SMRT - Keep or Dump?

'People Mountain People Sea!'

Introduction

As taken from SMRT's 2012 Annual Report:

"SMRT Corporation Ltd (SMRT) is a leading multi-modal public transport operator. In Singapore, SMRT offers a comprehensive suite of rail, bus and taxi services that are designed to interconnect seamlessly to make Singapore’s public transport system one of the best in the world.

SMRT has interests in operations and maintenance services, engineering consultancy and project management, as well as the marketing and leasing of commercial and media spaces within our transport network. We have established a strong reputation as a reliable, progressive
organisation, distinguished by our sound corporate governance, commitment to sustainable development and corporate social responsibility.

SMRT was established in 1987 and was listed on the Singapore Exchange in July 2000. As of 31 March 2012, we had a market capitalisation of approximately $2.64 billion. We have an annual turnover of $1,057.2 million and a net profit after tax of $119.9 million."

Key Financial ratios and figures

Purchase Price: $1.84
Current Price: $1.69
Net Asset Value (NAV): $0.521
Net Tangible Asset (NTA): $0.512
Earning Per Share (EPS): $0.079
P/E Ratio: 21.39
Gross Dividend (FY2012): $0.0745
Dividend Yield (Based on Purchase Price): 4.07%
Dividends Paid Out: $113.3mils
Profit After Tax: $119.9mils

Strengths

• Enjoys a duopoly of Singapore rail network with Comfort Delgro
• High barrier of entry for potential competitors
• Upcoming refurbishment of Woodland (2nd Half, 2013), Marina and Bayfront station will increase rental income
• Cash hoard of 195.3mil

Weakness

• Profitability likely to be affected by higher repairs, maintenance, energy, staff and related cost
• Tracks belong to LTA but SMRT have to maintain it as stipulated in separate lease agreement
• Huge maintenance and upgrading cost of $900millions to be spread over 8years ending in 2019
• Repayment of $150mil by October 2014 due to expire of fixed rate notes
• Obligations to purchase the operating assets of the CCL on 4 May 2019
• Dividend payout for FY2012 has fallen to $0.0745 compared to FY2011 $0.085

Opportunities

• Increase in vehicles price forces an increasing percentage of the population to turn to public transportation
• Ridership in public transportation is also expected to grow as Singapore population increases

Threats

• Changing political landscape might dissuade the authority to increase transport fare as the incumbent party will be mindful of the repercussion to their popularity for any fare increase
• Unlikely to have another year of 'Record Profit' anytime soon. The report of such earning at this period of time will probably trigger a public uproar... friends and family around me will be contributing to the angry voices:0 
• Change of focus to the engineering and rail section of the business instead of the lucrative rental and advertising section

Conclusion

I sold all 5 lots of SMRT on 06/05/12 at a price of $1.69, making a loss of $750. However, total dividends collected since purchase date was $850.  Therefore, there was a net gain of $100.

The reasons for the divestment was my increasing lack of confidence in SMRT ability to maintain their dividend payout despite the predicted growth in ridership. I was also not very certain of the degree in increases in SMRT's operation and maintenance cost.

The price at which I entered also seem rather high to me as the Purchase Price is about 3 times more than the NAV. The P/E ratio does gets on my nerve too as it appears rather high to me.

Based on the above reasons, I have decided to divest in SMRT and look elsewhere for higher yielding stocks with a Purchase Price close to their NAV while having a reasonable P/E ratio.

Portfolio Update: June'12

I have lost my dad.

Cancer has also touched my Mum... again..

I have barely got over the grief of losing my dad and suddenly, I am slammed with a huge feeling of deja vu..

Life sucks pretty badly at this moment...and yet it must go on..

Have been procrastinating over the updating of my portfolio. Since I'm feeling pretty jaded and lost right now, I have decided to do some blogging to gain some direction and clear my head. Feels like I have aged so much in such a short amount of time...

Anyway, here's my portfolio.. 

I have made new purchase of Lippomall and K-Reits recently. However, it was done on the spur of the moment without much study.

All I know right now is that they are currently below their NAV while offering a healthy payout of more than 4% per year. I also like the fact that some or all of their business are conducted out of Singapore, offering some diversification.

I will study the 2 recent purchase in detail soon. SMRT will also be reviewed as stated during my last post in Feb'12 =0

All hail the king of procrastination! 

There is an additional boost of $6000 to my portfolio due to cash left behind by my dad. On top of that, I have also been regularly contributing to the portfolio.

Lastly, $2500 was taken out from the cash holding to pay for my tertiary education.

Okay..THE END.

Still feeling jaded, but not so lost anyway. I feel so freaking olddddddd.....

 

Portfolio Update: Feb'12

I made some alteration to the layout. Added the 'dividend collected' column to shows the total amount of dividends I have collected from the holding. I have also removed the 2 numismatic gold coins since they were brought mainly because the collection of numismatic coins is my hobby rather than wealth growth/protection. In future, only intrinsic precious metal bullion would be displayed in the 'precious metal' category.

For this month, I did not commit much action to my portfolio except to add in additional funds of $2000. I am currently still in the preliminary stage of reviewing SMRT to decide if I should divest from it. The core of the management team of SMRT looks pretty strong at this moment to me thou.

Keppel, Hyflux, SGX, ComfortDelGro, Starhill Global Reits and Cache Reits have also piqued my interest recently. What does this entails you ask? This means that Limpeh will be kept pretty busy in the months to come because I will be learning to assess all this stocks:(

Haisss.. The path to financial freedom is not easy at all. Why doesn't monies fall from the sky??

Insurance for a Peon

Released the '天灯' a few days back. Hope it will bless me with a smoother year ahead:)

Anyway, I got my insurance sorted out finally, after much procrastination. 3 years plus to be exact...

My dad recent stay in the hospital made it much more compelling for me to get myself well covered. As I mentioned in the previous post, my dad is not a really financially savvy dude. However, it was really a surprise when I discovered that he was not even covered with the most basic and fuss-free coverage, the Medishield. Thus, his treatment cost us a bomb even though he was warded in the cheapest ward. When I said a bomb, I mean a really fcuking huge ginormous bomb. A nuclear bomb. The total cost of his treatment almost wipe out the funds from my mum's Medisave and we had to seek some help from the social welfare.

With this incident in mind, I hasten my search for the most comprehensive coverage with the budget of a peasant/peon/serf.

 
So with a grand budget of $50 in cash per month, I went on my search for the best coverage and upgraded/applied for the 4 policies stated below.

1) Aviva SAF Group Term Insurance

I was on this policy prior to this assessment of my insurance coverage. However I added 3 additional riders and increase my Death and Total Permanent Disablement(TPD) coverage.

All in all, my coverage for this plan includes:

Life insurance coverage

•   Death due to illness - $200,000
•   TPD due to illness - 120% of Sum Assured

Personal Accident Coverage

• Death due to non-SAF related accident - $225,000
• Death due to SAF related accident - $300,000
• TPD due to an accident - 120% + $25,000

 Major Illness Coverage Rider

• Payout when inflicted with any of the 30 Major Illness - $100,000

Personal Accident  Coverage Rider

•   Death due to accident - Additional $200,000
•   TPD due to accident -Additional Sum Assured

 Disability Income Coverage Rider

• Monthly payout in the event of incapacity to work - 50% of last drawn pay

Miscellaneous Benefits

• Cash Rebate in good years
• Daily payout when hospitalize for more 10days up to a maximum of 30days - $40
• Advance payout when terminally ill(<1year to survive) - $100,000

Cost of policy monthly = $25.60 + $10(Major Illness Rider) + $8.90(Personal Accident Rider) + $9.84(Disability Rider)
                                    = $54.34
                     
*To be paid fully in cash

2) NTUC Income - Dependents' Protection Scheme(DPS)

DPS is a low-cost term life policy which can be paid using monies from the CPF Ordinary Account(OA). Normally, any Singaporean would be automatically insured under this upon contributing to CPF. However, I must have been hit in the head years ago by a plane to be insane enough to opt out it then, leading to the hassle of applying for it now again.

The benefits for this policy are:

Life Insurance Coverage

• Death - $46,000
• Permanent Incapacity(inability to work) - $46,000 

Cost of policy annually = $36
Cost of policy monthly = $3

*Payable using CPF(OA)

3) CPF MediShield

MediShield is a scheme by the CPF board to help members to pay part of their medical bills. This is achieved by complementing the CPF Medisave account. In theory, what this means is that members would first pay only their Deductible and Co-insurance portion of their bill either by Cash or funds from their Medisave account and MediShield would then follow up by settling the rest of the bill. Premium for this policy can be borne entirely by CPF(Medisave). 

However, there are claim limits for this policy and they are as followed:

• Per Policy Year - $50,000
• Lifetime - $200,000

Cost of policy annually = $33
Cost of policy monthly = $2.75

*Payable using CPF(Medisave)

4) NTUC Income - Enhance Income Shield Plan

This excellent policy complement MediShield which further complement MediSave........
It is sickening stuff like this which makes me wonder why insurance coverage have to be so complicated when simple folks like me have a hard time understanding.

Anyway, back to the policy. This Income Shield plan provides a lifetime coverage for most of your hospitalisation bills. Once covered by this plan, members would only need to pay for their Deductible and Co-insurance(lower than MediShield) portion of their bill either by Cash or funds from their Medisave account. Premium for this policy is payable by using the CPF(Medisave). However, the premium for the riders for this policy have to be borne entirely by cash.

I have also applied for two riders for this plan as shown below:

Daily Cash Rider

• Daily Cash Benefit(Per Day) - $150
• Get Well Benefit(Upon recover) - $300

Assist Rider

• Pay only 10% of claimable amount
• Insured person not required to pay deductible
• Additional cash benefits if warded at a ward lower than what you are entitled to

Cost of policy yearly = $142(Medisave) + $83(Daily Cash Rider - cash) + $111(Assist Rider - cash)
                                 = $142(Medisave) + $194(cash)
                                 = $336

Cost of policy monthly= $11.83(Medisave) + $6.92(cash) + $9.25(cash)
                                  = $11.83(Medisave) + 16.17(cash)
                                  = $28

*Payable using a mixture of CPF(Medisave) and Cash




To summarise, I would have to pay a total of $88.09 monthly for all the above coverage. However, only $70.51 have to be paid in cash monthly with the balance covered by CPF. While I exceeded my budget of $50 by cash, I am feeling pretty smug glad about getting such a pretty good deal with the amount I am paying compared with the coverage I am getting. In the event that I am stricken with any of the 30 major illness, I would most probably not have to fork out a single cent unless the insurers decided to play punk.

Is this the best value combination one can find in Singapore?

PS: This is a freaking long post. My fingers and eyes hurt.
PSS: The '天灯' flew behind the block of flat and disappeared. I am sorry if it burns any of your stuff.

Happy Lunar New Year

Recent events had taken huge chunks of morale away from me resulting in the above sombre greeting.

Please allow me to rant.

Just a week ago, my dad was admitted to the hospital for severe infection due to him being in the terminal stage of cancer. The doctors didn't have much hope of him making it pass Chinese New Year. Thankfully, not only did he manage to fight off the infection, he even made a remarkable recovery in order to be granted a short and sweet 6 hrs discharge from the hospital.

Just in time for reunion dinner.

Although I tried to be cheerful during dinner, the fact that this is going to be the last reunion dinner with my dad did not elude me. The thought of having the last few meals with a love one have never ever crossed my mind till today and I never knew it would feel so excruciatingly painful.

Prior to my dad diagnosis with cancer, my family had another episode with cancer. That was my mum then and when it was discovered, she was already in the 3rd stage. Miraculously, she survived even though the doctors did not pin much hope.These two close encounters with death have made me realise the fragility of life and thus, set me thinking about how I would like my life to pan out.

Do I want to live a life so frugal and deprive of material comfort that I will regret when I pass on?

No, I do not want to... I will aim for a healthy balance while showering love on my love ones, specifically my mum.Therefore, while my wish of having sufficient passive income will still proceed on, I hope it will never be at the expenses of my family.

I know this sound cliche but still, do cherish your love ones guys, for life is indeed unpredictable.

PassivePeon is born!

A big hello to whoever is reading my obscure blog:)

This blog was set up mainly to gather my thoughts, summarize my financial standing on a monthly basis and to set and review my goals.

The sole reason for doing so is to enable me to rely on passive incomes to feed and shelter me with comfort when I'm unable to work. This wish of mine has been in my mind for the last couple of years. However, it is only now that I've decided to track my progress by blogging about it after I realized I had not made any progress at all for the last 2years.

Therefore, with the set-up of this blog, the PassivePeon is thus born! 

Firstly, let me start off with a summary of my financial status as of now.


Aged 23 years old, I have started working in this cruel society for about 1year without much to show for. This is not very surprising considering the fact that I'm only armed with a diploma cert. I acknowledge that this is entirely my fault as I wasn't a very studious person all my life, happily taking each day as it comes.

It is only when I stepped into office that I realized that I won't be able to get very far without a better 'toilet-paper'. Thus, I decided to join the growing ranks of paper chaser and I aimed to graduate in 2015.

So what or who exactly trigger my awakening to sort out my finances?

The answer to that is none other than my parents. Just in case you are wondering if my parents are wise old sages who imparted words of wisdom to me, the answer to that is a resounding 'NO'!

On the contrary, my parents completely mismanaged our finances. The breaking point came 4 years ago when my mum admitted that she lost all our savings and we were in debt due to her frequent casino visits.

It was during this point of time that I knew that I have to take charge of my monies and have a sound system to manage my monies if I do not want to end up like my parents. It was utterly heartbreaking when my mum revealed that she had no monies for a replacement computer and when my dad had to borrow from me just to pay the bills.

Therefore, I resolved to manage my finances much better than my parents and 'small' steps were taken to gain some knowledge in managing one's personal financial matters. Sad to say, I've not made any progress for the last 2 years but I hope to change this with the set-up of this blog.

Well...That's the end of my intro. Let's have a look at a summary of my assets shall we;)

From the above spreadsheet, my total assets can be seen since all my assets were 'showhand-ed'. There's a few things I would like to take note after the above summary.

1. Review SMRT holding

I purchase SMRT about 2years ago and I completely washed my hands off it since then. However, with the recent bad press and the changes in their leadership (bye SAW PHAIK HWA!), I'm rather incline to review SMRT again to decide if I should divest it since the dividend yield at 4.62% isn't that attractive and I'm not too sure about the fundamental of SMRT anymore. I have also set an interim cut loss limit at $1.50.

2. Precious Metal

My current holding for precious metal consist of 2 tiny pieces of numismatics gold coin. I'm considering whether to take this 2 item out of my portfolio since technically, the reason why this 2 coins were purchase is due more to me wanting to be a coin hobbyist rather than for assets building. However, this does not mean that the precious metal category will be taken out. In future, should I decide to purchase bullion instead of numismatic metals, the bullion will be inputted into this category.

3. What to do with the Cash holdings? 

Currently, my cash holding is about S$5500. While this is not much to begin with, I hope to be able to pick some assets at a fair valuation. Right now, I'm looking into Hyflux, a water-treatment company. However, I might also keep my cash holding due to the fear in the market and also because no other equities have interest me as of yet.


Finally, after the introduction and summary, I would like to set some goals for 2012. No goals, no aims! No aims, no progress!

GOALS for 2012

• Sort out my insurance. (Am I sufficiently covered using my limited resources?)

• Increase monthly dividend payout to $50. (Currently stands at $35.42)

• Achieve honors grades for my part time studies.

• Gain significant in-depth knowledge on FA.

With these points in mind, I shall take the first step in my passive investing journey!

Lastly, I would like to say that all views and comments will be appreciated as I acknowledge my inexperience in this journey of mine:)

Wish me luck!