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Friday, February 18, 2011

The Power of Introductions

A journey of a thousand miles begins with a single step. 
~ Confucius

You know what I always find hardest when it comes to writing? The introduction. It seems that whenever I have an idea to write about something, I encounter the most trouble in that section - the introduction. It’s the starting that’s the most difficult and the deciding factor if the piece makes it to keeps or is discarded with a touch of the delete icon. Maybe that’s because I place a lot of emphasis on it – the introduction. And why not? Introductions are of utmost importance yet are often overlooked. They have the power to make or break a piece and even put people off totally from reading what you have to say. But this doesn’t just apply to writing. A good introduction affects just about anything and leaves a lasting impression. Observe.

First dates

Dialogue: “Hi, really glad to meet you. You look great.”
Gestures: [winning smile]


Dialogue: “Hey. Glad to meet you.”
Gestures: [yawning] [scratching]

Job Interviews

Dialogue: “It’s a pleasure to meet you.”
Gestures: [confident smile and handshake]


Dialogue: “Pleasure to meet you.”
Gestures: [stammering] [timid handshake]

Meeting Your Future-in-Laws For the First Time Over Dinner

Dialogue: “Hello Auntie, Uncle. It’s nice to meet you. Thank you for inviting me to dinner.”
Gestures: [winning smile]


Dialogue: “Hello Auntie, Uncle. It’s nice to meet you.”
Gestures: [nervous smile]

Now while I only focused on only two aspects in a physical introduction – dialogue and gesticulations, it’s obviously apparent just how a bad introduction could drastically affect a good message.

And so it is with writing. Dive straight into a topic and some people may get lost and click the back or close icon of their browser. Write too long an introduction and risk people zoning out. Close browser. Write a weak introduction and have people label the article “boring” while skimming over the words, trying to absorb without understanding. Click back. No, that simply doesn’t work. If you’ve something to say and you want people to hear you, a good introduction is key. Click back and close browser must not be an option.

It’s said that impressions are made in the first 5 seconds from the time two people meet each other. I believe that also applies in writing. Note to self: Click back and close browser must not be an option.

Repeat: Click back and close browser must not be an option.


Wednesday, February 2, 2011

100th Post Celebration and a Happy Chinese New Year, With a More Important Note

Here's wishing everyone a happy and prosperous Chinese New Year. Also, this happens to be my 100th post so it's a double celebration for me. =)

While we're celebrating, I thought it would be good to incorporate some social responsibility as elaborated by the posters below. A picture does say a thousand words anyway.

And while some of you may have objections on shark fin soup. Perhaps the videos below may enlighten you on the importance of their roles in maintaining our environment and life and the danger that they are seriously in. 

Rob Steward's Sharkwater received numerous awards, 33 at current count, and positive reviews, in recognition for all the effort Steward put into making this movie, even putting his own life on the line to capture the truth. In my opinion, it is one of the best shark documentaries I've ever watched. 

I hope you check it out. And give us a chance.


Highly Recommended Videos on the Importance of Sharks

Sharkwater 01/09

Sharkwater 02/09

Sharkwater 03/09

Sharkwater 04/09

Sharkwater 05/09

Sharkwater 06/09

Sharkwater 07/09

Sharkwater 08/09

Sharkwater 09/09

Tuesday, February 1, 2011

Starhub - Which Way Will It Go?

Starhub has been stubbornly clinging on to its downtrend for more than two months now. Closing three in fact. Twice I blogged about a breakout in the making and twice it didn't materialize. Good news didn't seem to matter to the public who were already set in their negative sentiment (see Starhub: Breakout in the Making?). Even the 100 day moving average support, which I had hope in to hold the fort, so to speak, fell apart (see Starhub: Opportunity to Buy In May Be Near at Hand) resulting in prices crumbling quickly thereafter. 

To make matters worst, candlesticks in the last three days show strong pressure from above determined to push prices down further, with 2 gravestone dojis forming in succession, one longer than the other. However, prices were unable to penetrate $2.53 for the two consecutive days before that perhaps forming a floor beneath. In fact if we look back at the charts, we would see that $2.53 did provide some support in October last year.

Also, prices, at the moment, seem resilient and intent on holding firm. However we didn't see a lot of buyers a day after that long ugly black candle day back in Dec, so I'm not so sure about the reliability of the support despite driving prices back up. 

And since all looks quite ill, now I'm just toying with this idea, but doesn't that formation remind you of a heads and shoulder, albeit lopsided? Or would this just be a manifestation of seeing what wants to see to fit the scenario, in this case negativity?

Well if that's the case, we should worry if prices break the neckline at where the current support lies. If that happens, we could see prices plummet to $2.48 or even to its 200dma. Just something to take note of.

But that said, prices seem to be withstanding the hammer blows from above for now and as such a triangle may form and it could be really soon before prices breakout from its downtrend and head upwards especially since price lows are higher and since the triangle really has not much space to run anymore. This seems the more likely of the two formations. Plus when you have to force a formation into the chart, like I did with the heads and shoulders, it usually is wrong. So my opinion is that things could head this direction rather than the other. But I could be mistaken yet again for the third time and strike out.

With a dividend yield of 7.4% and p/e of 13.65, Starhub could be quite attractive as an income stock. However as mentioned before, maintaining its current dividend is something that has analysts concerned.

Perhaps this is a view shared by many and is the reason why share price seems intent on falling lower - to make up for the coming "falling dividend" yet maintaining the yield? The warning bells are chiming. Or are they? 

Senior Guru blogger Drizzt has done a terrific job at analyzing the telcos. You can read more at his blog, Investment Moats on Starhub's yield maintenance (see here), its debt (see here) as well as on how prices adjust due to people determine to upkeep their yield (see here). I guess his blog was voted the Top Stock Market Blog in 2010 for good reason. =)

On other news, Starhub has teamed up in a venture with Japan's Nippon Telegraph and Telephone Corp to jointly build and operate submarine cables that will connect East Asia's business hubs. (You can read the news here.) Though revenues are expected to rise, we can all expect costs will as well. Will this venture increase their free cash flows that will allow Starhub to maintain its dividends yet still leave ample capital to grow is a question I can't answer. Earnings announcement on the 11th of Feb by the way. Stay tune!


P.S. What started out as a quick post turned out to get dragged as I realized there was more news to consolidate. Apologies and thanks for reading to the end. Vested interest btw.

Singpost - What the Analysts are Saying


Steady 3QFY11 results

QFY11 results in line with expectations.
Singapore Post (SingPost) reported a 6.3% YoY rise in revenue to S$148.5m and a 0.7% drop in net profit to S$43.8m in 3QFY11, such that 9MFY11 net profit accounted for 74.7% of our full year estimates and 78.5% of Bloomberg’s mean consensus. Excluding one-off items such as amortization of deferred gain on intellectual property rights and benefits from the Jobs Credit Scheme (in 3QFY10), underlying net profit increased 5.1% YoY to S$40.9m.

Growth in mail and logistics businesses. 
Mail revenue grew 7.5% YoY on the back of strong growth in the direct mail business and better economic conditions, while international mail was underpinned by growth in e-commerce activities. More transshipment and vPOST shipping activities contributed to the 10.2% YoY increase in logistics revenue, but operating profit from this division declined as transshipment generally has lower margins.

Diversifying its businesses and markets. 
Management reiterated that it continues to face “formidable challenges” in the postal industry, driven by factors such as e-substitution. With the global trend of declining mail volumes, the group wants to reduce its reliance on mail revenue and diversify its revenue base. Indeed, the mail division’s contribution to total revenue has fallen steadily from 77% in FY08 to 68% in 9MFY11. However, being Singapore’s dominant postal operator, SingPost will still focus on the mail business to meet the changing and growing needs of its customers, while expanding its logistics and retail divisions. The group is also exploring acquisition opportunities to grow its businesses in the region.

Maintain HOLD. 
To accelerate the group’s transformation and growth, SingPost has announced an organizational restructuring in which there will be a CEO in charge of Postal and Corporate Services while another CEO will focus on the international business. We are positive on this latest development as the segregation of duties should result in a sharper focus on both the mail business (faces own challenges in the industry) and the group’s international expansion efforts (essential to seek new growth drivers). Meanwhile, we continue to await news on the M&A front. An interim dividend of S$0.0125/share has been declared, in line with the group’s usual practice. Though the stock has an estimated dividend yield of 5.3%, there is limited upside potential to our DCFbased fair value estimate of S$1.16. Hence we maintain our HOLD rating.


New CEO (International) for Regional Expansion

At a Glance
  • Net profit of S$43.8m (-0.7% yoy, +10.0% qoq) and quarterly DPS of 1.25 Scents were in line.
  • The appointment of new CEO for international business shows regional focus. Regional M&A and share buybacks cannot be ruled out.
  • Maintain HOLD with DDM-based S$1.17 TP (cost of equity 7.7%, growth rate 2%). We have assumed that dividends can grow by 2% p.a. in the long term.

Comment on results

Net profit of S$43.8m (-0.7% yoy, +10.0% qoq) was in line. Mail segment grew strongly by 7.5% yoy on the back of direct and international mail, benefiting from higher business activities. This offset the impact of higher terminal dues (about S$2-3m impact in FY11F) and absence of benefits from job credit scheme (S$5m adverse impact in FY11F), which expired in June 2010. 9M11 earnings constitute 77% of our FY11F forecast. 3Q is typically the strongest quarter due to higher mail traffic during the festive season.

New CEO (international) to drive regionalization. As Partner at McKinsey, Dr Wolfgang Baier, has been working with Singpost for the last five years and has extensive experience in Asian and Western markets. He will be driving the logistics and retail business, which can expand further regionally. With S$200m raised through bond-issue in March 2010, Singpost has enough muscle to acquire small companies. Given that Singpost has a mandate to buy 10% of its shares, share buy backs cannot be ruled out either in our view.


We do not see any risk to its dividend payout and recommend HOLD with DDM-based TP of S$1.17.

Kim Eng

Still waiting for fresh catalysts


SingPost did as well as can be expected. In other words, we expected its mail business to reflect the current economic strength, and it did. But the logistics and retail businesses did not do so well profit‐wise due to lower margin components coming to the fore. If this is the best it can do despite the economy firing on all cyclinders, then it needs to move faster on its regionalisation and diversification plans. Perhaps the recent management restructuring will speed things along. Meanwhile, HOLD for the yield of 5+%.

Our View

Net profit of $43.8m was flat YoY. Underlying net profit, excluding one‐off items such as the $2.9m amortisation of deferred gain on IP rights and benefits from the Jobs Credit scheme which ended in June 2010, was lower at $40.9m, though still 5% higher from a year ago. The usual quarterly dividend of 1.25 cents was also declared.

Mail business did the best on stronger domestic, international and hybrid mail volume, with EBIT growth outpacing revenue growth. However, Logistics margins were affected by lower margin activities such as transhipment as opposed to higher margin customized logistics, while Retail profit fell on lower agency and retail activities.

Perhaps sensing investors’ impatience with its long‐promised regionalisation and diversification, SingPost recently appointed two CEOs. An ex‐McKinsey consultant will now accelerate its expansion in the region and diversify into non‐postal businesses. Incumbent CEO Ng Hin Lee will lead postal services and strategic acquisitions.

Action & Recommendation

We maintain our HOLD recommendation, mainly for the yield of 5%. Our target price has been raised to $1.29 as we roll over to FY12, still on 15x target PE.


P.S. I have SGX Yield Stocks to thank for compiling the info.

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