sgwealthbuilder, Author at SG Wealth Builder

Money management; personal finance; Investment

Scary truth about accredited investor rule

March 8, 2017 sgwealthbuilder 916 Views 9 Comments

As an investment blogger, my commitment is to deliver quality content so that readers can benefit from reading my blog. Beyond this, I also hope to build a community by engaging my readers. Thus, if you find this article useful, please email subscribe to my blog for free or share your thoughts in the comment block. Today, I will share the scary truth about accredited investor rule in Singapore.

I learned about the accredited investor rule a few years ago from a local entrepreneur who worked in the financial sector for many years. He candidly shared with me his experience as a wealth manager and touched on how the industry made money from investors based on this rule.

I have previously written about this rule in this blog but apparently many readers still have many doubts about it. You may check it out here.

Make your money work hard

Like many people, I share the same aspiration to enjoy the good life through building wealth. In this regard, my conviction is that investing offers the possibility of a ticket to financial freedom.

But have you ever wondered why so many Singaporean investors lost big sum of money in financial products like Minibond Notes, High Notes 5 and Pinnacle Series 9 and 10 Notes back in 2008?

Stocks

Analysis on Raffles Medical Group

March 4, 2017 sgwealthbuilder 1659 Views 12 Comments

On 20 February 2017, Raffles Medical Group announced a record revenue of S$473.6 million for the year ended 2016, demonstrating its ability to maintain growth amid challenging economy. The result was impressive because it presented a 15.4% growth from 2015, driven by positive contributions from all business divisions.

Investment moats

Raffles Medical Group is one of my favorite stocks which I am not vested in but am constantly monitoring its progress for future investment purposes. Being one of the leading private healthcare service providers in Singapore, this company sets itself apart from the rest of its competitors with its strong investment moats.

Raffles Medical boosts RafflesHospital as its flagship, offering a wide range of specialist medical and diagnostic services for both inpatients and outpatients. Raffles Medical clinics form one of the largest networks of private family medicine centres in Singapore while RafflesDental is a team-based dental group in Singapore comprising of a specialist dental practice at Raffles Hospital and a network of general dental clinics. RafflesHealthinsurance provides healthcare insurance to corporate and individual clients.

However, Singapore market is too small and with local competition heating up over the past few years, it is inevitable for Raffles Medical to expand overseas to seek growth.

personal finance

Online frauds in Singapore

March 1, 2017 sgwealthbuilder 788 Views 0 Comments

Recently, SG Budget Babe wrote a very interesting article on online frauds in Singapore and I thought it would be useful to share a quick post on the same topic.

But before that, it is important to note that like many fraud victims, I share the same perspective and argument if I am in their shoes. But for argument sake, this article shall attempt to strike a balanced viewpoint from the perspective of the service provider (the bank) and the consumer. Hopefully readers can benefit from this sharing and avoid the undesirable fate of being a fraud victim.

Understanding the law

In Singapore, the law that governs electronic transactions is the Electronic Transaction Act (ETA). This law covers two important components of online transactions – Electronic Signature and Secured Electronic Signature. For an electronic signature to be legally recognized, it needs to be able to authenticate the person signing the document and ensure integrity of the document signed. However, if the service provider implemented secured electronic signature, the law automatically presume that these requirements are fulfilled.

The 2-FA authentication used by many local banks is deemed as a form of secured electronic signature and the system works based on “what you know (PIN or password)” and “what you have (two factor authentication token)”.

Gold; portfolio management

Divested my physical gold

February 24, 2017 sgwealthbuilder 934 Views 3 Comments

Recently, I partially divested my physical gold for 10% yield amid the rally in gold price. The reason for selling my gold is not because I lost faith in it but solely to consolidate my funds to prepare for the impending Temporary Occupation Period (TOP) for my Executive Condominium.

The average annual yield from my physical gold investment is about 3.33%. Although the return is nothing to shout about, it is still above the prevailing bank interest rates. It is also above the average inflation rate in Singapore for the past three years.

Interestingly, the inflation rate in Singapore has dropped drastically from a high of nearly 6% in 2012 to negative 1% in the middle of last year. Is negative inflation good for Singapore? Absolutely not the case. If negative inflation persists, it may lead to deflation and causes the economy to spiral out of control. Japan’s economy is a classic example. The country has been struggling with deflation for the past 20 years and has to implement Negative Interest Rate Policy (NIRP) to revive the economy.

The slide in inflation rate coincided with a corresponding decline in gold price, which peaked in 2012 and suffered a slump till 2016.

personal finance

Three things about growing wealth

February 22, 2017 sgwealthbuilder 1224 Views 0 Comments

This will be a short post to capture my thoughts about growing wealth in Singapore. In light of the recent Budget announcements, water prices will hike by 30% in two phases over two years. Thus, it is not matter of choice for Singaporeans to consider growing their wealth to beat the cost of living. All Singaporeans must start the journey as early as possible.

Stop tracking expenses

Early on in my wealth journey, I confess that I did track my monthly expenses and personal income religiously without fail. But I had stopped doing so after three years because I noticed there were no significant improvements in my personal cash-flow. Instead of enhancing my wealth, the quality of life inadvertently dropped as I suffered from guilt pangs whenever there were unexpected expenses incurred from friends’ outings or wedding dinner red packets.

After a while, I began to realize that my life should not be controlled by a spreadsheet. I need to be larger than life and start living a life. After all, we only live once. We are born into this world to enjoy, not suffer. With the change in mindset, I started to empower myself by focusing on how to grow wealth through enhancing my earning ability.

Stocks

Research report on SIA Engineering Company

February 21, 2017 sgwealthbuilder 1020 Views 1 Comment

On 3^rd February 2017, SIA Engineering Company announced 3Q results for 2016/17. It wasn’t exactly an impressive set of results but the data certainly reveals some interesting aspects of the company’s performance against the backdrop of a challenging operating environment for the maintenance, repair and overhaul (MRO) sector. This will be another research report on SIA Engineering Company (SIAEC).

Traditionally, SIAEC has a solid business model because it provides maintenance, repair and overhaul (MRO) of aircraft, engines and related components and offers the complete MRO suite of services. The business is recurring and with its vast network of joint ventures, the MRO stalwart managed to build an impressive investment moat in Singapore, rivalled only by local competitor, Singapore Technologies Aerospace.

However, the emergence of new generation aircraft with high reliability looks set to disrupt SIAEC’s business model because of the decline in demand due to extended maintenance intervals and lesser work-scope. In light of this, the management has started to position itself for the future through several initiatives.

Given that its joint ventures contribute a substantial amount of profits consistently to SIAEC, the management rationalized its portfolio of joint ventures periodically to extract value for shareholders. Some of these initiatives include restructuring and merger of associated entities and development of capabilities to support new generation aircraft.

Stocks

Will Ezra sink OCBC share price?

February 16, 2017 sgwealthbuilder 1356 Views 1 Comment

On 14 February 2017, OCBC reported a net profit after tax of S$3.47 billion for the financial year ended 31 December 2016, a decline of 11% compared to last year. Not surprisingly, the decline in earnings was due to an increase in net allowances for loans, mainly in the ailing Oil and Gas (O&G) sector. The bank has $15.8 billion exposure to this sector and Non Performing Loan (NPL) has crept to $1.3 billion. Will Ezra sink OCBC share price?

Ezra is an offshore contractor and provider of integrated offshore solutions to the global O&G industry. The Group has three main business divisions, namely Subsea Services (“EMAS AMC”), Offshore Support and Production Services, and Marine Services offering a full range of seabed-to-surface engineering, construction, marine and production services globally.

The struggling Ezra recorded a net current liability position of US$887,220,000 for the financial year ended 31 August 2016. It seems that Ezra has miscalculated the business risks and this led to various obligations owed to financial lenders and trade creditors. The troubled company recently flagged that it could possibly write down $170 million worth of investment due to problems with one of its joint ventures, EMAS Chiyoda Subsea.

Amid all these troubles, Ezra announced that it is undergoing a restructuring exercise to “preserve value for the Group”.

Trading

Why Currency Values Drop After Political Change

February 14, 2017 sgwealthbuilder 992 Views 0 Comments

Whenever there is political change, there is currency value change. Whether such political change is for the better or worse is often a matter of opinion, but almost every time currency values seem to drop after such a change. Most recently the US dollar has experienced its worst start to a year in decades, mainly due to President Trump taking residence in the White House. There are many reasons why political changes usually lead to a fall in the nation’s currency value.

Elections and Volatility

In the run-up to any election, currency values always fall. This is because traders view it as a time of political instability, with a greater chance of the currency falling leading to a sell-off by many traders. There will likely be different financial policies from all those up for the election, meaning investors and traders will be uncertain about what the future for a currency will hold until the outcome of the election is revealed. Trade can also slow down during elections, further weakening a currency.

Changing Monetary Policies

When a new leader or political party takes charge, there is often a fresh monetary approach. This is a strong driver of a nation’s currency and can direct it in a new way.

Gold; portfolio management

Buy gold bullion now?

February 11, 2017 sgwealthbuilder 823 Views 6 Comments

In 2016, Brexit set fire on gold and ignited a rally in gold price. In 2017, it was newly elected US President, Donald Trump who ignited an unexpected gold price rally with his controversial policies. Should wealth builders buy gold bullion now?

In my own opinion, every leader is entitled to defend his country’s national interests. Whether Donald Trump’s policies, which have been viewed by many critics as being protectionism, will lead to a stronger United States is subject to debate.

But Trump’s actions certainly create a lot of market uncertainty. And one of the things that investors hate most is uncertainty. Due to this, investors flee for safety and buy gold bullion. Since Donald Trump took office, gold price has rallied to USD1233 per ounce. On the current form, gold price is certainly very bullish and looks to rise further in the short-term.

Based on data released by World Gold Council, gold has a mixed performance in 2016. While the price has recovered from a low of USD1067 per ounce since end 2015, demand for gold bar and coin has dropped by 2% year-on-year. This is because many investors has been put off by the high price of gold in 2016.

Self improvement Trading

Loss aversion

February 8, 2017 sgwealthbuilder 850 Views 0 Comments

For many wealth builders, winning $1000 in the stock market is very different from losing $1000 in share investments. In fact, many research studies have demonstrated that the impact arising from losses is twice as powerful as gains. This strange phenomenon is known as loss aversion.

Coined by Amos Tversky and Daniel Kahneman, loss aversion explains why most people prefer avoiding losses to making gains. Understanding this form of economic behavior may help us become better investors because it can shed some light on why people make irrational decisions consistently.

Our brains are geared to hold on to what we own because in ancient times, our ancestors survived by holding on to resources. As a result of such human evolution, our instinct tells us to avoid making losses at all costs. But what we don’t realize is that in doing so, we often make flawed decisions and end up being financially hurt. This is because times have changed and modern day economics have become much more complex, so we cannot afford to apply the same loss aversion mentality when managing money issues in today’s context.

Most stock investors hate cutting losses because most of us has a tendency to be emotionally attached to what we own as compared to what we do not own.

Stocks

Analysis on Suntec REIT

February 5, 2017 sgwealthbuilder 1152 Views 2 Comments

The rationale for this stock research arises from my recent decision to invest in a reputable REIT with a consistent track record of cash distribution per unit (DPU). Another factor of consideration is the quality of the management in strategizing growth for the company. Suntec REIT seems to fit the bill and hence, this shall be my first analysis on this venerable SGX stock.

New chapter for Suntec REIT

Listed on 9 December 2004 on Singapore Exchange mainboard, Suntec REIT is the first composite REIT in Singapore, owning income-producing real estate that is primarily used for retail and/or office purposes. 2016 had been an eventful year as the company expanded its footprint in Australia and navigated through the soft retail market reasonably well. For 2017, the change of CEO of the Manager will herald a new chapter for Suntec REIT.

On 2 December 2016, it was announced that Mr Yeo See Kiat would retire as CEO with effect from 31 December 2016. Mr Yeo has been CEO of the Manager of Suntec REIT for 10 years and has steered the company through significant milestone events through the decade. Some of his notable achievements include overseeing the $410 million asset enhancement of Suntec City, divestment of Park Mall for $411 million and Suntec REIT’s foray into Australia.

Stocks

Analysis of SingPost

February 1, 2017 sgwealthbuilder 1076 Views 4 Comments

On 29 December 2016, SingPost finally unveiled a new Chief Executive Officer (CEO) through appointment of Mr Paul William Coutts who was previously from Toll Global Forwarding, one of the five divisions in the Toll Group. On the basis of the 2Q2016 financial performance, the new CEO will have his work cut out for him. This article contains my analysis of SingPost.

Suffice to say, the business model has been disrupted by digital technologies, which led to declining traditional letter mail volumes in recent years. 2Q2016 financial results revealed that SingPost is a company still “work-in-progress”. Underlying net profit for Q2 fell 27.9% which the company attributed to “transformational investments and challenges”. Total expenses increased by 23.7% due to higher expenses in the eCommerce business and costs related to the new Regional eCommerce Logistics Hub.

As the management embarks on its business transformation journey, the incoming CEO has an unenviable task of leading an institution that has faltered in recent years. While the company is still making profits, operating profits across all its business units declined by doubt digits compared to last year. Its eCommerce unit lost $6.8 million and $10.3 million in Q2 and H1.

The eCommerce unit will likely to continue burning cash as SingPost seeks to enhance the eCommerce logistics capabilities to better serve the region growing online retail markets.

Stocks

ISOTeam secured a series of new contracts

January 28, 2017 sgwealthbuilder 886 Views 5 Comments

Despite the challenging economic condition, ISOTeam secured a series of new contracts worth $22.7 million, including a third and single largest renewable energy installation project, worth around $6.3 million.

ISOTeam is an eco-conscious Repairs and Redecoration (“R&R”) and Addition and Alteration (“A&A”) specialist in Singapore. I have previously covered this company in my blog before. Founded in 1998 and listed on Catalist of the Singapore Exchange, ISOTeam has successfully undertaken more than 300 public and private sector R&R and A&A projects for more than 3,000 buildings and counting since inception.

With market capitalization of only $121 million, ISOTeam is considered a small player in SGX. However, the company differentiates itself from its competitors by branding itself as an eco-conscious enterprise. They integrate green methodologies in their R&R, A&A and Others projects, and actively work with strategic partners and technology companies to develop and commercialise green solutions / products.

Its foray into the renewable energy segment is also in line with the government’s SolarNova programme, which aims to have solar power contribute 350 megawatt-peak (MWp) to Singapore’s energy supply by 2020. There were 400 HDB blocks with solar panels in 2015, and the programme targets to have around 5,500 blocks by 2020, or clean energy for 55,000 four-room flats annually.

Trading

Developing your growth mindset

January 25, 2017 sgwealthbuilder 671 Views 0 Comments

In response to my previous article “Surbana terminated 50 staff”, one reader blasted me for writing a disguised advertorial. I was a bit disappointed because my intention of writing that article was actually to encourage readers to develop a growth mindset. If you are interested in developing your potential, please do read on.

The term “growth mindset” was coined by Dr Dweck, who discovered that our mindset can shape our understanding of learning. Broadly speaking, it means that we can actually grow our brain to enhance our performance in life and indirectly increase our wealth. Arising from this, we can either choose to have a fixed or growth mindset.

Some people believe that human beings are born with a certain level of intelligence and thus, assume that they can’t do much to change their destiny in this respect. This mentality is called “fixed mindset”, which curtails learning opportunities because people who have fixed mindset choose to believe they cannot change for the better.

On the other hand, there are people who believe in growing themselves through learning. They are not afraid of learning new things and have a knack of learning from their mistakes. Such people possess “growth mindset” and are often motivated by success.

Stocks

OCBC considering sale of United Engineers Ltd

January 20, 2017 sgwealthbuilder 1062 Views 8 Comments

OCBC started the year with a bang by announcing that it is considering the sale of United Engineers Ltd (again). Two years ago, the local bank had tried to divest United Engineers (UEL) but the deal did not materialize.

On 7 January 2017, OCBC and its subsidiary, Great Eastern Holding (GEH), appointed Credit Suisse (Singapore) Limited as their financial adviser in connection with the strategic review encompassing the whole of the combined stakes of OCBC Bank and GEH in UEL and WBL.

Both OCBC and GEH hold about 30% of UEL. If the move is successful, it will be a windfall for OCBC as the market capitalization of United Engineers is about $1.7 billion. In view of this, investors immediately bought into the news and chased OCBC share price to nine month high of $9.38.

I believe this time round, the sale of UEL is imminent as the company had been disposing its assets for the past nine months. This included the 42.2% effective interest in Multi-Fineline Electronix, Inc. (MFLEX); 62.6% effective interest in Suzhou Speedling Co., Ltd.; 100% interest in UES Holdings Pte. Ltd.and its subsidiaries and associates; 100% interest in UE Envirotech Pte. Ltd. and its subsidiaries; 100% interest in UE Asia Pacific (Beijing) Co.,

Career management

Surbana terminated 50 staff

January 17, 2017 sgwealthbuilder 803 Views 2 Comments

Temasek Holding’s Surbana Jurong terminated about 50 staff who were deemed as “poor performers”. The layoffs occurred a couple of weeks ago, just before the Chinese New Year.

Surbana has stressed that the terminations were not retrenchment exercise. The staff were let go simply because of their poor performances.

It is indeed a sad day for Singapore. Some people may argue that many of the affected staff are foreigners and hence there is no need to feel sorry for them. But the issue is not whether local Singaporeans or foreign talents are being laid off. The issue is whether Singapore employers are beginning to lose their moral compass.

Make no mistake, bottom-line is of course important for every enterprise. Obviously companies are entitled to sack staff who cannot perform. But surely there should be ample time or few month’s grace period for the affected staff to improve? And surely there should be more sensible or even humane time to fire them? Would it even hurt their financial positions to postpone the firing after the Chinese New Year period?

Losing your job is a very terrible feeling. It not only hurts your ego but also damages your wealth. To lose a job right before the festive season is even worse.

Stocks

Will Noble Group do an OSIM or Swiber?

January 15, 2017 sgwealthbuilder 1358 Views 12 Comments

Will Noble Group do an OSIM or Swiber Holdings? The embattled commodity trader is currently at a cross-road as many investors wonder if it can pull off a dramatic recovery.

Once a blue chip stalwart in Singapore stock exchange, the Hong Kong based company is now trading at penny stock price level. The free fall of Noble Group share price wiped off billion of dollars from its market capitalization value and it would have being included in SGX’s watchlist had the Minimum Trading Price rule not being revised recently.

Crisis for Noble Group?

One of the worst fears among investors must be Noble Group becoming the next Swiber, which collapsed and went under judicial management in 2016. The fall of Swiber was due to the prolonged slump in oil prices causing oil and gas companies to cancel infrastructure projects. Another factor that led to Swiber’s shocking downfall was the amount of debts it took on. It was reported that it owed money to 10 banks and DBS alone had about $700 million worth of loan exposure to Swiber.

Those who invested in Swiber shares or its junk bonds are unlikely to get back their hard-earned money.

Similar to Swiber, Noble Group endured a challenging 2016 due to the collapse of commodity prices and the slowdown in China’s economy.

Gold; portfolio management

Golden start for gold price

January 12, 2017 sgwealthbuilder 777 Views 2 Comments

What a golden start for gold! Since the beginning of 2017, gold went on a rampage and increased in value by 6% within 2 weeks. This will be a short post to capture the latest trend on gold price.

What actually fuelled the surge in gold price? Many analysts could not really pinpoint the real cause but it certainly seems like 2016 all over again. Back then, when the US Federal Reserve raised interest rates for the first time in many years at the end of 2015, gold price also dramatically rose in value.

Will history repeats itself for gold price? The current trend indicates so. Since US Federal Reserve raised interest rates by 25 basis points on 14 December 2016, gold price crashed to USD 1129 per ounce but subsequently recovered and spiked to USD 1200 per ounce in 2017.

Conventional wisdom indicates that once interest rates in USA increased, gold price will likely drop because the precious metals does not yield interest. The opportunity cost of holding physical metal under such circumstances made cash more appealing. However, the world has evolved and things have become more complicated.

In fact, even though US has increased interest rates, it does not mean big economies like the European countries, China and Japan will follow suit.

Stocks

Formidable challenger for Challenger Technologies Limited

January 6, 2017 sgwealthbuilder 1074 Views 1 Comment

Crisis? What crisis? SGX mainboard-listed company, Challlenger Technologies Limited, appears unfazed in the aftermath of the closure of its 53,000 sqft megastore at Funan DigitaLife Mall since December 2015. Last year has been challenging due to the weak economic sentiment but on the basis of the 3Q2016 financial results, it seems that Challenger managed to reduce the impact of its megastore closure.

Last week. I visited the Challenger Technologies store at Bedok Point mall to purchase a software and was very impressed by their staff’s customer service and efficiency. Prior to the trip, I had done some research online and thus only spend less than 5 minutes in the shop. The whole experience had been positive but in the face of stiff competition from online and brick-and-mortar players in the market, Challenger faces a daunting journey ahead.

While Challenger tried to downplay the significance of the closure of its Funan DigitaLife mall through the rapid expansion of heartland retail stores, it has since moved on and announced a new flagship store at Bugis Junction. Spanning almost 14,000 square feet in space, the basement 1 location is set to open by the second quarter of 2017. In addition to complementing the existing Challenger store at level 3 Bugis Junction, the new flagship store will add to the Group’s overall portfolio of almost 50 stores island-wide.

Stocks

SATS flying high in 2016

January 1, 2017 sgwealthbuilder 924 Views 1 Comment

While the rest of the SGX-listed companies huffed and puffed their way through 2016, SATS was flying high. The share price of this blue chip darling even stormed to a record high of $5.11 in September 2016, setting a gold standard among fellow STI players. Amid the sluggish SGX market performance, it seems very strange that its stock has been so bullish. Just what did the management do that set the company apart from the rest?

The key reason for SATS’ strong performance might be due to its investment moats in two niches – Gateway Services and Food Solutions. Their Gateway Services encompass airfreight handling, passenger services, ramp handling, baggage handling, aviation security services, aircraft interior and exterior cleaning as well as cruise centre management. Food Solutions include airline catering, institutional and remote catering, aviation laundry as well as food distribution and logistics.

Being a dominant player in provision of gateway services and food supplies, SATS derived most of its revenue from the aviation sector. For 1H16/17, revenue of $752.4 million came from aviation sector, while only $110 million of revenue were derived from non-aviation and corporate.

SATS has many associates, joint ventures and subsidiaries but they contributed only $23.7 million profit in 1H16/17.

Stocks

White Knight for Noble Group

December 29, 2016 sgwealthbuilder 1649 Views 3 Comments

As 2016 comes to an end, it is timely to review the significant developments of some of the popular stocks listed in Singapore stock exchange (SGX). Beleaguered Noble Group certainly is in the hit list as it made the headline news for all the wrong reasons. Is the company really doomed or would there be a White Knight for Noble Group?

The free fall of Noble Group’ share price represents one of the most dramatic declines in modern-day equity market. Listed in Singapore stock exchange back in 1997 and backed by China’s sovereign wealth fund, China Investment Corp (CIC), the commodity trading company used to be one of the revered stocks in SGX. Make no mistake, at one point, it was even trading at a record high of $2.40 per share back in 2004. Now languishing at $0.16, those giddy days must seem so surreal to long-term investors of Noble Group.

In fact, Noble Group was still in the elite Straits Times Index (STI) earlier this year but got booted out of the list in March 2016. Then again, being included in the prestigious STI should be the least priority for the management at this moment because there are more pressing problems to deal with.

Gold; portfolio management

Crazy year for gold price

December 26, 2016 sgwealthbuilder 704 Views 0 Comments

It has been a crazy year for gold price! Towards the tail end of 2015, gold price dramatically fell to USD1054 per ounce upon the announcement of the interest rate increase by US Federal Reserves. Since the start of 2016, global investors were stunned when gold price surged to USD1350 per ounce within seven months.

The surge in gold price was due to the sudden crash in the China stock market which caught many by surprise. The massive sell-off in the stock market of the world no.2 economy triggered tremendous panic and caused many investors to flee for safety. As gold is traditionally seen as a safe haven for investments, gold price stormed to USD1237 per ounce. A majestic fine run indeed!

Gold price was given further boost in mid-year as a result of the fall out from Brexit. As the epicenter of the event in London unfolded, gold climbed to USD1360 per ounce at one point. Government officials, analysts and economists were all dumbfounded by the results as most of them expected UK to remain part of European Union. In the midst of the chaotic situation, Brexit sparked an explosive gold price surge once again.

Somehow after the event, gold price peaked and had a free fall, reaching USD1255 per ounce.

Stocks

SIAEC share price crashed to 5 year low

December 23, 2016 sgwealthbuilder 1122 Views 0 Comments

SIAEC share price crashed to 5 year low! Amid the global economic uncertainties and challenging aviation outlook, SIAEC’s performance continued to slide as revealed in the financial results for 1HFY2016/17. This article contains my latest SIAEC stock analysis. I am not vested in this counter but have been monitoring this maintenance, repair and overhaul (MRO) stalwart for many years.

Operating profit for 2nd quarter declined to $24.5 million as compared to $27.0 million last year. Cash flow from operations was a negative $7.4 million as compared to positive $2.4 million in the previous year. The dismal quarter results reflected the massive challenge faced by the management in navigating SIAEC through this storm.

It is certainly not business as usual for this MRO powerhouse as airlines are buying new aircraft like A350, B787, A320NEO and B737-MAX to replace their older fleets. These new aircraft require less maintenance checks and longer maintenance task intervals, especially in the first few years of entry into service. Arising from this new trend, the MRO sector in Singapore has seen a decline in business for the last 2 years. This is because about 90 per cent of the local aerospace work is tied to aircraft maintenance and repairs.

salaries

Salary increase

December 21, 2016 sgwealthbuilder 935 Views 5 Comments

On 12 December 2016, National Trade Union Congress (NTUC) announced that cleaners will receive yearly salary increases from 2017 to 2019 for a total of S$200. Various government agencies like Ministry of Manpower, National Environment Agency and Workforce Singapore said the salary increase will benefit more than 40,000 resident cleaners employed by 1,200 cleaning businesses.

For an industry that faces high turnover rate due to the perceived unsustainable low wages, this is a good move by the government. According to NTUC, the median salary for full-time cleaners was S$1,100 and gross wages were S$1,200 in 2015. With such low salaries, it is hard to imagine how a cleaner can live a quality lifestyle in an expensive city like Singapore.

For the longest time, our society has always downplayed the contribution of cleaners. The general perception is that due to the low skills required for their jobs, they don’t deserve a respectable level of salary or salary increases (if any) for that matter. But we seem to neglect the fact that cleaners play an important role in maintaining Singapore’s reputation as a clean and green city. We need them to do the dirty jobs of clearing rubbish chutes and cleaning toilets. If the salary is too low, how can the industry attract workers, especially Singaporeans, to do these dirty jobs?

Money management; personal finance; relationship

CPF’s Home Protection Scheme (HPS)

December 19, 2016 sgwealthbuilder 1258 Views 3 Comments

The most significant big-ticket item for my family in 2016 was the purchase of our Executive Condominium (EC), The Terrace, at Punggol Waterway. Like many Singaporeans, being able to upgrade to an EC is our Singapore Dream. Arising from this purchase, we had taken a quite a big mortgage loan from one of the local banks and in the course of doing so, I did some research on mortgage loans. In this article, I will share some of my knowledge on CPF’s Home Protection Scheme (HPS).

HPS eligibility

More than 80% of Singapore residents live in HDB flats. If you are using your CPF savings to pay your monthly housing loan instalments on your HDB flats, you are required to be insured under HPS. Note that HPS does not cover private residential properties, such as executive condominiums (ECs) or privatised Housing and Urban Development Company (HUDC) flats. Because of this exclusion clause, my family is not eligible for HPS cover.

For the current HDB flat that my family is living in, it is covered under the HPS although the loan is from a commercial bank. As our loan amount is only $150,000, the annual premiums is very affordable and can be deducted from my CPF Ordinary Account.

Self improvement

Inspirations from a Singapore finance blogger

December 17, 2016 sgwealthbuilder 1098 Views 4 Comments

In recent years, there has been a proliferation of finance bloggers joining the scene. Many of them are good bloggers who write better than me. But in my humble opinion, what differentiates a great blogger from a good blogger is his ability to create inspirations among readers. In one of his latest articles, Singapore finance blogger, “Got Money, Got Honey” (GMGH), inspired me.

In his article, GMGH articulated very well his philosophy of giving. I was very impressed by his structured thought-process because although most people donate to charity, not many can think so deeply as him. It also set me thinking about the future direction of my own blog.

As a Singapore finance blogger, it was never my intention to become an influencer in the first place. My original idea was to create a crowd-source platform that attracts readers to contribute ideas on various wealth building ways. Over time, SG Wealth Builder has evolved into a wealth blog that focuses mainly on stock analysis, gold bullion and career management.

There are many Singapore finance bloggers who write about their dividend income reports and portfolio performance. They contribute interesting articles but I seldom read such articles because I prefer to look at those with deep analysis on stocks.

Stocks

Singtel increased investment moats aggressively

December 13, 2016 sgwealthbuilder 1160 Views 2 Comments

In August 2016, Singtel increased its investment moats aggressively through the acquisition of stakes in Thailand’s Intouch Holdings Public Company Limited (Intouch) and India’s Bharti Telecom Limited (Bharti Telecom) for a total consideration of S$2.47 billion from parent company, Temasek Holding.

This transaction will be funded through internal cash, short-term debt and proceeds from a share placement of 386 million new Singtel shares to Temasek totalling S$1.605 billion at a price of S$4.16 per new share.

Rationale for acquisition

Investors may think that this is just one of those asset transfers between the two Singapore entities but I view this development differently. To put things into perspective, it is difficult for Singtel to directly acquire foreign telecommunication companies because these are high growth entities and most governments are generally reluctant to let foreign entities own 100% such strategic assets. By purchasing these stakes in Intouch and Bharti through Temasek, SingTel can increase its regional market share without facing foreign regulatory resistance.

Being a regional player, Singtel derived only 29% of its net profit from Singapore in FY2016. The majority of its revenue and profit are driven by its regional joint associates because the management is smart to acquire strategic stakes in telecommunication companies with either number 1 or 2 market share in regional countries.

Stocks

Analysis on Jumbo Group’s shares

December 8, 2016 sgwealthbuilder 1114 Views 3 Comments

Listed in SGX’s Catalist board on 9 November 2015, Jumbo Group has Temasek Holding subsidiary and Osim boss among its investors. With such strong support from institutional investors, it is no wonder that its share price surged from $0.25 to the current $0.65. Jumbo Group’s shares is definitely on form but what will be its outlook for 2017?

The one thing I like about Jumbo Group is that its business is simple and easy to understand. Basically as a multi-concept dining food and beverage company, Jumbo has a total of 15 F&B outlets in Singapore and 3 F&B outlets in the PRC, under 5 restaurant brands – Jumbo Seafood, JPOT, NG AH SIO Bak Kut Teh, Chui Huay Lim Teochew Cuisine and J Café. It also manages 1 Singapore Seafood Republic outlet.

As a consumer, I have also patronized many of Jumbo restaurants before and [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Gold; portfolio management

Buy gold bullion in Singapore

December 3, 2016 sgwealthbuilder 776 Views 2 Comments

Since Donald Trump became US President-elect, gold price has been falling for the past few weeks. Amid the price weakness, wealth builders must be wondering whether to buy gold bullion in Singapore now.

To put things into perspective, there is a dichotomy between the price of gold and the actual demand for the precious metal. Most economist would tell you that the prices of all goods and services are governed by supply and demand. The higher the demand, the higher the price. However, gold is unique in the sense that such logic does not always hold true.

One reason for such strange phenomenon is because gold price discovery is primarily in the paper market, and not the demand for physical gold. London Gold Market dominates global gold price discovery and is regarded as the leading global centre for over-the-counter (OTC) transactions. According to BullionStar, 95% of the gold traded in London is unallocated, has no legal title, and is merely part of a fractionally reserved paper gold system. In this regard, the dynamics of the markets for paper gold and physical gold differ greatly, even though both are linked by the gold spot price.

In view of the current weakness in price, wealth builders should seize this opportunity to buy gold bullion as part of portfolio strategy.

Property investment; Singapore market; private housing prices

Why the Singapore Economy Really Isn’t That Bad

December 1, 2016 sgwealthbuilder 870 Views 2 Comments

Whenever we appraise economic growth, there is always a tendency to take a short rather than a longer-term perspective. Such a focus not only encourages us to see things in a less favourable light, but it also undervalues the importance of historical trends and any incremental growth that the global economy has experienced over the course of the last 30 years or more.

A quick glance at the global economy reveals that the levels of growth sustained since the Great Recession began in 2008 has been immensely disappointing by most metrics. Any prosperity that has been evident in either developed or emerging economies during this time has been sporadic, while uncertainty and geopolitical volatility has also caused significant fluctuating in the financial markets.

Despite this, PWT data on average, real-time inflation per capita GDP tells a slightly different narrative. This reveals that the global population was 80% richer financially in 2010 than it was in 1980, while also underlining the fact that gradual, long-term growth trends are all too easy to overlook. Interestingly, the average material well-being of society is three-times what it was in 1950, and this is an economic trend that should offer hope for future generations.

The Singapore Economy: Should We View it From an Alternative Perspective?