Singapore Stock Market News

Hmm, I realised it's been such a long while since I commented on the market or the announcement which I read daily from sgx website. I haven't commented on such things since I stopped blogging daily. Hoho, to think that I once used to blog daily...where got time now? :)

Today, several news caught my eyes as I was roaming through the announcement website.

1. Singtel announces the first-in-the-world landmark deal with major US studios, Disney ABC International TV, 20th century fox and Warner Bros International TV, which enables Singtel to screen over 50 top US tv series as early as 24 hrs after their US premiere for its mio TV service. Thus, Singtel became the first Internet protocol TV operator in the world to offer a model.

My take:

Well, I don't watch tv at all. The last tv series I watch is maybe 6-8 yrs ago? I have no idea how people are addicted to tv shows. In either case, there are so many free shows in the internet, so I'm wondering why people even want to pay. Either case, it sounds pretty important for Singtel's fight over cable tv with Starhub.

2. Ecowise is going to give a special interim dividend cash dividend of $0.01 per ordinary share for the financial year ending 31st Oct, 2008. At the same time, they are proposing a rights issue of 214,165,181 new shares at an issue price of $0.01 for each proposed right shares, on the basis of 1 rights share for every 2 shares held, disregarding fractional entitlements.

My take:

Hmm, didn't Ecowise did such a thing not too long ago? Digging out the old archives, I found that on 24-Jul-2007, they did put an announcement to propose a cash dividend and rights cum warrants issue. Back then, the special interim tax exempt cash dividend for the financial year ending 31st Oct, 2007, is $0.03 net per ordinary share. They also proposed a rights issue of 249,975,000 new shares at an issue price of $0.01 per rights share with detachable free warrants. Each warrant carries the right to subscribe for 1 new share at an exercise price of $0.05. So back then, every 1 share held entitles the holder to 3 rights share and 1 warrant. Complicated? Yes, I thought so too.

Oh, so now, after nearly 1 year, they wanted to give out another 'special' interim dividend, coupled with rights shares but no warrants. It's not so 'special' if they did it for two successive years!

This is seriously going to dampen their share price in the short term. But it begets a more serious question - what do they need the new capital for? Are they concerned about existing shareholders by diluting their share holdings again and again? Take a look below:

Based on today (date of announcement):
Share capital: 376,067,246
Outstanding warrants: 52,263,116
Potential rights issue: 249,975,000

This can seriously affect EPS, considering the huge dilutive effect of the rights issue. It's going to nearly half the EPS ... goodness.

3. Yellow pages announces initiatives to drive revenue growth - it plans to partner government agencies and related organisations to launch new products and services. Value added services for SME customers to target niche groups via print and online platforms are also planned

My take:

Sigh...I was once into Yellow pages for quite some time. I bought at $1.670 on 3rd April, 2006 (luckily only 1 lot!!). It's now $0.675 now, tsk tsk tsk...

I sympathize with them. The real society had moved its searching online and it's only recently that Yellow pages poured more money in IYP (Internet yellow page). There are lower sales contract value compared to last year (a drop of 3.1%) but they consoled themselves that their average revenue per advertiser increase by 4.3%, even as the number of advertising accounts declined 7.8%. They are operating in a competitive environment, and I think nothing of their branding, which they think it's an intangible asset. Seriously, when is the last time anyone flipped the yellow pages to look for stuff? I think greenbook seems more commonplace than yellow pages.

This statement sounds quite funny:

"Backed by the Group's core assets: a proprietary comprehensive database and the established Yellow Pages brand name, we believe the Group is poised for growth, as illustrated by the pages intentionally left blank to accommodate our growth in our FY2007 Annual report"

That was said by Mr Chow, CEO of Yellow pages. I even went to search for their annual report and viola!


Pages 124 (of 148) to 146 are 'left blank intentionally to accommodate our growth'. A total of 23 pages are left intentionally blank. The total number of pages for the statements, inclusive of notes to financial statements, took up over 50 pages only. It seems that there are PLENTY to grow for yellow pages with 23 pages are left blank for that. Lame lame lame...

A few weeks ago, I was browsing books in the library as usual when two books caught my eyes – Liar’s Poker by Michael Lewis and Confessions of a Wall street analyst by Dan Reingold. I thought it was good fortune that had me borrow both books at the same time, because reading these books one after another brought me to a level of insight that reading them individually would not bring.




Liar’s Poker is the more famous of the two. It talks about the story of a trader and bondsman who went through hell and came back ahead, dealing and wheeling in the pits of Salomon Brothers. I learnt more about the history of Salomon Brothers in this autobiography than I would have had I read it straight from a point by point, chronologically arranged sequence of events. It’s the story that stays after the facts faded from memory and the author weaves the story so tight and so engaging that it’s literally a page turner for me. Imagine this – a page turner for this genre of books!

It struck me that back in 1980s, these traders and bond salesman are paid to take enormous amount of risk, all backed by their clients’ money. The firm actually encouraged them to take such risk. A few hundred millions is small change for these people. It’s incredible to think that this insane amount of money just floats around waiting for Big Swinging Dicks to play around.

The other book, Confessions of Wall street analyst, is a little more dry. It had to be, it’s about the life of a idealist analyst who wants to go into wall street to espouse his independent views, but left the street a cynic wary of the independence of American’s financial system. The book is full of examples where investment bankers, analyst and issuers had major conflicts of interest, back in those days when SEC haven’t clamped down on them. It was in the heydays of the telecoms M&A era and subsequent internet dot.com bubble. I had first hand account of how Worldcom blew up, catching analyst and even insiders wondering why nobody found out the glaring aggressive accounting in their books.




I read about ‘swapping’ – where company A bought products from company B and vice versa, resulting in both companies booking a huge increase in revenue and not necessarily an increase in earnings. They did this to justify their huge PE ratios attributed to them and the target revenue and growth set up management. It was an incredible insight into the pitfalls of seeking growth at all expense and the eventual and inevitable exposure of such growth. The scary part is – even insiders do not know about it. Insiders like CEO or CFO, so absorbed in their own story of growth through acquisition and glowing from their soaring share prices, actually believed it will last forever.

I already had the idea that analyst are not entirely independent because they are paid by the company that usually also had a brokerage and investment banking wing, which is a huge source of potential conflicts of interest. But reading these two books bought it to a huge new level of belief!

Perhaps the last few words in the Confessions of a Wall street analyst will cement the ideas in my head forever:

“Of all the lessons I’ve learned in my time on the Street, the most difficult one to swallow is that I no longer believe in the transparency of the American financial system. When I came to the Street, I saw it as a place where there were plenty of sharks, but also a place where American capitalism reigned supreme, a place where everyone had a chance to do if they were smart, hardworking, and a little bit lucky. It was a game I enjoyed playing – at least until I realized how corrupted the game had become.”

I must say that Heath Ledger’s passing left a void in the art of villainy that will not be filled for a long time. His masterful portrayal of Joker, the arch-nemesis of Batman, surpasses the good work done by Jack Nicholson in Tim Burton’s Batman, I dare say. While Jack Nicholson’s Joker is more campy (which is untypical of Tim Burton’s movie), Heath Ledger’s Joker is the pure, psychotic and maniacal force that can stand by its own in the movie.



I think the director’s understanding of the Joker is immense and accurate. The Joker works not for money but understands the usefulness of it. His purpose and reason for crime is to ‘play’ with Batman, to challenge him. As a parody of Jerry Maquire’s famous (perhaps infamous) line, “You complete me”, the Joker acts as the star-crossed lover of Batman. Joker’s ‘love’ of Batman is the hatred of him, yet Joker will not kill Batman because without the challenge that Batman poses to him, he will have nothing to live for. At the same time, no matter how much hatred Batman had for Joker, he will not kill Joker because otherwise all that Batman fought for will be for nought. A love-hate relationship thus plays out nicely in the movie. Another thing worth mentioning is the social experiments that Joker tries out in the movie. A true student of game theory by John Nash, he plays out big scale human experiment, pushing the frontier of experimentation beyond ethical limits. The Joker had such a masterful understanding of the human psyche that he manipulates and twists to create another villain in the same movie.

A pity that Heath Ledger will not return to play the Joker again – perhaps it’s for the best, for he left at the peak of his performance and all shall remember him for this last superb portrayal of Batman’s greatest enemy. I really love the body language he poured into the characterization of Joker, especially the scene after he bombed the hospitals and was walking out in a nurse’s uniform. His awkward, slightly stooped, almost resigned manner speaks much more than words can do.

The movie also plays on this major theme of Batman – his fear that what he does every night will turn him into the very people that he fought for in the first place. For the first time since watching Batman movies, I saw consequences in Batman’s nightly adventure in the streets of Gotham city. Self serving vigilantes appear, bearing the mask of Batman but without his philosophy. My girlfriend asked me how do I know which is the real Batman and I replied – Batman do not use firearms. His parents are killed by firearms and he will not use it to fight crime, hence his preference for fist fights and ninja-like weapons. The movie also plays out the Batman as the dark lonely fighter, who can never be the same again after donning the suit. What kind of person can lead dual lives – acting as a rich businessman in the day and a dark vigilante in the night? Perhaps only a psychopath can. Batman is driven by revenge for his parents but at what cost? This a good theme to explore in future Batman movies.

Someone mentioned that this Batman movie lacks weaponry. I do agree. Batman’s greatest weapon– his superb detective mind – is not portrayed in the movie. What I see here is his internal conflict of breaking the law to catch criminals who broke the law. There can be much more time allocated to showcase Batman’s Shylock Holmes-like mind in solving crime, rather than fighting crime. I really love Batman because he is about the only superhero whose superpowers are not superhuman. His superpowers is his very human but excellent mind (ahem, though his status as a billionaire and thus the moo lah acts as the icing to the cake).

My girlfriend commented that the show is a little boring in the first half and gets better towards the end. I disagree. How would the siege of Helm’s deep by Saruman’s Uruk-hai be without the events and circumstances that lead to it? In my opinion, the control of the pacing and tension are done nicely by the director.

Watch this movie. If not for Batman, at least for Joker.

Ps: As a side note, I half expected Peter Parker to leap out to punch Bruce Wayne/Harvey Dent for stealing his ‘Mary Jane’ :)

Had a pleasant surprise when I opened my mail box today - China milk's annual report was out :) It felt surprising 'hard' and when I tore open the envelope, I realised that it's hardcover with metal bindings - something like those lecture notes we had back in school days, except that this is super colourful.



Like a child who had accidentally wondered into the toy department of a shopping mall, I was bridled with excitement as I flipped through the colourful pages. You really had to admit that, hey, this is one of the most interesting (not to mention, expensive) annual report there is! On the front is a hard cover picture of their mascot, named Mo Li (yes, they even have a mascot, with a name!).

Mo Li was hidden behind one of the pages opposite a house. As I flipped the page....



Mo Li jumps out literally as a pop out! She held a china flag which, under the force of the turning page, swings over to the other page. So besides the classic page-powered pop out, there is also a swinging leveraged pop out (ahem, the author is an admirer of pop outs, having made a couple himself, so pardon his excitement as the heart popped out when reading an otherwise boring and plain annual report).



Mo Li promptly introduces her other pals from Australia - Mathilda - who then proceeds to tell us about their breed. The whole thing reads like a story book with lots of pictures. If China milk's intention is to spend a little more money to entice shareholders to read up their business in the annual report, I must say they have succeeded wildly :)

I'll give my thoughts on the numbers in due time.

Just came back from a tiring but fulfilling 2 day event - helping a good friend to organise his wedding. I was aware that indymac had fallen and had been rescued. Fannie Mae and Freddie Mac are also in big trouble over the subprime issues. Today, when I finally stared at my watchlist (my companies didn't fall much), I was surprised to see HK falling over 3-4%. Now that is drastic!

Was thinking of whether to add in more HSBC at the current price of 113+-.

Here's what I gathered so far:



* EPS, dividends and NAV are given in USD



* Earnings in reports are given in USD. I used the conversion rate as advised in the hsbc official website (the dividend section) to convert earnings from USD to HKD. Closing price is the adjusted close provided by yahoo! finance site.




At HKD 113 now, the valution for hsbc looks really good. PE (last year's earnings) of 8.9x, which is way below the usual PE of hsbc (around 12x). Dividend yield (last year's dividend) is around 6%++. Given a 12.6% CAGR of dividend for a time frame of 10 yrs, buying at this price will 'lock' the dividends at 6%+ and growing at a conservative 10% per year thereafter. I believe this dividend is backed by a stable 10 yrs track record of increasing dividend.

Based on 2007's dividend,

To get a dividend yield of 7%, the price to buy in is around HKD 100
To get a dividend yield of 8%, the price to buy is around HKD 85

Based on 2008's forecasted dividend of HKD 7.71 per share (assuming 10% increment from 07's dividend),

To get a dividend yield of 7%, the price to buy in is around HKD 110
To get a dividend yield of 8%, the price to buy is around HKD 95

Will do more in future post.