Thursday, May 25, 2017

Is Haw Par a golden tiger or a sick cat?

This is a guest post by the kind folks over at Investingnote. It seems that now they have an in house technical chartist and an analyst as well. Good for them. It's quite a detailed analysis with FA and TA perspective, but this kind of company isn't my cup of tea, LOL. The chart failed to trigger any buys in my system, so yeah, it's good to know about the company and keep it in mind the next time you use their signature muscle rubs or ointment.

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A Golden Tiger: $Haw Par(H02 )


This column is jointly written by @fayewang, @calvinwee, @gordon_ong and @devinnath

 -Faye is both a fundamental analyst and economist by nature. She is a global thinker who’s open-minded and enjoys learning from the market.
 -Calvin is a fundamental analyst at heart and an ardent disciple of value investing. He relishes the process of searching for undervalued stocks and enjoys collecting dividends from his stocks.
 -Gordon has a demonstrable interest in equity investments, financial markets, and negotiating deals. As @NTUInvestmentClub president, he has an understanding of what factors drive an organisation’s success. -Devin is a technical analyst who balances FA and TA in his investment decisions. He believes in using news and FA to spot the right stocks and rely on TA to give him the lowest risk-to-reward ratio possible.

Brief Background: Haw Par Corporation Limited is engaged in manufacturing, marketing and trading healthcare products; providing leisure-related goods and services, and investing in properties and securities. The principal activities of the Company are licensing of the Tiger trademarks and owning investments for long-term holding purposes, the history of the brothers Haw and Par traced back to the 19th century. The company distributes its products in the Americas, Africa, the Middle East, Asia, Australasia, and Europe.

Product Segments: Haw Par operates in four segments, namely
1) Healthcare - principally manufactures and distributes topical analgesic products such as Tiger Balm and Kwan Loong.
2) Leisure - provides family and tourist oriented leisure alternatives through its owned and operated oceanarium, including Underwater World Pattaya in Thailand.
3) Property - owns and leases out various investment properties in the Asia region.
4) Investment - invests primarily in quoted and unquoted securities in Asia region.

Performance Summary: Haw Par recorded a dip in profit from operations and investments of 2% mainly attributable to lower dividend income from investments. However, it should be noted that all operating segments generated higher profits in FY16. The healthcare business segment continued to contribute significantly to the Group’s revenue with a 16% increase in revenue from $152.6 million to $176.4 million. Correspondingly, healthcare’s profit increased 37% from $48.1 million to $66.1 million with higher sales and reduced operating expenditure. However, revenue from the leisure business segment registered a sharp drop of 34% to $8.4 million due to the closure of Underwater World Singapore (“UWS”) in June 2016. Therefore, leisure recorded profit of $0.9 million in FY16 compared to loss of $4.3 million in FY15 due to the one-off impairment charge in fixed assets of UWS in 2015.

Financial Highlights:

 



 1. Operating performance Haw Par Corporation’s revenue has increased steadily since 2012, and this is also reflected in its profit before taxes. However, PBT decreased slightly by 1.6% yoy due to the lower dividend income received from investments. In that light, it should be noted that all of its operating segments generated higher profits yoy, however the profit contribution from Investments dropped by 31%, leading to an overall decline in PBT.

2. Financial & cash position Haw Par’s Operation Cash flow recorded yoy increase since 2012, and FY16 was no different since it reported higher profits across all its operating segments. However, there was a sharp drop in its total cash flow by 30% yoy. This is attributed by the decrease in financing cashflows by $24.8Million. Correspondingly, it recorded a fall in the lower cash and cash equivalent in the balance sheet by 0.51% yoy.

3. Segment performance Traditionally, Haw Par Corporation derives its revenue from the investments income segment. The overall group revenue for FY16 at $201.6 million grew 13% yoy, with Healthcare and Property recording 16% and 25% increase in revenue respectively. Operating segment profits before interest expense and tax for Healthcare and Property grew 37% and 22% respectively. However, investments income decreased 31% due to lower dividend income from investments.

4. Stock information Haw Par Corporation has a very low D/E ratio of 2%, hence it can raise additional financing if they wish to acquire more assets in any of their business segments. On the other hand, Haw Par does not have a remarkable ROE and ROA, hovering between 4-7% from 2012-2016. This is likely because most of its business segments are in the mature stage and have limited growth potential. However, it should be once again noted that it derives most of its revenue/profits from its interest in UOB, UIC and UOL group, hence its overall profits is highly dependent on the performance of these 3 companies. Haw Par has a dividend yield 1.9% for FY16. We were unable to find a comparable company for Haw Par Corporation in the SGX stock universe, hence, we decided to skip the peer analysis for Haw Par Corporation.

SWOT Analysis


Strengths:

1. Renown of brand. Brand of Haw Par retains a history over 100 years that can be traced back to 1920s. With famous Tiger Balm as its representative product, Haw Par held competitive advantages of competition in the healthcare industry considering exceptional brand awareness. Despite the long history, Tiger Balm became iconic for the sake of its incorporation in Singapore traditional culture. Brand loyalty is another benefit from well brand management. It is brand loyalty that become a significant obstacle for new entrants, as they may fail in the competition due to strong brand loyalty of customers to existing players.

 2. Uniqueness of products. Haw par differentiates its Tiger Balm from other healthcare products with secret herbal formulation. Therefore, the effect of substitution seems limited to Tiger Balm. For sure there are other pharmaceutical manufacturers who provide analgesic products, for instance, liniments or oils made by using Chinese medicine. Nevertheless, they can merely bring competition but cannot replace Tiger Balm. In Singapore market, the uniqueness of Haw par is more apparent, it is difficult to find a listed company that operate similar business as Haw par does.

 3. Organic Growth of Core Business. Though Haw par is involved in various industry such as property, leisure, and investment, its core competency is derived from healthcare segment. Growing proportion of profit from investment segment has been observed in recent years, which makes Haw par looks like an investment holding firm. However, it is worth noting that revenue generated from its healthcare products enjoy continuous growth with an average rate of 40% over 5 years.

Weaknesses:

1. Haw Par’s leisure segment. Main business of Haw par’s leisure segment is its Underwater World Pattaya (UWP) in Thailand and Underwater World Singapore (UWS) in Singapore. Profit contributed from Leisure segment has experienced continuous decline since 2012. The segment suffered from loss in financial year of 2015, which is related to the terrorist attack at Bangkok in August 2015 and flash flood in Pattaya. Leisure’s profit swung to black in 2016, while Haw par decided to close UWS afterwards. The close was claimed due to the expiry of lease contract on Sentosa island, albeit more likely to be for profit improvement purpose.

2. Investment portfolio. In Haw par’s balance sheet, financial assets occupied 81.9% of its total net assets. In other words, majority of its net assets is made of securities of UOB, UOL, and UIC, which worth $2 billion in 2016. Therefore, Haw par’s profitability is closely tied to the performance of UOB, UOL and UIC. The investment portfolio cannot be considered as absolute ‘weakness ‘of Haw Par, but it exposes Haw par with greater volatility to the performance.


Opportunities:

1. Further expansion. To fully utilize the renown of Haw par’s brand, Haw par can make more efforts to expand their business for greater presence in the global market. At the current stage, income generated from local market merely occupies 18.6% of the total number, meanwhile 35% of the revenue contributed by other Asian countries outside the ASEAN area. Based on the data, we can conclude that Haw par has exploited and penetrated the Asia market, but seems has not started its exploration in other potential countries. With sufficient cash in hand and light debt burden, Haw par is at an appropriate position for global expansion. The expanding strategy can be introducing new products in various markets through franchise.

2. Segment restructuring. Haw par has closed the Underwater World Singapore (UWS) in Sentosa island, thus the segment of leisure greatly shrunk in 2016. As mentioned in the weakness part, the leisure segment suffered from plummeted revenue and the loss even eroded profit from other business. It might be wiser if Haw par gradually shift their investing emphasis to healthcare and investment business only.

3. Long-term flourish healthcare industry. The growing number of aging population and better awareness of healthcare jointly lead to stronger demand for healthcare services in the future. Advanced technology allows Haw par to extend its products line and seek for more opportunities in this resilient industry. Threats: 1. Increasing competitors. Rapid growth in healthcare industry has attracted more companies to enter and share the market pie. Increasing number of competitors is the biggest threat Haw Par is facing now. Products such as Yunnan Baiyao from China and Mopidick’s from Japan have brought intense competition to Tiger Balm.

Key Drivers & Limitations 
Expanding to new markets and modernizing the Tiger Balm brand


Haw Par’s strategy of widening Tiger Balm’s product offerings to include Medicated Plasters, Mosquito Repellents, Cooling Patches and Lotions, as well as modernising the packaging and marketing strategies, seems to have revitalised its attractiveness to consumers. Haw Par has also successfully capitalised on the recent ASEAN mosquito virus outbreaks to increase sales. With such outbreaks being frequent within the region, Haw Par has a consistent sales driver.

Haw Par has also capitalised on Tiger Balm’s brand strength to attract distributors and remain asset-light – recently, it has partnered with Alkem to expand its distribution network in India. Haw Par’s distribution network remains formidable throughout the world. Such a business model means that Haw Par can sustain its high margins in the foreseeable future.

Acquisition for growth in Healthcare/Leisure segments 
Haw Par is currently seeking acquisition targets to utilise its net cash position. It has stated that it may do horizontal integration of other healthcare products to add to its Tiger Balm brand. Such an acquisition will support the overall business-level strategy of dominating the topical analgesic market through consolidation under a single brand. Haw Par also seeks to acquire leisure destinations to utilise its decades-old expertise of running tourist attractions. Depending on the acquisition target, this will most likely increase Haw Par’s low ROE and unlock shareholder value. Haw Par seeks to maintain its low profit margins; hence it will most likely acquire products rather than expand overseas using physical stores.

Exposure to Banking and Real Estate Sectors
Haw Par not only has equity investments within banking and real estate, but also has its own property division. Hence, its asset value and investment income stream are exposed to the high earnings expectations on SG banks, as well as occupancy rates/rental yields from its SG and MY properties.

Analysts’ Opinion 
Key takeaways by @calvinwee

Haw Par is a household brand synonymous with its flagship product: Tiger Balm. However, with deeper analysis, one will realize that over the years, Haw Par Corporation has diversified into different business segments such as leisure and property. Also, management has shown great prudence in maintaining a strong balance sheet and free cash flows. Most importantly, it derives a substantial portion of its profits from UOB, a big 3 bank in Singapore. I am of the view that its healthcare segment has the potential to grow, albeit at a slower rate, with its expansion into European and US markets. Barring no major changes in the 3 companies that it is vested in, Haw Par Corporation is a safe haven amidst the volatility in the market.

Comments below is written by @Gordon_ong:

Haw Par is a Portfolio of UOB, UOL and UIC at deeply discounted values 
To find out what is Haw Par’s current equity stake in UOB, UOL and UIC, we first assume that there are no changes in shareholdings since FY16 annual report. To test this assumption, we will see what is the fair value change on these financial assets (FVOCI) for 1Q. If there are no changes in shareholdings since the last annual report, the fair value change should be 182m.

   

 The actual fair value change as stated in 1Q report is 189m, almost the same as assumed. Hence, we can conclude that there are no significant changes in Haw Par’s investment holdings.

   

Hence, based on the share price of $10.43 and market cap of $2.290B, the Total Enterprise Value is $2.015B. This TEV includes a liquid portfolio of 3 shares with combined market value of $2.2B, Investment Properties of $200M valuation, and a business worth about $1B. Based on a sum-of-parts valuation, TEV should equal to $3.4B and market price should be ≈$15. It can be argued that the market has grossly undervalued the price of Haw Par. In fact, purchasing Haw Par shares means acquiring an investment portfolio for cheap, as well as a stake in the investment properties and the underlying Haw Par business for free. 

Usually, stocks that trade at a discount to NAV have negative operating profits. However, in Haw Par’s case, not only is the Tiger Balm healthcare business still profitable and growing, the net assets are not hard-to-dispose-of fixed assets, but equity stakes in other businesses. 

One consideration is whether Haw Par is a “value trap”, a.k.a Haw Par will hoard the dividends paid by its investments within its business without distributing to its shareholders. Even in this worst-case scenario, as Haw Par’s main businesses are profitable, defensive and secured by a deep economic moat (brand strength), Haw Par’s cash position and equity stakes will just grow indefinitely until a catalyst unlocks value for shareholders e.g. continued growth of healthcare product segment or some form of M&A. To test whether Haw Par hoards cash, we simply measure the investment income received vs. dividends paid out.

   

 While Haw Par does retain a portion of its investment income, its other business segments contribute such that the total dividends paid is higher than an equivalent weighted portfolio consisting of UOB, UOL and UIC. Notably, healthcare segment’s growth in new markets support Haw Par’s ability to pay out higher dividends recently. 

The Dividend Payout Ratio and Historical Dividend Yield also show that dividends from Haw Par is near equivalent to investing in a weighted portfolio of the 3 stocks. Even though the dividend yield of Haw Par is slightly lower, the excess cash is going into Haw Par’s cash reserves. Hence, the 48 b.p. is not lost, but merely locked up within Haw Par’s cash reserves, which shareholders still own a stake of. 

Overall, Haw Par does indeed distribute its investment income from its equity portfolio to its shareholders. A shareholder of Haw Par will gain more dividend benefits compared to directly holding an equivalent portfolio of the three shares. As the risk of Haw Par suddenly hoarding investment income is negligible given its track record, there should not exist such a discount on valuation for Haw Par’s equity portfolio. 

Unless you believe that UOB, UOL and UIC are grossly overvalued by the market, as long as Haw Par’s TEV remains lower than the market value of its equity portfolio, it makes complete sense to buy more of Haw Par. While acknowledging that Haw Par has been consistently undervalued for the past 10 years vis-à-vis its equity holdings, the gap between Haw Par’s value and its equity holdings has narrowed, signaling that the market has taken notice. 

Investors should view Haw Par primarily as an Investment Holding company at discount prices, with its success as a healthcare product company as a pure bonus.

For investors interested in $UOB(U11), can consider purchasing shares through $Haw Par(H02) for greater value. A portfolio of banks, real estate and healthcare seem to fair well against interest rate risk. Vested in Haw Par; DYODD. Downsides: During expansion, management may decide to modify Haw Par’s healthcare segment from an asset-light distribution model to an asset-heavy model, requiring cash. However, unlikely based on conservative management’s previous reinvestment rate. Also, SG Banking and Real Estate sectors may weaken affecting value of equity holdings – yet holding an isolated UOB/UOL/UIC stock will be even worse in that scenario. 

Technical Analysis 
 From TA (Technical Analysis) perspective, followings are the analysis of Haw Par as of 23rd May 2017. This part is written by @devinnath.

 

-Taking highest high and lowest low from 12 month time frame (July 2016), it appears that Haw Par stock price has been testing the resistance line at $10.500 since the beginning of May 2017. 
-Channel width is considerably wide, contributed by the bullish steam at the start of 2017 (Jan-Feb). Although an untested weak support range is formed between $9.745 and $9.837, strong support remains low at $9.360 
-Stochastic Oscillator (14,3,3) and MACD (12,26,close,9) both agree that there is no apparent highlight of trend being formed in the past month, although both indicators signalling a slight uptrend (MACD : 0.1117) and minimal buying pressure in the market (slow %K = %D : 65). 
-Parabolic SAR on the other hand acknowledges the position of the price on upper boundary of Bollinger Band (20,2) by showing a possible price stop and reversal, hence the stock price might be taking a bearish stance in the near future. 

I believe that it is rather reasonable for investors to expect a significant attempt to break the strong resistance line at 10.500. This attempt will be indicated by a sharp hike in price above $10.500, which the result will determine the future trend direction of Haw Par stock. 

Best case scenario: If price manages to break the resistance line and stays there for at least 2 days, then high chance it will continue to take its bullish stance. Once its position is reinforced, it will be the perfect time to enter the trade. 

Worst case scenario: If price fails to stay above the resistance for 2 days, similar event with 12th May might reoccur, e.g. price broke through the resistance but failed to maintain its stance as bearish engulfing pattern appears the following day. It will form a double top pattern which might impose a very strong selling pressure. This might be followed by breaking the weak support towards the strong support line. 

Conclusion: In order to mitigate risk, It will be in our best interest to wait and see how the market behaves around the resistance and let time reveals itself. 

This article is written by by @fayewang, @calvinwee, @gordon_ong and @devinnath from InvestingNote. 


InvestingNote is the free social network platform designed specifically for crowdsourced investment ideas, news and interaction for the holistic stock investing community. Investors can identify trends, market movements and sentiments through crowdsource analysis that can make them better at investing. With free access to a wide variety of stock data, investors can upload research reports, utilize technical charts and make stock price targets that will be visible to other investors. It promotes financial literacy and connects investors for better investing outcomes. Our users come from a wide spectrum of the investing community: remisiers, brokers, brokerage houses, financial writers, financial bloggers and the general retail investors.

Monday, May 22, 2017

The math of crisis investing

I want to find out what is the possible rise in my portfolio after investing during crisis, and in so doing, I can find out the optimum amount of cash to keep. The problem with cash is that while it's very useful during crisis, there's a cost to it. It's the drag on your portfolio return, that is, your cash is rotting in the bank doing nothing. On the other hand, investing throughout the ups and downs will mean that your portfolio volatility will be swinging in extremes too. Not for the faint hearted.


I start off by looking at Straits time index in the past. These are the major crisis that happened and what the STI returns look like after while. The first dates indicated the lowest point in STI while the second date refers to the apex of the bull run that occurs after market recovers. The % refers to the percentage increase i.e. 220% means if you invest 100k, your portfolio will increase by 220k.

1998 Sept to 2000 Jan - 800 to 2580 - 220%
2003 Apr to 2007 July - 1220 to 3900 - 220%
2009 Mar to 2015 Apr - 1450 to 3550 - 145%

The last current bull run might be still 'running'. As you can see, all these are from hindsight. It's not clear until after the fact had happened. Since I can't predict the future, well, the past history is all that I have.


Assuming that we can only capture 70% of the bull run from trough to peak, we are talking about 220% x 70% = 150% gain or a 250% increase in portfolio. Let's use that figure to guesstimate our returns from crisis investing.


If we keep 100% cash and invest during crisis, we can realistically expect to get about 150% increment. That means we're looking at 225% increase in our portfolio. If we keep 80% cash, and invest during crisis, we can realistically expect to get about 200% increase in our portfolio. If we keep 60%, we can expect to get a 175% increase in our portfolio. If we keep 40%, it'll be 150% increase in portfolio.




Here's a few thoughts:

1. If you think the returns are too low, you can leverage. But it comes with its own set of problems.

2. If you're hoping to become a millionaire after the crisis, you have to be realistic. Ask yourself how much you have in your portfolio now and how much cash you are keeping and how long are you waiting for that big crisis to happen. We haven't even talked about whether you have the balls to go in while others are busy rushing to get out.

3. Since STI tracks only blue chips, which are safer, we can technically do a few rounds of the crisis investing. When STI is at the trough, we get into blue chips first. Once the blue chips recovered and STI goes up, people will take notice of the rising market and get in, so we get out of the blue chips and enter the mid/small caps before they do. When the blue chips had finished rising, the next rotation will be the mid/small caps, so technically we 'compound' our cash faster. Instead of going in and out during crisis, we recycle our capital and do it within each cycle itself. Easier said than done, of course, but that's the plan. The execution depends on your skill.

4. For me, I aim to get around 40% to 80% cash during crisis. That should realistically get me a minimum of 150 to 200% increase in my portfolio growth organically. Haven't include recycling of capital or injection of new capital or dividends.

5. We only get 2 rounds of solid crisis and I've wasted one already. I can't waste it anymore. Save hard, work hard on my craft and execute it. I don't want to be caught in a crisis without the cash to utilise, or the psychology to take advantage of it. If executed properly, this can save me a few years of my life.


Updated (22nd May 2017)

Thanks to theintelligentinvestor from Investingnote community from spotting my calculation error in the percentage. At first, I still thought that crisis investing is still alright. Now, with the changes in the error, an organic portfolio growth of 150 to 200% is crazy and I know it's do-able!

Monday, May 15, 2017

The evolution of needs and wants

My baby is slightly more than 3 months old now, and I learnt a lot from the experience of being a first time father. One of the first things I get to observe is how the needs and wants of the child develops as he gets older.

When my son is less than 1 month old, the term 'needs' and 'wants' are interchangeable. You can even say that the needs and wants are indistinguishable from one another. The default mode of the baby is sleep. If he is not sleeping, it's because of the following reasons:

1. Food
2. Change of diaper
3. Hug

Took us a few weeks to get it right, but once I thought I mastered the art of baby soothing, the baby evolves. After 1 month to 2 month, the needs and wants changes, so we have to adapt to them again. Here are the needs:

1. Food
2. Change of diaper
3. Hug in the right manner
4. Rock

Okay, it's still alright, I thought to myself. I can't hug it anyhow, because the baby needs to feel right. I also have to rock the baby to quieten it down. Thankfully I have a gym ball that my wife uses pre-child, and we can sit on it while hugging the baby and bounce up and down on it. That makes the rocking part manageable, because at this point in time, we're holding a 5kg weight that can scream, puke, cry and smile.

Around 2 to 3 months, just as we thought we got the hang of it, the baby evolves again. They say change is the only constant, and I say the person who came up with that saying must have been parents. So their needs/wants became:

1. Food, but must be of the right temperature
2. Change of diapers, but must be fast
3. Hug in the right manner, but must change position every now and then
4. Rock, but only after doing all the above
5. Temperature - must be cooling enough
6. Play - you need to spend time interacting with me!
7. Sleep in the right position

Wah, suddenly as the baby's sight improves and the brain functions start to whir in action, there's more and more things that we need to do right. If the past history can be extended to the future, there'll only be more needs and wants, and soon there will be a differentiation between the needs and the wants. Then what happens?




Depending on individuals, there'll come a inflection point where the needs and wants stop increasing. It starts to stay constant, then decrease as we age further. All the wants are removed, leaving only the bare basic needs. And when we're on our dying beds, I suspect strongly that the following needs are as follows:

1. Family
2. Happiness
3. Free of suffering

I've mentioned earlier on in the article what my son's 1st month needs are. Let's review them again:

1. Food
2. Change of diaper
3. Hug

Hey, isn't that the same wish list as that in our dying beds? It's of a different form but it's essentially the same theme. Food, change of diapers and hugging is the expression of the same values as family, happiness and free of suffering, but specifically exhibited by a baby. Food and change of diapers is the baby's equivalent of 'free of suffering'. Hug is what the baby's equivalent of 'family'. I've always said that a child is like a buddha-baby. A child is extremely enlightened in what the important things in life are, and we, as adults, can take a leaf out of his/her book.

Saturday, May 06, 2017

Fear-based selling

There's a lot of fear out there. Everytime you switch on the news, out of 10 news, perhaps 8 are bad news. Maybe some air plane crashed, some terrorist attacks somewhere, some murders elsewhere. Then comes the commercial interval selling things. It's known that fear can trigger emotional buys (for certain items), so is this the way to pre-suade consumers to part with their money?


A typical example would be that of a insurance agent. The sales pitch is that you don't know when you're going to die, and there'll be huge medical costs, and you must be responsible for your family and so on. That's fear based selling. It can be for a tutor too. Oh, your child is going to fail his O'lvls because his foundation is so weak. There's only 4 months to the major exams and he's so weak in his foundation, so do you want to increase the number of lessons during June? Fear based selling. How about a furniture seller? This special promotion is only valid until today, if not it'll revert back to the original price which is 20% more than the current. Oh, this is the last piece left, and someone just called me to ask me about it. Do you want me to reserve it for you (by paying a deposit) so that the other caller don't be able to have it?


Fear sells. But it leaves a bad taste in the consumer's mouth after buying it.




In the stock market, there's also fear based advice. This stock is going to run if you don't get this. Or I've a whatsapp group that offers great advice for people because there are so many people in there with eyes on the market 24/7, and I'm offering you at this great price for only a limited period of time. Everyone is making big bucks in the chatgroup, so why don't you join? Fear of missing out is also a fear based selling.


As STI marches past 3200 and still moving upwards, beware of more and more people doing fear based selling for all sorts of things. If memory serves me right, in the last major bull run, there are a lot of gurus offering crazy returns by attending this workshop and that, a lot of cheating incidents and a lot of funny ways to make crazy returns in oil, land banking, crabs, trees or what have you. You see it everyday in the newspaper, sometimes with ads like these taking up a quarter of the page. You don't see such things when the market is depressed.


Look at this piece of news back in 2007 here. It talks about university undergraduate making huge money in the stock market, so they are chasing grades and trades. Or this one, also in 2007, here (courtesy of musicwhiz). This one is a memorable case study of a student who made up to 80k per month trading in the height of the bull run. Just a few months later, he lost all and more, including his parent's life savings of 300k. I just want readers to be aware of such emotional battles. When people are making huge money and you have a lot of cash rotting in the bank, are you able to withstand the pressure and all the fear based selling and NOT commit to mistakes?

Saturday, April 29, 2017

I don't read; I study

This year is turning out to be a year of new systems. I had already implemented two systems, which I've dutifully blogged about in this post here. I'm still using them and they are serving me very well.


This new system is a overhaul of a old one that dated back in 2007, so it has been active for about 10 years. I used to have a reading target of 52 books a year. I say 'used' because the new system seeks to overhaul this old one. Reading 52 books a year means essentially reading one book per week. While I failed to hit target in some years, I succeeded in some too, and overall I'm the greatest benefactor of this reading habit. If you have to read one book a week, I'm sure you won't have a lot of time to watch TV or surf the internet and such time wasters. In trying to find 52 worthy books to read, I also have to spend some time curating the good books that other people are reading.




The bad thing about reading 52 books a year is that I always find that I'm rushing to finish off the book and go on to the next one. While the goal is a notable one to urge me to read more, it has slowly become one of those checklist that I want to fulfill. In other words, I read for the sake of reading and to fulfill that goal. That makes the goal meaningless. There's scarcely time to reflect. When I did was to devour plates and plates of brain food in a endless stream of buffet items without really having enough time to savour and digest each mouthful. It wasn't totally useless, because while I do not have the depth of understanding each book as fully as I would like to have, I did have the breadth and with it comes the knowledge of what I like and do not like.


The motive for a change of system came when I became a father this year. I thought I had fully utilised my free time before I was a father, but I thought wrong. There are always more pockets of time that I can squeeze, that I need to squeeze. It became clear that I won't have the time to do 52 books a year anymore. What if I am reading and missed the first smile by my son? What if I missed his first step? The cost is too great.


Thus, it's high time to reduce the breadth and go deep. I don't read books these days; I study them. I study them by reading it once, then type a summary of each chapter or the points that cry out to me for the entire book. I'll read the summary a few more times when editing them before declaring I'm done. I've done it for a few rounds already and here's what I found out:


1) This is such a good experience. When is the last time I've studied something like that? I might want to do an experiment where I only read just 1 book in one year. I'll read it again and again and again just to have a contrast between the old system where I was reading so many books. One is breadth while the other is in depth.

2) The amount of things I retained from merely writing a summary is tremendous. Usually after reading it only, I can remember a few key points and these key points will be forgotten in 1 month, 6 month or in a year's time. By actively summarizing and typing it out, I get maximal retention. Even if I've forgotten the key points, I can always review the summary again to refresh.

3) I effectively shifted my focus from hitting "x" books a year, a meaningless target, to learning as much as I can from each book. The shift in focus is very liberating to me.  

4) Having practiced summary writing for a while, I find that while reading, I will also subconsciously try to find an overall structure to each chapter. I will browse through each chapter to get a feel of the layout before I begin reading. The structure acts as the skeleton while the points and example as the flesh that clings on to the structure. Within the book there is also an overall structure that lays out the main argument of the book clearly. I find myself going back and fro and looking at the table of contents a lot more these days. Now I'm wondering if I'm actually reading a book in the past 10 years! There's so much things that I can get out from a book and yet I'm only reading the text!

5) It takes me about 1-2 weeks to get the summary done. During that time, I will be reading the re-reading previous chapters to feel the overall structure. That gives me plenty of time to reflect and think and integrate the new materials.


To play a piano while, we first learn the rules and obey it strictly. When we can do that very well, we earn the right to 'play' the piano. Thereafter, we ignore the rules, experiment and improvise. Isn't that what I'm doing here too? I begin with an unforgiving goal - to read 52 books a year. I've done it a couple of times to know that I can read. Now, it's time to really play-read a book.

Monday, April 24, 2017

Government paid child benefits for self-employed

It's always hard to find stuff for self employed individuals like me, so since I've already done my research, I might as well share it with others who are in a similar situation as me. I just had a baby boy and he's doing mightily fine. As a self employed, I have no company benefits as a father. Since almost all the benefits given by the company as a employee is co-shared by the government (meaning that the G will reimburse the company), I can only claim the part of the benefits that is given by the government, called Government Paid Paternity Leave (GPPL). What about the company's portion? Too bad, that's part of the cons of being a self employed, so I can only LPPL.

There are two benefits that a father can claim, if you fulfill the following conditions:

1. Your child is a Singapore citizen
2. You are lawfully married to the child's mother 
3. If you're self employed, you must have engaged in your business for at least 3 months before the child's birth 

As a working father, I'm entitled to 3 types of benefits:

1) Government paid paternity leave (GPPL)
2) Government paid shared parental leave (SPL)
3) Government paid childcare leave (GPCL)

A lot of information can be found in the aggregate of links here. But trust me, it's actually quite confusing, especially when there are so many links point here and there. I digested as much of the information as I can, and as accurately as I could, and present it here:


Government paid paternity leave (GPPL)

I'm entitled to 2 weeks of GPPL. There are 2 ways to take the paternity leave. You can either :

a) take it in one continuous block within 16 weeks from the birth of the child. This means 14 calendar days, inclusive of weekends and public holidays taken consecutively from start to end. OR

b) take it by days, with a break in between leave dates, within 12 months from the birth of the child. This is will be based on the number of working days you have per week. If you work on a 5 day work week, your total entitlement will be 2 weeks x 5 workdays per week = 10 days

The leave is also subjected to a cap of $2,500 per week, so one cannot claim more than $5,000 from the GPPL for the 2 weeks. The exact payment is calculated based on our notice of assessment from the IRAS, specifically, the net trade income portion. Exactly which year of assessment of our tax will they use, they are unable to advise. I found this, read it, yet I ended up being as clueless as I started. So I emailed them.




They can only say that the latest net trade income details in their system at the point of submission will be used, and if there are any discrepancies, we can write back to them by providing the notice of assessment for their review. 

I did find out how they compute the reimbursement and that depends on whether you take it in one continuous block or take it by days.


I took (a) as I think it's better for me. You might want to calculate both and see which works out better for your case.


Government paid shared parental leave (SPL)

Government paid shared parental leave is the sharing of 1 week out of the 16 weeks of the government paid maternity leave by the mother with the father. For the father to even qualify for the SPL, the wife must first be eligible for government paid maternity leave in the first place.

This SPL must be consumed within 12 months from the birth of the child, and any unconsumed SPL after 12 months will be forfeited. There is no minimum period that an applicant must have carried on his trade, business or profession in order to qualify for SPL, as long as there is allocation from his wife to him in his current employment.

I have no experience in this as I didn't apply for this. My wife has problem claiming maternity leave as it as, so no help from me in this segment. The explanatory notes for both GPPL and SPL is here.


Government paid childcare leave (GPCL)

This is for both parents each to take paid leave to take care of the child. It'll be eligible for both parents per year until the child reaches above 12 years of age. Those who are employees will get doubled of what I'm going to write next because I think half of the childcare leave is reimbursed to the company by the government. Again, I'm LPPL so I can only take the GPCL, which is half of what normal employees are entitled to. For a child below 7 years old, the GPCL is 3 days per year per parent. For a child between 7 to 12 years old, the GPCL is 1 day per year per parent.

The calculation is based on the number of working days per week, and that you have to key in when you submit your claims. The formula is here:


Do take note that the childcare leave is subjected to a cap of $500 per day, so there'll be a cap of $1,500 per calendar year.

The full details for the GPCL is found here


Application

Before you apply, you need to key in your banking details and update your particulars.

A) Go to the government paid leave website here and login to the e-services as a self employed person


B) Click on Maintain profile and update your details, including the all important banking details. This will be the bank account that the money will be transferred to, when it is submitted and approved.


C) Under Online application, there are two options: Government paid childcare leave and government paid paternity and shared parental leave. The instructions are clear cut and you just need to submit the information such as working days per week, birth cert number of your child and the child's birth date etc. The whole process takes less than 5 mins to submit.


I think for both my submission of GPPL and GPCL, only 3 to 4 working days transpired between the date of submission and the receipt of the reimbursed money from the government. I think they have a service standard of processing the entire thing by 10 working days. The whole process is very smooth and painless, once you sort out what you can claim and how much.

Wednesday, April 12, 2017

Newbie's guide to market depth

SGX is running a promotion for free market depth information, limited from 3rd April to 30th June 2017. I’ve not seen them done this ever before, so perhaps they are doing this to boost the liquidity of the market, or to sell them the subscription. Either way, take this as a free trial and see if it’s useful for you or not. Quite a few brokers are participating in this, like CIMB, DBS Vickers, KGI, Lim&Tan, Kim Eng, OCBC, Philips, RHB and UOB Kay Hian. And before you ask, no, stanchart is not part of it, but you can always access the market depth information from other brokerage platform.

The more important question is how to use market depth. I’m the first to confess that I’m not an expert, but I’ve read and researched enough to know a tiny bit about it, so I’ll share with readers here. I divide this into two sections, the first are the points to look out for when using market depth and the second is about the limitation of the information you get from it. It’s good to know both the usefulness and the limitations of it. By the way, I’m using poems, so it might differ a bit from yours if you’re using other brokerage platform, but it’s largely similar.

Section 1: Points to look out for

1. Is it a buyer or a seller’s market?

By comparing the total buying volume on the left side and the total selling volume on the right side, we can see if it's a buyer or a seller's market. Buyer's market means that the selling will be very well absorbed with very little price movement downwards, because there are a lot of buyers waiting in line to buy. Conversely, in a buyer's market, any buying up will be met with lesser resistance because there are not a lot of sellers waiting to sell at higher price than the current price. In other words, in a buyer's market, the ease of movement of price upwards is easier than the ease of movement of price downwards. In a seller's market, the reverse happens - the ease of movement of price downwards is easier than the ease of movement of price upwards.

Buyer's market - note that there is so many pple waiting to buy on the Bvol side (left)

Seller's market - note that there are more pple waiting to sell on the SVol side (right) than the left

2. Check immediate resistance and support level

This is a TA concept. Resistance refers to a price where the price will likely hit a wall and move downwards. Support refers to a price where the price will likely hit a springboard and rebound upwards. Here, we are looking for big volume camping around a price range. If the normal queue is 1000, 800, 1500, and suddenly we see a 200,000 queue, then that is significant.

The left side represents the possible support level at 1.080. It's going to be hard to go below 1.080 for the time being. The right side represents the resistance level at 1.095 and 1.100. It's going to be hard to go beyond 1.100 for the time being.

Looking at the above pic on the left side, we can see that there's a huge volume camping of about 2.7 million shares at 1.080. If the price is to go below 1.080, it will have to break that huge wall first. Hence, for the time being at least, it's going to be hard. On the right side, we can see an even bigger wall of about 10 million shares distributed over 1.095 to 1.100 range. It's going to take a while to break that wall and go to 1.105.

If you're buying, and you want to jump the long queue, you might as well queue at 1.085. If you're selling and you want to jump the queue, you might as well queue at 1.090. That's just one way to see it. You can also set a order to buy at 1.105 once the market price reaches 1.110, because it means the the stock broke out of the huge wall block and that's usually a good sign. Go back to TA to decide what to do with the information you get from the support and resistance levels.


3. Can the market absorb my buying and selling?

If you want to sell a huge volume, you want to ensure that the price remains as stable as possible. You don't want your huge order to bring down the price and end up having a lesser amount at the end of your selling. Likewise, if you are buying a huge volume, you don't want the price to be bidded up too huge so that at the end of the day, you'll end up paying more for your shares. All these requires the market to have enough 'depth' to absorb both your selling and your buying, without affecting the price too much.

A good analogy is that of a reservoir. If you scoop up a cup of water from it, the water level is not going to change much because it has a lot of 'depth'. Conversely, if you pour a cup of water into it, the water level is also not going to rise much (not even perceptible!). If you do the same experiment on a pail of water, you can see the water level rise and fall much more appreciably. This whole concept is market depth.

SGX guide here already have a great example, so I'm not going to reinvent the wheel. I reproduce it here for your reference.



Section 2: Limitations of market depth

1. Market depth is dynamic.

The information is probably only valid for a day. Maybe just for a few hours. We don't know. The volume reflects the live order keyed into the system, so it keeps changing. In a fast moving market, a static picture of the live market depth information probably should have an expiry date of only a few minutes.


2. Order volume might be hidden

I know institutional traders can have an option to disclose a certain percentage of their trades in the system only, called disclosed quantity buying/selling. Let's say that a big boy (BB) wants to sell 500k shares at a certain price, it can choose to disclose only 5k shares in the system, so only 5k is seen in the market depth, and not 500k. Is this available in Singapore, I'm not sure about that though as this is something I've read about in US markets. If it's available here, then whatever you see in the market depth is just what others want you to see.


3. Order volume might be fake

The orders placed might not be real. By fake, I mean that there is no real intention to buy or sell the entire order seen in the market depth. The volume in the market depth can be removed at any time. It could be used to test the market or to find out who the counterparty is. There are several reasons why they want to do this. One reason could be to prevent the price from going above a certain price. Whenever the volume gets depleted, more volume will be topped up to discourage buyers from bidding higher. This same trick can also be used to dispose of shares in a very orderly manner without people knowing it. Only people with too much time watching the 'tape' can see it. In structured warrants, you will see lots of such actions happening.


4. There are buyers or sellers who do not queue.

You’ll only see something in the market depth if people queue for it. There are companies where buyers or sellers do not queue at all. Immediate transaction will happen if you sell at bid and buy at ask, so in such cases, it won’t be so useful.


Conclusion:

Market depth is paid for under a subscription. I didn't use it in the past because I'm too cheapskate to have it. Is it useful? Yes it is, but it's not essential. Good to have but not that important in the longer run. Perhaps it'll be more useful for intra day traders, which I'm not.

Saturday, April 08, 2017

Gradual effort, sudden result

A long time ago when I was just a newbie tutor, a parent sat in with my student for a lesson. After teaching the theory, I set the student to some work. For the greater part of the duration of the lesson, the parent saw me doing nothing but just watching the student do his work. Occasionally I would point out some things here and there but that's about it. The parents remarked that since I'm just baby sitting her kid and doing nothing much, how come I charge so much for the fees?

In the past, to prepare for the 2 hr lesson, I likely have to spend more than 2 hours preparing for it. I've already gone though all the different possibilities in the questions type, all the possible errors and thought through the best way to structure my lessons so that there is a framework for the student to grasp on. It seems like I'm not doing anything DURING the lesson, but that's only because the work had already been done BEFORE the lesson. I also do post lesson reflection to see if there's anything I need to improve on. That's what I do every lesson for the first 2-3 yrs of my career. That accelerated my learning tremendously.

Effectively, I spent 2-3 yrs of constant gradual effort so that I appear to do nothing when I am seen at work.


This is just one example where there's a hokey stick progression - one long almost flat bar of nothing, then boomz it shoots up. The thing that broke the camel's back is also not the last straw that is piled on top of it - it's broken by the accumulation of all the straws on top of the camel before the last straw is piled above it! It's also how the Chinese bamboo grows. You water it everyday for the 1st year and you see nothing. You do the same for the 2nd year and you see nothing. By the third year, you're starting to feel anxious...and suddenly in the 5th year, just when you're about to give up hope, it breaks ground and grow to a height of 27 m in one year! It would seem that that bamboo grew 27 m in one year, but it really took 5 years for it grow 27 m.

Gradual effort, sudden result.

Friday, March 31, 2017

The creep of the crib

A warm feeling trickled down the back of his buttocks. He savored the new sensation and smiled. But as his back gets warmer, it didn't feel comfortable anymore, so he wailed. It began as a soft whimper, barely audible, but the cries progressively gets louder, almost like the siren of an emergency vehicle dashing nearer and nearer towards you. Within a minute, he felt manhandled by a pair of hands that is even bigger than his head. The cones and rods inside his eyes are still forming and he couldn't make out distant objects clearly, and yet nobody bothered to prescribe short sighted glasses for him. He only saw a blurry figure lifting him up, whispering a few indecipherable sounds as he got carried off. When he opened his eyes, he found himself in another place. The new sensation stopped his crying immediately as his mind whirred to take in the new sensory information. During this hiatus, he recognized that voice that is constantly whispering at him, and it immediately soothed him down. That same voice that accompanied him all the time while he was still in that warm comfortable darkness where everything was nice and good.


His felt his pants being pulled off, exposing his legs and lower body to the cooling air. Contrasted with the warm and sticky feeling at his buttocks, the whole situation just became even more unbearable for him. He wailed louder and more insistently this time, crying for someone, anyone, to make things whole and good again. He was so agitated that rivulets of tears streaked down his small face, soaking the pillow that his head was resting on. In between sobs, he felt something cool wiping past his buttocks and cleaning him up. Just like the dirt that was cleaned up, that initial discomfort that plagued him was wiped away little by little . Soon, he had long forgotten why his eyes were wet in the first place. Throughout all this ordeal, that soothing motherly voice was speaking to him, comforting him and letting him know that all will be okay. While he didn't understand the words, he giggled because he recognized that familiar voice. He let off a toothless grin and soon he heard a string of single syllable sounds that he will soon know as laughter. He cooed in a feeble attempt to mimic that sound, but of course, he failed, resulting in even more strings of single syllable sounds from the voice.


While he was paying all his attention to the voice, he didn't realize that his legs started to get all warm and cosy again as his pants were being put back on. He was scooped up by the powerful hands but soon he was wailing yet again. This time, it was that groaning feeling in his stomach that strikes every other 2 hours or so. It was agonizing and his entire world was about to crumble. It was so disconcerting that he had to try making that awful feeling go away by sucking on his tiny hands.


But the voice seems to know what is troubling him. He found that his head was being pressed into a warm, round and soft body with a protruding tip. It smells right and feels right. Acting on instincts, his mouth opened and he latched onto that warm body. A warm liquid filled his mouth and he drank it hungrily. After a few mouthfuls, his stomach felt better. He was cuddled close to a warm body while feeding, and the voice continued speaking softly to him, encouraging him. In the background, he could hear a faint 'lup-dup-lup-dup-lup-dup' emanating from the warm body. It was the same sound track, that reassuring organo-techno music that he heard when things were utopic. For that moment in time, everything felt right and proper, just like it was back then in that warm comfortable darkness before he was brought into this world.


With all his needs and wants satisfied, his eyelids relaxed and closed gently. His little hands, initially grasping his mother's clothing for dear life, were now relaxed. His body shuddered as he fell into slumber, as if an off button on a great machine that had been working overnight had been shut down temporarily for maintenance. Except for the soft rise and fall of his chest, his entire body was motionless and he is like a ragdoll - all soft and maneuverable. As his body rested, his mind wandered off to seek new adventures and sensations to experience, occasionally with arms flailing in the air in his baby dreams.


Rest well, my child, there is a lot more adventures waiting for you when you wake up.




Friday, March 24, 2017

Need a financial tribe?

If you want to be financially literate, you should be immersed in an environment where everyone is talking about it constantly. Some wise men did say that if you want to find out the character of a person, you just need to look at 3 of his closest friends. We're the average of the 3 persons we talk to most frequently.


Being in a group of like minded individuals allows you to be completely immersed in an environment that will saturate your mind with the things you want most to learn about. There are times when I was 'addicted' to games and will devour any and every material related to that game, like the faq guides, the hacks and the secret areas. All of it. This saturation of mind allows maximum absorption of new materials and the constant contact of people who are also like that makes everyone more involved due to the shared activities and interaction.


If you don't have such a group formed offline among people you already know, there is a recent Facebook group formed for such a purpose, titled aptly "BIGS World - Build Wealth, Live a Good Life". Some of the prominent financial bloggers are already in, and you can ask questions, share articles and learn from the comments shared among like minded individuals. After joining the group, my facebook feeds are not longer so saturated with watches, hand bags and food pics, but more about those good hard questions and thought provoking articles that we find awkward to talk to others, and that are specially curated by people who are of the same frequency as me.


However, if you're looking for stocks tips, FA write ups or TA stock charts, this group isn't for such posts. In fact, this group is not solely about money. Wealth encompasses a lot more things than just finance, so expect to see more sharing on healthy living and personal growth as an individual. You want to be in a nice community where there are people who are above your level whom you can emulate, people who are of the same level as you but doing better than you, and people who are below your level but are doing things better than you did when you're at that level. It will be hard not to grow as an individual.


If you're looking for people to talk and discuss about personal finances, or just topics about personal growth that you know will be yawn inducing to your peers or colleagues, consider joining BIGS World. This is the closest thing to a community of financially conscious individuals you can get locally.

Friday, March 10, 2017

Living your life in 2 hr block

There was a remake of Battlestar Galactica. It's a sci fi show about how a group of humans was attacked by a race of robots that they had created (it's a long story) called cylons. Only a few ships made it off the planet and they are wandering in deep space being pursued by the cylons. The attacks on the cylons are relentless, because every 33 mins, they will find out the location of the entire fleet and everyone will have to be battle ready. The pilots have to fly out to meet the cylons in space dog fights, while the commanders and staff at the command center will have to coordinate the hyper space jump of the entire fleet so that they can escape.


Cylons from Battlestar Galactica. They are also known affectionately as toasters.


Every 33 mins for the last 150+ hours it's like that. Relentless. Fatigue sets in and they will make a mistake or two, like leaving a ship behind because of the wrong coordinates for the hyper space jump. Or a pilot gets killed in the dog fight. So every 33 mins, after they had successful accounted for all the ships of the fleet, they will reset the timer and prepare for the next cylon attack, taking whatever rest they can afford.


Why do I tell you this sci-fi series? It's because my life is sort of measured in 2 hours block now.


My baby 'cylon' needs to be 'fended off' almost every 2 hours like clockwork. Each feeding/diaper change cycle presents different difficulties that throws your routine out. Once he starts wailing, then both me and wife will have to figure out what's wrong. Is it because his diapers are soiled? Is it because he needs to feed? Is it because he needs to be carried? It doesn't matter if it's the day or the night, because the baby 'cylon' will come every 2 hours, rain or shine.




This had been our routine since our confinement lady left about a week ago. While we could certainly do with more sleep, I think we're happily taking it in stride. The philosophy of appreciating all experiences, whether they are good or bad, is important for mental strength and fortitude. I guess for me, that's what being a parent is about. I don't want to know the good times only. I want to go through all the bad times too.


It's a cliche but it's very suitable here - Life's rainbow is made up of rainy and sunny days.

Friday, March 03, 2017

T+30 of being a Father

My baby just reached one month recently. In the midst of the showering, feeding, changing diapers routine, I didn't realize that 30 days had just flew past like that. So, how did a first time father feel after a month?


1. Baby is living in blissful zen

I must have mentioned it before. When a baby eat, he eats. When he shits, he shits. When he is uncomfortable, he'll cry. When comforted, he stops crying. I think we can learn a lot from watching how a baby reacts and responds. They are living so much in the present that they are not haunted by the past nor worried about the future. At least not yet.


2. Whoever said "Sleeps like a baby" obviously haven't seen a baby before

I haven't really taken the full load of taking over the care taking part, but my confinement lady is leaving today. D-day! My wife is a little worried over the night duty part. Rightfully, because she is feeding him from the breast at night, so her sleep is disrupted every 2-3 hours if we're lucky. But I think once our short term help is over, it will be suicidal to depend on my wife just for the night duty feeding. I'll have to feed formula milk and do guard duty lol


3. Pain is inevitable, but it need not come with suffering

In the first few weeks, there are short bouts of anger when I couldn't calm the baby. It had arisen out of frustration and perhaps lack of sleep. I recognized it (thank my 100 days meditation!) at the onset and dispersed it. I think after here is where reading Tools of Titan helped. I remembered reading about Tony Robbin's State -> Story -> Strategy. Essentially, it is this: if you encountered a problem, ask yourself if you had enough sleep and food. Settle the biochemical state of mind first. Then you construct a story. For me, the story is that there is meaning behind the pain and frustration of being unable to calm a baby, or waking up in the middle of the night for feeding duties. All these are bonding time. Besides, the baby won't be in this needy state for long, so enjoy it. This story helps tremendously in coping with everything that seems like a chore when I became a father. Lastly, strategy is just the specific hacks that I can utilize, the practice that I had, and the sharing of good habits and routines from experts like my mother and the confinement lady.

The creep in the crib, the nipple nibbler, sleeping comfortably in my laps


4. To build trust, be vulnerable

A baby is so needy and fragile. It depends on you for everything needed to keep it alive and well, and that is precisely why everyone will treat the baby very well and to take care of it. I'm not talking about psychopaths here, just normal well adjusted adults. Can we also accelerate the process of building trust in relationship? When I meet a new student, usually I'll share some of my own story and vulnerabilities, so that rapport is build up fast. In the past I thought I'm wasting their time because I could have taught them more things. How foolish! I'm teaching a person, not force feeding content down their throats, so the more relationship points we get, the more leverage I can use to change my students and make a difference.

A careless mistake admitted by me when doing a math problem is a better relationship builder than a perfectly executed model solution copied from a pre-prepared sheet. It makes me genuine, and human too, so we can close the gap between us. If I'm perceived as a super teacher who can't make mistakes, then they might see my abilities as being too far and out of reach.


5. Expenses shot up like crazy!

Nah, just kidding. Besides the one off, there really isn't much increase. There is a spike in groceries expenses because of all the milk powder and diapers and nappy rash cream, but it's somewhat offset by zero restaurants trip, almost zero carpark charges and fuel, zero cafes trips and so on. What's the actual expense increment? I'll blog about it once I have a 2-3 month average, as it's a bit premature to see the increment now. But it's at most $500 per month increment, and I think I'm pretty generous about it already. We'll see in due time.


6. Work is a relief from care taking

I think it's important to take our minds off our kids regardless of how much we love them. There is caretaker's fatigue to worry about, so that's something that SAHM (stay at home mums) have to think about. For me, a few hours of work where I concentrate on something else is a very welcome break from the caretaking, no matter how much I love spending time with my son.

Are we also working too hard in our jobs? A month or two of a good break in between jobs can clean up all our pent up frustration and negative energy can be a good thing to revitalize our work. That might be all it takes to change from dragging to skipping yourself to work. Thankfully in my line of work I always have 'in-built' 1-2 months slack time, so no complains there lol


7. To have someone sleeping in your arms is such a wonderful thing

Babies are so manipulative. After making them comfortable, they just sleep in your arms. That feeling is better than having a multi bagger, or a job raise, or a promotion at work. For those absent daddies who are not 'into' kids, do not miss out on little things such as these!

If you're ever angry with someone, remember that they are once babies and cute and lovable too :)

Thursday, March 02, 2017

Comfort delgo : Goodbye or good buy?

This is a guest post from Investingnote. It's regarding Comfort delgro and it's mainly about touch and go FA and other industry news. I had already bought it some days ago and my views can be summarised in two pictures:

Comfortdelgro weekly: bullish weekly divergence

Comfortdelgo daily: break out of down trend line and retracing back to trendline
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Can ComfortDelGro(C52) regain its customers of taxi service?


Brief Background of ComfortDelGro: 

ComfortDelGro Corporation Limited is a Singapore-based investment holding and management services company. It operates in eight segments:

1) Bus & bus station
2) Rail
3) Taxi
4) car rental and leasing
5) automotive engineering services
6) inspection and testing service
7) driving centre and
8) insurance broking services and outdoor advertising.

Summary of ComfortDelGro’s recent financial performance: 

The group maintains a steady growth of net profit despite a slight revenue decline caused by unfavourable currency translation this year. With the entrance and fierce competition brought by Uber and Grab, ComfortDelGro’s taxi business succeed to keep growing profitability. The five-year lowest P/E ratio indicates it is undervalued in a greater degree by the market. However, ComfortDelGro’s actions and measures towards issue of diesel tax and further competition are vital.

Recent Event: 10 Feb 2017 ComfortDelGro - Full Yearly Results of 2016 

Key Financial & Operating Highlights:

1. ComfortDelGro group had a steady growth of revenue during the period from 2012 to 2015, but experienced a light drop (1.26%) of revenue in 2016, which is mainly caused by unfavourable foreign currency translation, as the Group revenue should have been increased 1.76% by $72.4m. Stable growth of both operating and net revenue can be observed, but the growth rate has been declined after 2014. Also, the group achieved its highest profit margin in 2016.
 



2. From the perspective of segments operation (the eight segments can be found in the previous part of Brief Background), in the financial year of 2016, more than half (57%) of the group revenue was contributed from the segment of Public Transport Services Business. One third (33%) of the group revenue was driven by the segment of Taxi business, which is also the most discussed segment in recent years because of the competition from Uber and Grab. Approximate 10% of their revenue came from the Automotive engineering services.



The chart represents revenue of the three largest segments of ComfortDelGro. According to the chart, revenue of taxi business managed to maintain slow growth under the competitive pressure of Uber and Grab, especially after the aggressive expansion of Uber in early 2015. ComfortDelGro stated in their financial report that the revenue growth in the Public Transport Services Business, Taxi business, and the Driving centre business was offset by the decrease at Automotive engineering services business, the Inspection and Testing Services Business, the Car Rental and Leasing Business and the Bus Station Business.


3. Compared to the number of 31 Dec 2015, the group burdened less secured and unsecured borrowings and less payables. Total equity had a growth of 5.96%. Net cash generated from operating activities edged up to $702.5m from $600.2m at the same period of last year. However, the amount of free cash flow has a small slide of 1%. Overall, the group maintained a stable financial and cash flow position.


4. Now the group has a P/E ratio of 16.732, lower than that of the Transport industry (33.267), it is also the lowest number observed during the five-year period since 2012. The Earning per share (EPS) is 14.7 cents, with a dividend yield of 4.187%. (source: here)



ComfortDelGro’s Competition with Uber and Grab:

Are entrants of private-hire car threatening the profitability of taxi business?
After Uber and Grab entered the market, the amount of taxi licences issued was indeed affected by the rivalry.

“There are early signs of taxi weakness”, refer to the full article here.

For ComfortDelGro, the quantity of taxi licences were prone to fall since 2014.




However, the group presented positive numbers in both revenue and operating profit of Taxi segment during the recent years.

Hence, during the competition with Uber and Grab in the taxi industry, ComfortDelGro neither suffer from decreasing profit nor from loss. The possible reason could be that certain amount of consumers choose Uber/Grab because of the attractive coupons/Promo code they can use for car services. However, under the circumstance of urgency, they still prefer taxis as they do not have the time to schedule rides in advance and do not wish to waste time waiting for the Uber drivers. ComfortDelGro has witnessed improvement in service quality since they started the competition with Uber and Grab.


Is the Business of Uber and Grab sustainable?



Uber and Grab have proved their success by conquering the Singapore market and becoming well aware by people within a short period of time, but still, they face various obstacles with their operations.

1. How long can they allure customers by using promo code?

2. Private hire cars obey the Road Traffic Act (RTA) that they cannot carry a passenger who is under 1.35m without a booster seat or a child restraint. Taxi do not required to follow this Act because they are public vehicles. Related news here.

3. Singapore's private car hire business including Uber and Gran need to be licensed according to the amendments to the Road Traffic Act (RTA) after 7 February. Related news here.

4. Private-hire scam deteriorate customer’s trust. Related news here.


New threat: increasing diesel cost and new competitor HDT singapore

The Budget 2017 of Singapore announced the levy of diesel tax of 10 cents per litre, thus increase the operating cost of taxi business. Though taxi operators adopt plans to pass on tax reduction savings to drivers by less rental fee, the actual cost will increase according to research.

“Budget 2017: SMRT, ComfortDelGro to pass on diesel tax savings to taxi drivers”, to see the full article here.

“Diesel tax will add to costs, say cabbies”, refer to the full article here.

The new competitor HDT taxi company expand their customer base quickly and adopt a fixed salaries with benefit plan. Refer to the full article here.


Trans-Cab and Premier Taxi adopt new plans to attract cabbies

The 2 taxi operators introduce surge pricing (dynamic fares) and cut their rental fee to deal with competitions from Uber/Grab. But ComfortDelGro, as well as SMRT taxi, has not disclosed any intention towards the new plan.

Related news: “2 taxi firms plan to Grab hold of more customers”, shared in the post of @FGD, refer to the news here.

“Trans-Cab cuts rental fees in bid to attract cabbies” here.


What's the discussion in our community? 

“Ever-increasing challenges for Uber’s profitability”, shared by @alansmith in the post of https://www.investingnote.com/posts/47910

“Cab operators urged to offer driver more job options”, shared by @bgting in the post of :https://www.investingnote.com/posts/47721

@yjlim queried the opinion that Uber/Grab threat the business of ComfortDelGro in Taxi business, to see further discussion and share you opinion in the post :https://www.investingnote.com/posts/46795

@raynersu held the opinion that ComfortDelGro group did not make enough effort in updating their strategy for the latest market trend but rather stay out-of-fashion, while their peer Taxi operators keep improving and acquiring larger share of market gradually. Refer to more discussion in the post:
https://www.investingnote.com/posts/48547


Our Key Takeaway: 

ComfortDelGro performed well under the fierce competition with private hire services and new entrants in Taxi business. Under the circumstance that Uber or Grab maintain their operating strategy, ComfortDelGro group has a great chance to gradually gain their customers in Taxi services back. However, facing with declining growth of revenue, ComfortDelGro group has to carry out appropriate measures to deal with rising diesel cost and make greater efforts on cost reduction. Additionally, ComfortDelGro’s movement towards the latest plan promoted by Trans-Cab and Premier Taxi is vital.

For ComfortDelGro, and also for the taxi industry, it is the right time to have an innovation now.

Also check out some estimations:
@Breaddbutter: https://www.investingnote.com/posts/44331
@simontan0: https://www.investingnote.com/posts/47904 
@Lunner: https://www.investingnote.com/posts/47895
@hk1: https://www.investingnote.com/posts/47859 
@thatsasecret: https://www.investingnote.com/posts/47204
@chinnamng: https://www.investingnote.com/posts/46630

Saturday, February 18, 2017

Comprehensive financial cost from pregnancy to birth - Part 3

Finally received the final bill from NUH, so that I can properly blog about the cost of the entire pregnancy and delivery. To be honest, NUH billing is so complex and it's not immediate intuitive to know what the costs are. I received a total of 3 billings, one while in the hospital, one after I've discharged and the last one about 2-3 weeks after we discharged. Why so many bills? I've no idea. From what I observed, the first bill is to let us know the rough figures while the second bill is for us to foot a deposit in cash, because there is a limit to claim from medisave and so the rest had to be footed in cash. Lastly, the final bill received post discharge is after all the medisave claim had been sent, approved (they might not grant you the full medisave claim) and we had to pay the remaining amount due by credit or cheque.


3 STAGES OF PREGNANCY JOURNEY

To understand the bills, one would have to understand the events leading to the delivery. There are 3 major stages:

1. Antenatal charges

This is related to the checkups, from the 1st trimester to the 3rd trimester, and includes stuff like consultation with the gynecologist, laboratory screening (for genetical defects etc), ultrasound scanning and swab test. There is also a range of supplements, like essential vitamins, iron, calcium, fish oil and folic acid, to ensure that the mother is well nourished so that the foetus can grow healthily. For new parents, there could be antenatal classes conducted by various hospitals to teach the parents how to prepare for the delivery and also the care taking part.

2. Delivery charges

This is related to the actual delivery cost. Generally there are two ways - natural (or normal) delivery or cesarean delivery, with the latter being much costlier because besides the gynecologist, there is also an anesthetist (that's two doctor fees for you). It takes a longer time for the wound to heal too, so the standard hospital staying duration is 3 days, as opposed to just 1 day or 2 days for normal delivery. Lastly, there are a lot more medications and drugs so there will be more charges on this aspect as well. During antenatal check ups, there is a GSB (group B strep) swap test. If it's tested positive, there will be a need to IV drip antibiotics during delivery. All the charges are also tagged to ward category, but if the father wants to bunk in overnight, it has to be A wards (single bedder).

3. Nursery and laboratory charges

These are charges for the newborn baby to stay at the nursery. On top of that, there is a screening for NENS (I don't know what's that), Galactosemia and Cystic Fibrosis, plus vaccinations (BCG, Hep B etc). There will be daily pediatrician visits to check on the baby too.


OUR BILL

It's really hard to make a good judgement of the cost without telling people what we had in the first place. So, here's what we had:

Antenatal:
1. 4 consultations with a senior consultant + 1st trimester antenatal screening
2. Antenatal package covering 8 consultations with the doctor and some screening
3. GBS screening
4. Supplements
5. No antenatal classes (about $200)

NUH antenatal package. We opt for the senior consultant, highlighted above

Delivery:
1. Natural birth
2. 1 day hospital stay at A1 ward (single bedder)
3. No painkillers like epidural
4. GBS positive - so antibiotics given
5. 18 hours labour

NUH delivery package. We have a normal delivery @ 1 bedder ward, highlighted above

Nursery and lab:
1. No jaundice
2. All standard vaccinations
3. All screening test (NENS, Galactosemia, Cystic Fibrosis)
3. 2 day nursery

I'll present the final bills here:



The total bill works out to be $6,862.21. (Update on 22nd Feb 2017: I checked my CPF-MA and realised there is another deduction of $361.87. I have no idea where it came from - I told you NUH bills is really confusing) Of the Antenatal and delivery charges, $2100 can be claimed under CPF Medisave account (MA), while the entire sum of $457.97 under the Nursery and lab charges can be claimed under MA. In other words, we paid $3,946.37 in cash. But that's just the final sum after all the claims had been done. What's more important is the cash out flow i.e exactly when do you have to pay this or that fees?

Here's my hand drawn time schedule of all the cash payment:

My hand drawn diagram of the cash outlay schedule. I would like to do this digitally, but nah, time is precious to me these days. Essence is more important than form.

Antenatal charges is spread over the entire pregnancy over 3 trimesters. The entire $2,090.29 is paid by us first, then we can claim from MA after delivery. Supplements is paid throughout the entire 9 months. The first 4 consultations and 1st trimester test (B+C) amounting to $800.70 is paid over 2 trimesters. Thereafter, once the antenatal package of $898.80 is paid in advance, there's not much money to be paid for check ups anymore other than the supplements and some minor tests.

Delivery charges is first paid on the day of discharge. They will calculate how much you paid for the antenatal charges, add in the delivery fees and minus off the medisave claimable amount. You pay in cash/credit immediately. That is $1855.55 straight away for us.

Nursery and lab charges are claimable from medisave straight away, so there's no need for any cash outlay for that one.

After 3-4 weeks, when the final bill is in, we owe them $0.50 (you did not read wrongly). So, either a cheque or a credit card bill statement had to be sent back to them and that will be all.


LAST THOUGHTS

Is it costly to give birth in Singapore? I think a lot depends on our expectations. With the baby bonus of $14k, $8k of which is paid out in cash over several months, this will more than offset the cash outlay of the entire pregnancy journey. I'm showing both the final bill and the actual cash outlay schedule hoping to reassure new parents that it's not a shocking bill at the end of the whole thing. You'll have 9 months to save up, and even then, all can be paid for by the baby bonus. Of course, care-taking is another big tap where money gets drained out fast.

That is another story, another day. In the meantime, I have a baby boy to cuddle and love :)


Part 1: My fatherhood journey
Part 2: Her motherhood journey