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A lazy sunday night, so thought I'll try out a few surveys for fun. Turns out to be quite accurate, despite the seemingly small amount of questions asked in each survey. Don't we all love to find out more about ourselves - we little narcissistic self-lover? :) haha!

What the House Test Says About You

You consider yourself important, but no more important than anyone else. You love attention, but you don't feel like you deserve more of it than anyone else. You are a fairly community oriented person. You like to get to know your neighbors, but you also like your privacy. You get attached to neighborhoods and cities. You are a playful, charming, and seductive person. People feel instantly close to you. You look good in a low maintenance sort of way. You do the minimum required to be attractive. You are moved by romance and love. You are optimistic about people, and you love hearing about happy endings.

Your Five Factor Personality Profile

Extroversion: You have low extroversion. You are quiet and reserved in most social situations. A low key, laid back lifestyle is important to you. You tend to bond slowly, over time, with one or two people. Conscientiousness: You have high conscientiousness. Intelligent and reliable, you tend to succeed in life. Most things in your life are organized and planned well. But you borderline on being a total perfectionist. Agreeableness: You have high agreeableness. You are easy to get along with, and you value harmony highly. Helpful and generous, you are willing to compromise with almost anyone. You give people the benefit of the doubt and don't mind giving someone a second chance. Neuroticism: You have low neuroticism. You are very emotionally stable and mentally together. Only the greatest setbacks upset you, and you bounce back quickly. Overall, you are typically calm and relaxed - making others feel secure. Openness to experience: Your openness to new experiences is medium. You are generally broad minded when it come to new things. But if something crosses a moral line, there's no way you'll approve of it. You are suspicious of anything too wacky, though you do still consider creativity a virtue.

You Are a Great Listener

You are the perfect person to talk to. You are patient, empathetic, and encouraging. You provide subtle, but important, feedback. You let people say everything that needs to be said before you weigh in.

Your Dominant Thinking Style: Modifying

Super logical and rational, you consider every fact available to you. You don't make rash decisions and are rarely moved by emotion. You prefer what's known and proven - to the new and untested. You tend to ground those around you and add stability.

So how? Do I have the characteristics of a good investor or a good trader? You might want to try some of these surveys yourself too. Takes less than 2 mins each, but for fun, of course :)

This year, I’ve read a total of 28 books (excluding those that I didn’t read from cover to cover). After reading so many, I realized that those selections which interest me are getting lesser and lesser. I used to go to any library and grab a book – chances are that it’ll be interesting enough to carry on reading till the end. But as more of such books had been read by me, I have to be a little more selective.

I recently stopped reading two of Ken Fisher’s books that I borrowed - the most recent one being his famous “Three questions that count”. After reading the first chapter, I already felt bored by his philosophy. The singularity point comes when I did one-third of the book and I decided to stop taking the nonsense I’m reading. Don’t get me wrong, it’s not a bad book seriously, I think it’s just not for me. Some deeper level of conflicts between his ideas and mine prevented me from finishing his books. In a way, Ken Fisher already ‘predicted’ that as he mentioned that even if people are to read his books and predictions, they won’t believe in enough to act on it. Oh well.

These days I go by author. I love Pat Dorsey and Nassim Taleb. I’ll gladly devour any books written by them. I was wowed by Nassim Taleb’s Fooled by Randomness – a salad mix of philosophical, logical, mathematical and statistical story telling. I learned from these authors that stories stay when big ideas are forgotten – a very useful thing to remember in my line of work. Never tell facts – tell stories that wove the facts.

I’m already salivating over his new book – The Black Swan – which is sitting right here on my desk.

Another ‘genre’ of books that I like are those very old books with their ancient fonts and archaic sentence structure. The authors are irritatingly polite and have this circular kind of reasoning, which is all-so-common in that era. However, reading such books still give me a rustic kind of charm, which I liked very much. Don’t be mislead by their ancient-ness, the advice espoused are very much applicable in today’s new era. I suppose there are a few truisms when investing and those that can stand the test of time and hold strong in the face of the vicissitudes and whims of Mr.Market truly deserve to be called ‘truism’.

Am I now a more learned person because of the books I’ve read? It’s hard to say. From a personality test that I took in the past, I’m a fact curator – someone who collects facts and recalls them well. This brings me to another important point. Does reading make one stupid because the thinking had been done for you? Am I getting stupider yet thinking I’m smarter because I’m so educated and read so many books? If the latter is true, it’ll be the most ironic thing – to be intellectually trapped by books. I guess the balance point lies in being open minded.

And I’ve just shown myself to be close-minded by rejecting Ken Fisher’s book :)

This book is very meaningful to me. I remember in 2006, me and a friend just went over to DBS building there to just open a DBS Vickers account together (but not joint). After some time, my friend bought this same book and passed it to me for reading. I browsed a bit and realized that this book is not ‘locally contexted’ and hence dismissed it, saying that it’s not suitable for Singapore.



Who would have guessed that years later, in 2008, I was actually looking around in library for this book? I read and found out big my folly is. The book was written back in 2004 but the prediction and forecast are uncannily accurate. It detailed, among other things:

1. The dollar crisis of America
2. Sub prime crisis
3. Rise of China and India (esp China)
4. Rise in commodities like oil, gold, metals, soyabean, corns

I found it amusingly when the guy predicted that oil will one day rise to USD 100 per barrel. You can guess how much the price of oil overshot this forecast by now.

That was back in 2006, when I’m still new and ready to stand in front of a bear charging at me and thought it was a bull. Atlas, even if I had read that book back then, I doubt I would have the maturity and experience in me to really treat this book as it is. That’s life – cest la vie. But life is to be lived forward and understood backwards, so there’s no point regretting not reading the book when fate had thrown it to me earlier.

I particularly liked his insights into China and India. His general rule when investing in emerging markets will be this: Buy the biggest financial, energy/resource, telecommunications companies in these areas and you pretty much had the biggest growth area. I totally agree with him. Looking at china mobile, singtel looks a tad insignificant. M1 or Starhub must be like how Singapore looks like when one is looking at the world map of telecommunications.

The author recommended ETF as a cost efficient and safe way to invest, though he also mentioned that if one is savvy enough, individual stock picking can also be done. The key point here is that bull markets occur somewhere, one just have to open one’s eyes for opportunities. Just like when one place is daylight, another place falls into darkness, bull and bear market will chase each other till kingdom come. The important question when facing a bear market is this – are you investing in the right asset class?

An excellent book, this one is for me. It had truly come one full circle back in the days when I first came to know of the book in 2006.

Business

Singtel had significant operations in Singapore and Australia, through a wholly owned subsidiary of Singtel Optus. They are the second largest satellite operator in Asia pacific, with international network providing direct connections from Singapore to more than 100 countries. Singtel had major investment in telecommunications industry in Thailand, India, Philippines, Bangladesh, Indonesia and Pakistan, forming the largest multi-market mobile customer base in Asia outside of China.

This is about the first time I saw a local company earnings billions in revenue and net profit after tax – truly an eye opener.

Singtel is the leading mobile operator in Singapore in 2006 and 2007 (I’m sure they are too in the past). Besides being the market leader locally, they are also named asian mobile operator of the year in 2006 – a true testament to its market leadership status. Their red colours are splashed everywhere in the local newspaper and media; it’s hard not to recognize their branding.


Growth prospects

With number portability implemented, there is bound to be a war to win market share. It’s stated in ST that singtel will do all it can to retain its market leader position. I believe with their market clout, they can do that. Regardless of the results, their expenses is bound to rise up as I expected more advertising dollars will be spent to create a perceived difference in the services and plans by the 3 local telcos. If the price war that is bound to happen lasted for a few years (as did Hong kong when they implemented number portability), then all 3 telcos will suffer in profitability.

That being said, singtel having the most diversified operations out of the three telcos, they should be able to weather out this small bump in the local telecommunications scene.


Analysis

Singtel has growing turnover since 1996. Even during the worst sars period, their turnover increased (though their profit dropped). I suppose that is the good thing about telecommunications industry – everyone needs to use their products regardless of what happens.



CAGR over 11 yrs is 11.4%, CAGR over last 5 years is 12.6% and CAGR over last 3 years is 3.1%. I suppose their heyday of growing turnover in excess of 10% is well over, at least in the local scene. Based on just Singapore’s business segment, a turnover increment of around 1-3% seems reasonable for Singtel in the future – anymore than that, every one of us might have to hold 2-3 handphones by Singtel.

Average operating margins over 7 years is around 38%, with net margins at a very good 28.6%. ROE flunctuates, especially during the hard FY2003, but is around 17% on average. Current ratio of 1.4 on average and a total debt/equity of 0.9 – I think the figures are peculiar to the telecommunications industry with all the high initial capital cost. I need to check these set of figures with Starhub and M1.

Dividends had been increasing, except for the difficult years in 2003-2003. Payout ratio is around 45%, with the latest FY07 having a payout ratio of 50.8%.


Valuation

Again, I’m just fooling around with numbers. My usual EPS model with zero terminal value, with EPS growth ranging from 10% to 15% and discount rates ranging from 4% to 6%, gives me this table:


I do not know which values to take as an estimate for Singtel, though I know that at last closing of $3.59, it does not seem to have a margin of safety sufficient to guarantee safety of principle and an adequate return. I do not have the price range for Singtel in the troubled periods of 2001-2003. It’ll be interesting to see what the PE ratio during that time. Historically, Singtel trades at a low PE of 8.4x and a high PE of 17.9 times.

Based on last year’s EPS of $0.23 and last closing of $3.59, PE of Singtel is at 15.5x – a tad too high. Dividend yield (based on FY07’s dividend) is 3.8%. It’s too unattractive at the moment. Perhaps when the price drops way below $3, then it’ll be more attractive in terms of dividend. Again, I could be grossly underestimating the potential of Singtel given its branding, since I did not do a more in-depth study of its business model. My feeling is that a sum-of-parts valuation seems more appropriate.