Saturday, June 27, 2015

M1 - A more extensive explanation

Many of you might have read what I wrote about Singtel and some of you asked me about my investment in M1 as well.




I bought it at 2.66 in Sep 2012 and have been holding on to it since. Every year I received about 4% to 5% of Dividend and I believe this will continue.

M1 has always been my prefer choice of local telco investment, prior to the 4th Telco News, because:

1. Cheapest Defensive Stock among the 3 Telcos and with the one with the lowest debt.

2. No Cable TV or Mio TV - With the streaming services readily available on the net, this seems like a lose-making venture, especially with the fighting of the EPL rights. Charging sky high prices towards the consumers will only backfire eventually.

3. First Teleco to step into the fibre boardband spectrum.

4. Consistent Rising Trends. Singtel and Starhub, at that point, has a more roller-coaster trend.


So with the news of the 4th Telco (in additional to the Greece Drama as well as the new up and coming China Drama), M1 share price has been on a downtrend since Feb 2015.

Rather than off-loading like many does, I continue to hold on to my M1 shares and view this as an buying opportunity.

I have stated many reasons on why it is not the end for M1 and Starhub investors here.

In addition, for M1 investors, do note that it is carry making inroads into Oman. Something I am happy about. Rather than focusing on Singapore Market alone, going overseas should be the priority for our local telcos.

Having said all these, my current favourite is still Singtel and I will only buy M1 if it goes lower.


Sunday, June 7, 2015

My Methods Has Evolved Since...

Ever since I have joined some of the Facebook Groups and follow some of the experienced traders, my methods has changed.

Rather than just solely looking for at value investing shares, I look at:

1. News - On future opportunities 

I have talked about AIIB, Japan Investing in Asia and ICT Tenders (Read here Part 1 & Part 2).

Now I have found other interesting news as well.

Singapore building an Indian City - Blue Chips will definitely get involved. But how profitable will it be?

Sembcorp Intention of Buying 1MDB Edra? - Opportunity or Political Move or Something in the dark we don't know? My view is that most probably they intent to expand their utilities unit in view that Oil and Gas is not doing well.

Greece Risk Timeline - A matter that will create shock wave across the world.

I always view these news as opportunity rather than risk. If its risky, invest after that event as blue chips tend to fall. If its opportunity, invest before it happen as these events will act as an catalyst.

2. Technical Analysis - Looking at Charts.

As you have read my previous post, I may have made a better judgement if I knew about the "support" price of Starhub and even Singtel.

You may not need to wait for it to touch the "support" price - But you can look at it and understand the risk you are taking or rather buy it when its near the support price.

However, if you are looking at pennies, value investing methods is still preferred.

TA is more for blue chips in my opinion.

3. Accumulation Instead of Diversification

I have always try to look for "new" value stocks rather than accumulate. This is because I am always thinking of diversification but never knew how many stocks I should have.

After reading these articles -

How Many Stocks You Should Own In Your Portfolio?

Value Investing and Diversification – How Much Do You Need?

I decided to keep to 10 to 12 stocks in my portfolio and then look at accumulation rather than new opportunities.

Conclusion

I am a Singapore Stocks investor. Not yet a global platform investor. It is really hard to find "value" stocks opportunity here in Singapore. In addition, Singapore STI is still significantly high. Thus, I believe it is required combine value stocks with passive income stocks, and add a little Blue Chips in your portfolio to receive capital gains and dividends for NOW.

Singapore investors also need to be flexible (Enlarge Your Pie, My Approach, Power Stocks) BUT without compromising their core values.

Note: Yet to find time to talk about my new portfolio. Sorry guys...

Tuesday, June 2, 2015

I Sold Starhub and Lose $$

I believe I should update, whoever have read my previous 2 write-ups (Part 1 & Part 2) on the drastic drop in the Telco Prices, that I have sold off my Starhub shares (and had a small loss incurred).

This is because Singtel Shares have dropped even more and I view it as an opportunity. Thus I decided to transfer my holdings to Singtel (despite incurring some losses).

Why Singtel? Not M1 or Starhub?

(1) Global Firm vs Local Singapore Firm

The drastic drop maybe due to the introduction of 4th Telco in Singapore. M1 and Starhub, being more focus within Singapore, will result in a greater drop in Revenue (if subscribers jump ship to 4th Telco). This will lead to lower profit then lower dividend. Dividend yield will drop of dividend payout dropped.

Global Firm, where majority of the revenue comes from Outside Singapore, the impact will not be so big. Thus, hopefully maintaining dividend.

(2) Same Business

At the moment before I sell, I have all 3 Telco Shares (Singtel, Starhub & M1). However I view Starhub & Singtel as having the same business model - esp. Cable TV vs Mio TV.

M1 is slightly different as they have a head start in Fibre Boardband (have to emphasize that Singtel is catching up) and being the smallest Telco here. In addition, they are expanding in Oman (new great opportunities).

(3) Singtel - The Owner of Our Telco Infrastructure

Remember the fire? Read it again.

But is Singtel free of All Risks?

No. Being a Global Firm, Singtel share prices will be more affected by external forces (ex. Greece Debt repayment, Optus financial, Australia Telco Regulations, etc).

Being a major player only within Singapore, will allow you to be less affected by these external forces.

Why Do I Still Keep M1?

This is my legacy stock - one of the first I bought. Average price is at $2.66. Therefore I will still be keeping it. (May load more if it drop more...) and also because of the following (these will applies to Starhub Investors as well):

(1) My stand that the market has oversold on the 3 Telcos is still valid. 4th Telco effect will not be felt by this year  (Read Timeline). Even if 4th Telco is launched by Dec and users jump onboard immediately, the finances will not be affected immediately. Thus, these stocks should be review when closer till the 4th quarter. Next year dividend should not be affected as well.

(2) All telcos have recurring revenue and created lock in periods for the users. Please remember, unless you intend to pay the fine, you are still lock in for 2 years.

(3) People nowadays cannot resist a new handset. A launch of the next smartphone (ex. IPHONE 7) will create another frenzy of customers to re-contract.

(4) Temasek seem to own a significant amount of shares (directly or indirectly) of all the 3 Telcos. "Parents will try not to let their children fail"

(5) 4th Telco is to create competition among the companies, which is only better for the consumers. It may also enhanced Starhub or M1 revenue instead.

(6) Bidders of the 4th Telco "expects" to gain about 10% to 15% of the market share. This is not drastic to M1 or Starhub. Nevertheless even if a dropped in Revenue, a company may still maintain its dividend amount.

(7) Starhub has the cable TV revenue. Enough said.

Conclusion

As stated at the start, I sold Starhub to shift my funds to Singtel as I deem it a better opportunity. However, I still believe all 3 Telcos are good buy at the moment with the significant drop in prices.

Finally, if you intend to trade/contra, please do not follow my lead. Only buy if you can hold and at a price you feel comfortable.

My only regret is that I may have bought the Starhub and Singtel shares a week too early. That is my mistake. I do realise that if I learn some Technical analysis (not being so stubborn about it) I may have predicted a better entering price. But that's another story.