Save money by being less picky and be wealthier.

"Aiyoh, this Kimball Chilli Sauce price is up again!"

I was at NTUC Fairprice doing some grocery shopping.

"Ya lor. Price keeps going up. Now, it is $1.55 for a small bottle." 

OK, I am not sure if it was $1.55 or $1.35 by now. Such is the state of my short term memory.

Anyway, it was a conversation between an old uncle and old aunty. They looked to be in their 60s.

"NTUC is too much! Always increasing prices!" The old uncle was relentless.

I was holding on to a bottle of NTUC Fairprice housebrand chilli sauce and debating whether to take 1 bottle for $1.05 or 2 bottles for $1.85 when I heard the exchange. There was a special offer going on and I have always been a bit of a sucker for special offers.

I wondered whether to tell the old couple that they should give the NTUC Fairprice housebrand chilli sauce a chance. It looked like it was twice the size of what they were thinking of buying and a third cheaper in price! More if they were to buy two bottles. For those of you who have not tried, frankly, the housebrand chilli sauce is not bad.

So, did I do it?

I was feeling a little under the weather today and one look at the couple, I decided to mind my own business. They had faces that looked like someone just stole their CPF money. Yikes!

I feel that it is unfair to accuse NTUC Fairprice of being too much in increasing the price when it is not a brand they have control over.

In fact, NTUC Fairprice do a pretty good job of offering good quality and value for money housebranded alternatives. Here are a couple of other examples I have at home:

Is there anything special about atas branded detergent?

Is there anything special about atas branded tissue paper?

We could save quite a bit of money without compromising on our quality of life if we are less picky. We would also almost certainly become wealthier and happier people in the process.

In case you are wondering if I bought one or two bottles of chilli sauce, I did the sensible thing and bought one bottle. It is going to take me quite a while to finish one bottle, after all.

Related posts:
1. Waste not, want not, save lots with Pasar brand.
2. A visit to Fairprice could teach us about stocks.

NeraTel: Is 1QFY15 a sign of things to come?

I received a message from a reader last night saying that NeraTel's profit after tax plunged 33.8% for 1Q FY15. Looks bad, doesn't it?

I was somewhat surprised at the plunge since I remember that the full year 2014 results although not positive were flattish when compared to the year before. We don't usually see big negative shifts in a single quarter in a business as usual scenario. So, it is important to ask whether the decline is due to something that has permanently damaged NeraTel's ability to deliver the goods, so to speak.

NeraTel's management has for a while now mentioned that stiff competition is impacting the business. This is the reality but given their track record, NeraTel should be able to hold their ground even though they might have to give up some margin. This is just my view, of course.

In an interview that NeraTel's CEO, Samuel Ang, gave to The EDGE, some time ago, he said that it is important to remember that revenue recognition could be lumpy because NeraTel is generally a project based business. Annualising any one quarter's results would not give an accurate picture of full year performance. Now, with this understanding in mind, the weak 1Q FY15 results become less worrisome.

The following slides are self-explanatory:

2Q FY15 results, logically, should be better, all else remaining equal.

Although the stiff competition and pressure on margins are pertinent considerations, NeraTel's track record and their continuing efforts to expand their regional footprint, especially in the generation of recurring income, will likely bear fruits in future. How long will this take before we see significant results? I don't know.

However, even as we recognise the costs of expanding their business, as long as NeraTel's current businesses continue chugging along in the meantime, I would be quite happy to wait.

In conclusion, if we believe that 1Q's less attractive results were due in part to the lumpy nature of NeraTel's revenue recognition (i.e. it is an issue of timing), then, earnings over the next 9M should make up for the weaker 1Q FY15 showing.

In my blog post dated 25 Feb 15, I said that at 76c a share then, we were looking at a PER of about 17x and that it wasn't cheap as the stock was priced at 71c a share a year before that with similar numbers. Now, with a rather reasonable expectation that the numbers might remain similar this year, the current price of 65c a share looks more palatable.

See all presentation slides: here.

Related post:
NeraTel: Still a good investment for income?