SATS: A nibble while learning from Rusmin Ang.

I have shared here in my blog on a few occasions that I am increasing my investments in companies which are going to be less affected negatively in an environment of rising interest rates.

Although interest rates are still low, it stands to reason that they will have to rise in future. When interest rates do rise, businesses and individuals who are heavily leveraged will be the ones to feel its direct impact more severely.




In view of this, one business which I have accumulated a small long position in recently is SATS as its stock price became significantly lower at $2.94 a share upon the counter going XD.

A price of $3.00, give or take a few bids, gives us a PE ratio of almost 19x. Of course, if the company is a grower, then, it might not be considered expensive. Otherwise, I would feel more comfortable buying more if the PE ratio is lower.

Although sometimes SATS pay more dividend per share (DPS) than its earnings per share (EPS), a more normalised payout ratio is 70% of earnings. So, I believe that an annual DPS of 11c is realistic. Based on $3.00 a share, that is a dividend yield of 3.67%. Not anything to scream about.

Technically, there seems to be some support at $2.95. This is probably due to the fact that SATS have been buying their own shares in the open market each time price goes to $3.00 a share or so. Technically, it is also easy to see that if support at $2.95 were to be lost, we could see $2.50 tested.

My friend, Rusmin Ang, at The Fifth Person is hardworking. You might want to read what he has to say after attending SATS' AGM:
12 quick things I learned from SATS' AGM 2014.

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1. Portfolio review: Unexpectedly eventful.
2. NeraTel: What is a sustainable dividend payout?

Tea with Ms. Y: 3 points to share with fresh graduates.

A regular reader graciously agreed to contribute a guest blog and here it is:

I'm very honoured to have AK71 request for a guest blog post from me. I would like to share some of my experiences and hope that people would benefit from these.

1. Get a job before graduation.

In my last semester in university, I was busy writing resumes and sending them out. My goal was to get a job ASAP. To me, the ability to secure a job at graduation or before demonstrates how good a student is. It is not just the grades we get.

Moreover, a few months of unemployment would set me back financially. We all have some living expenses to take care of, right?

2. Save money: Keep it away until you forget you have it.

I'm not inclined to save money. I find going the extra mile to hunt for cheap deals or reduce spending is quite troublesome and tiring. I like to spend money. I like to go for holidays, shopping trips etc. 

However, I do know the importance of having savings. One thing I learnt from my mother is to keep some money away until I forget I have it. So, I have some endowment plans and monthly savings accounts.

These tools are very useful especially in terms of timing my savings to prepare for my resale flat purchase. Of course, this method might not be good for everyone but it forces me to save.

3. Invest in yourself.

Take courses to improve yourself. The journey just started.

I believe that if I am not giving real value in my job, my employer has no incentive to give me an increment that is beyond inflationary rate. My real wage will be stagnant.

Plan your career path. Invest in yourself to cross disciplines. Employers pay good money for people who can bridge gaps.

I realized that when I took courses, I had less time to spend money. That resulted in more savings for me.
                     
Focus on doing what will secure higher pay for us. Seriously, because it's just going to get more difficult when the bigger demands of life kick in later on. For examples, getting married, setting up a family, buying an apartment and taking care of parents who are aging with medical needs.

Related posts:
1. Do you want to be richer?

2. The very first step to becoming richer.
3. How much life insurance should a fresh grad have?
4. Be a plumber or be unemployed?
5. A fast track to wealth building!