The email address in "Contact AK: Ads and more" above will vanish from November 2018.

PRIVACY POLICY

FAKE ASSI AK71 IN HWZ.

Featured blog.

1M50 CPF millionaire in 2021!

Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.

Archives

"E-book" by AK

Second "e-book".

Another free "e-book".

4th free "e-book".

Pageviews since Dec'09

Financially free and Facebook free!

Recent Comments

AK71 commented on sold alibaba for 51 gain: “Hi SgFire,Taking profit is never wrong. Gong Xi Gong Xi. :)”
AK71 commented on dbs share price to stay higher for: “Hi jeff, Apologies for the slow reply.I remind myself that…”
SgFire commented on sold alibaba for 51 gain: “Hi Ak, took profit on baba and sitting on profit with…”
jeff commented on dbs share price to stay higher for: “Hi Ak, im new to investing the banks now are rather pricey,…”
jeff commented on dbs share price to stay higher for: “hi ak,Im new to investing, however now the banks are very…”
AK71 commented on dbs share price to stay higher for: “Hi Yv,Huat Huat 2025 to you too! :)”
AK71 commented on dbs share price to stay higher for: “Hi bunny,Nope. Not adding.Last time I added was before they…”
AK71 commented on dbs share price to stay higher for: “Hi Deet,I am somewhat busy and might be late in looking at…”
AK71 commented on dbs share price to stay higher for: “Hi Unknown,As long as you have the shares when it goes Cum…”
AK71 commented on dbs share price to stay higher for: “Hi zhenling,That can either be a good or a bad thing.…”
AK71 commented on dbs share price to stay higher for: “Hi KK,That would be more accurate. Thanks for this.”
Yv commented on dbs share price to stay higher for: “Dear AK, Happy HUAT Year to you. Hoping to equally good…”
bunny commented on dbs share price to stay higher for: “Morning AK, would you still increase the holdings to DBS…”
Deet commented on dbs share price to stay higher for: “Hi AK, Thanks for talking to yourself!I'm eagerly…”
Unknown commented on dbs share price to stay higher for: “Hi AK, thanks for the sharing. I am new to stock. Do you…”
Unknown commented on dbs share price to stay higher for: “Hey AK, I am new to stock. Do you know if I were to buy DBS…”

ASSI's Guest bloggers

Singapura Finance: 1 for 1 rights issue.

Tuesday, September 30, 2014

I have been a Singapura Finance shareholder for a few years. If you have not heard of Singapura Finance, well, it is not surprising as it is one of those sleepy stocks that don't really shout out for attention.



Why did I become a shareholder a few years ago?

1. They have a good track record of rewarding shareholders with meaningful dividends.

2. The stock was trading at a big discount to NAV. (It still is.)


Nothing exciting, really. Just the usual stuff I look out for.

In the last few years, however, earnings came under pressure. EPS declined and dividend per share (DPS) also declined.



The reason really is due to the low interest rates environment and the Chairman said:

"The Singapore Dollar interest rate, which closely tracked the US Dollar interest rate, remained at an exceptional low level throughout the year. As a result of the continual low interest environment coupled with the relentless market competition, interest margin was subjected to immense pressure and deteriorated further during the year. Against such challenging external backdrop, and the need to provide additional collective impairment for the loan allowance, the Group profit after tax for the current year declined 21.2% to $5.3 million." (Taken from Annual Report 2013.)

How are things looking now? Results improved in 2014 and profit after tax rose 10.2%.



Now, with interest rates likely to rise next year, it seems that Singapura Finance might do much better again in future. To ready themselves, they are strengthening their capital base by having a 1 for 1 rights issue at an issue price of $1.00 per share. This rights issue is renounceable which means that shareholders could sell nil-paid rights in the open market if they do not mind having their shareholdings diluted.

I know that some readers might be thinking about possibly buying Singapura Finance's stock now to participate in the rights issue. If you are one of them, you might want to consider the following first:

With a theoretical ex-rights price (TERP) of $1.275 per share, nil-paid rights selling at any price lower than 27.5c (when they start trading) would be "cheap". At a NAV/share of $2.10, a share price of $1.55 is cheap (26% discount to NAV) but, post rights, NAV/share becomes $1.55 or so. So, the TERP of $1.275 is less cheap (17.75% discount to NAV, post rights issue). Of course, rights shares at $1.00 each represents the best value for money (35.5% discount to NAV, post rights issue).


Expect EPS and DPS to half as well, ex-rights. 3.5c and 2.5c, respectively, perhaps? Of course, this is assuming that everything else remains equal and that there is no improvement in business performance in future which seems unlikely to me.

For existing shareholders to subscribe for the rights allotted to them is, ultimately, to show confidence in the management that they will be able to improve earnings by more than 100% in due course. It has to be more because even if earnings should improve by 100%, it would mean that business performance has not improved one bit on a per share basis. Then, it would be better not to have had the rights issue.



I will subscribe for my rights as I am confident that interest margin will improve in future although the business environment is likely to stay competitive. I will apply for excess rights too but I will give the nil-paid rights a miss.

Taking part in the rights issue is to believe that the additional funds will generate a much higher EPS in the medium term. In the short term, business performance could continue to be lacklustre and whether this would put downward pressure on the share price or not is hard to say.

See announcement on rights issue: here.
Visit Singapura Finance's website: here.

How to get better than the best deals?

Monday, September 29, 2014

Get the best DEALs in town from DEAL.com.sg.

Now, for 48 hours only, get another 10% off all DEALs!



Remember to key in the Promo Code when you shop from 29th September 00.00 hrs till 30th September 23.59 hrs.

AK likes value for money deals. I hope you like them too!


Monthly Popular Blog Posts

All time ASSI most popular!

 
 
Bloggy Award