an update on the latest global demand for gold bullion. According to World Gold Council, the demand for gold bar and coin was weak in Q3 due to the high gold price. Market research revealed that investors generally look for low gold price as the signal to buy gold bullion. This explains why the demand for gold bullion has been declining since end 2015.

Another cause for the weak demand in the third quarter was a lack of momentum in the price. Following the implosion of Brexit, gold price had surged to a high of USD1365 per ounce in July and maintained around that level for about three months. Long term investors were put off by such high price and this led to declining buying interest of gold bullion.

gold

Year-to-date demand for gold bars and coins amounted to 664.2tonnes, the lowest since 2009. However, demand may improve in Q4 as the price drop results in renewed retailer’s interest in the USA, India and China. The demand for physical looks set to increase in the aftermath of US President-elect, Donald Trump, who advocated trade protectionism. In fact, since his appointment, the US dollar …

Singapore rejected calls for unemployment insurance

financial destiny

During this year’s May Day rally, Prime Minister Lee Hsien Loon rejected growing calls for unemployment insurance. Instead, he reiterated that the government of Singapore has something even better for Singaporeans – schemes to enable Singapore workers to find jobs. Amid the massive number of retrenchments announced by foreign banks and oil and gas companies, such a move is inexplicable to me.

Firstly, I must clarify that I do not disagree with the government’s push for SkillsFuture. In promoting lifelong learning among workers, the movement enables Singaporeans to develop skill competencies relevant to succeed in the new economy. However, by telling Singaporeans that unemployment insurance is not needed is akin to a doctor advising his patient not to buy medical insurance and to stay healthy through regular exercises. Is this strategy even feasible in today’s challenging context?

financial destiny

We all know that life is fragile and can be unpredictable. Very often, even if you maintain a healthy lifestyle, it does not guarantee you against critical or even terminal illnesses like cancers. And what about unforeseen circumstances like workplace incidents or road accidents? There are simply too many circumstances that are beyond our control and it is naive not to insure our …

Is Sheng Siong’s dividend policy sustainable?

Sheng Siong

The recent Sheng Siong kidnap trial did not create a negative publicity for the supermarket operator. Instead, shares of the groceries retailer surprisingly stormed to a record high of $1.10 in October 2016. Listed in SGX mainboard only in 2011, Sheng Siong has risen from a penny stock to an established player with strong dividend track record. But in today’s challenging operating environment, is Sheng Siong’s dividend policy sustainable?

Sheng Siong had committed to pay out dividend of up to 90% of their net profits after tax. Note that this is a commitment made by management and the company is not legally obliged to fulfill this promise. Nonetheless, since 2011, company has consistently met this target and investors were rewarded for their continued support in this home-grown enterprise.

But should management review this dividend policy and reinvest some of the excess cash to grow the company? The total amount of dividends paid out had been between 2 to 4 cents and to be frank, the amount is nothing to shout about. Nonetheless, when Sheng Siong shares were trading at $0.30 to $0.40 in the early days of listing, the dividends looked attractive relative to the share price. But now that …

Will Straco Corp be de-listed from SGX?

SGX

With a slew of SGX listed companies being privatized recently, one wonders whether Straco Corp will be the next to be de-listed. The latest company to be delisted from the Singapore Exchange is Super Group, which is acquired by Dutch coffee firm JDE for a whopping $1.45 billion.

Will Straco Corp be de-listed?

Recently, Straco Corp purchased a total of 269,800 shares by way of on-market purchase for a total consideration of $206,000 in 3Q2016. These shares purchased were made out of the company’s capital and held as treasury shares. As of now, the company is holding 10 million treasury shares.

SGX

The key internal stakeholders, namely Straco Holding Pte Ltd, China Poly Group Corp and Straco (HK) Limited, hold about 75% of the company shares. Under such situation, the management may make an offer to minority shareholders in a bid to de-list the company. Thus, I am cautious about investing in Straco Corp. What if the offer is way below the price level at which I buy the shares? If this is to happen, I would have sustained losses in my investment.

Of course, all these are just speculative thoughts. But assuming Straco Corp made an offer of $0.80 per …

Protecting my best asset

SG Wealth Builder

This is my 600th article! As I celebrate another milestone for this blog, I can’t help but feel that time really flies. I started this blog in October 2010 to share my thoughts and insights on personal finances and investing. In a flash, it’s been six years already and there had been many changes in my journey.  Well, thankfully mostly positive ones. My main financial goal for this year is to go back to the basics and focus on protecting my best asset – my health.

Health is Wealth

It may sound very cliché but health is definitely wealth. As we grow older, protecting our best asset tends to take a back seat due to various commitments in life. Of course, making money and putting food on the table is important. And very often, I am guilty of being lazy when it comes to maintaining a healthy lifestyle. But I guess the wake-up call was my medical report in last year. My cholesterol level was too high – at 250 mg/dl.

In the last few years, I struggled to control my cholesterol level due to my work and family commitments. As a result, I neglected my exercise regime. …

Is it a good time to invest in OCBC shares?

dividend stocks

Hi SG Wealth Builder,

My comments on your post: OCBC Bank’s 3Q16 results beat market estimates. I’m not sure why it shows “failed to leave comment” on your article post. Hence, I drop you the comment via this mail.

My comments: I’m curious on your statement stating that your target entry for OCBC stocks will be at $6.00. Current trade price for OCBC share is $8.43. Based on the liquidity of SGX market, the price could hardly fluctuate in between price gap of around $2.00++. Not to say it’s impossible, as anything is still possible to happen in the stock market.

My concern here is if we were to wait for that target price of $6.00, and assuming the market goes smooth for the year. Then we will be missing out the 1 year opportunity for the stocks if the price never achieve the target price of $6.00 within the year, isn’t it? Since based on analysis the stocks growth is strong and having potential of profit as well. This is just my personal opinion and it’s always my pleasure to share and learn more from your analysis. Hope you have a great day!

Best Regards,

William

I received the …

Will SingPost turn the tide?

SGX stocks

When Simon Israel took over as SingPost’s Chairman in May this year, investors must be wondering whether SingPost will turn the tide. The group recently announced a set of disappointing 2Q16 results that saw net profit plunging 27.9% due to “transformational investments”.

Mr Israel, who is also the Chairman of SingTel, has been tasked to review the corporate governance and appoint a new CEO for SingPost. SingTel is the major shareholder of SingPost and currently holds 22.85% stake in the national postal service provider.

There was a leadership crisis in SingPost earlier this year and SingTel intervened after the exit of almost all of the top management. Even Chairman-designate Professor Low Teck Seng declined the offer to chair SingPost’s board, claiming that the “role is too demanding”.

Judging by the recent financial results, Mr Israel certainly needs to accelerate the search for the new CEO so as to set strategic directions and lead the management team. Currently, Mr Mervyn Lim is the Covering Group Chief Executive Officer. Since the exodus of the previous management team, SingPost share price has declined steadily from $1.69 to a low of $1.37. The share price only starts to show sign of stability recently and …

OCBC Bank’s 3Q16 results beat market estimates

OUE

Underpinned by strong performance from its wealth management and profit from life insurance, OCBC Bank delivered an excellent 3Q16 results that beat market estimates. The oldest bank in Singapore reported a net profit after tax of S$943 million for the third quarter of 2016. This was 5% above S$902 million a year ago and 6% above S$885 million the previous quarter.

A deeper review of OCBC’s financial results revealed more interesting insights. Net interest income of S$1.23 billion was 6% lower as compared to S$1.32 billion the year before, driven by lower loan volumes and net interest margin. As at 30 September 2016, customer loans were S$209 billion or 2% lower than the year before, led by a decline in trade-related lending to Greater China, which offset an increase in housing loans and other consumer loans.

Net interest income is the difference between the revenues derived from interest-bearing assets (customer loans) and the cost of servicing (interest-burdened) liabilities. Thus if the US Fed interest rates increased and induced the local banks to heighten the bank saving rates, OCBC may be negatively impacted because of the lower margin from net interest income. Also, the current slowing market results in lower loan …

Unable to find jobs in Singapore

DBS share price

With big companies like SPH, Keppel Corp and various investment banks announcing retrenchments, this is definitely a dreadful period of time to look for jobs in Singapore. In today’s context, experience and qualifications can only get you so far. So why is it that many Singaporeans are unable to find jobs in Singapore?

Is it a case of skills mismatch in today’s new age economy? Are Singaporeans too complacent and choosy? Is it down to the lack of selling skill during job interviews? Or have we priced ourselves out of this competitive market? Too many foreign talents fighting for positions that Singaporeans can perform?

I would say none of the above is exactly true. Most Singaporeans are unable to secure a job is because many downplayed or ignored the power of networking. In fact, networking is not only a powerful skill for securing a dream job, it is an important skill that entrepreneurs must possess in order to build their businesses. When you have a quality network, jobs will come to you, and not the opposite.

wealth

Contrary to what most people thought, networking isn’t about promoting yourself or cold calling your business contacts when you are being retrenched …

The departure of K1 Ventures’ Steven Green

dividend stocks

All good things must come to an end. After 15 years of heading K1 Ventures, one of the largest listed venture capitalists, Steven Green unexpectedly announced his departure a couple of weeks ago. I am writing this article to pay tribute to one of the most talented investment wizards in Singapore.

K1 Ventures used to be a shipping company in the 1970s and adopted its current name in 2000 after a series of business consolidations. The company was looking at transforming its scope of activities to include a portfolio of technology and non-technology companies. At that point, Steven Green was the US Ambassador to Singapore and had an outstanding reputation for being a business leader. Subsequently, Steven Green was appointed to be CEO on 7 September 2001, just four days before the 9/11 terrorist attacks.

stock market

K1 Ventures Business Strategy

The fact that K1 Ventures’ board of directors looked to US Ambassador indicated that the company intended to seek opportunities in the United States. The terrorist attacks in 2001 certainly threw up a lot of bargain buy opportunities for K1 Ventures. Throughout the years, Steven led his team to make a series of notable acquisitions in USA – Helm Holding …

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