The weekend news had an interesting contrast – one couple was featured for spending half a million on their lavish fairytale wedding, whereas another held their own budget wedding for $100 per head instead.But while I believe in creating a memorable we…
Category: SG Budget Babe
Attending weddings can be a reallllllllly expensive affair. How do you politely decline when you’ve invited to an expensive wedding which you can’t afford to attend?How much would you give if you were invited to this $140,000 wedding?It is no sec…
|Whoever came up with this ad deserves an award.|
(101.25 EUR = SGD 156. See how the price becomes cheaper?)
If I had the DBS Visa Debit Card linked to my MCA sooner, I could have bought more EUR when the price dipped to 1.48 earlier this year, and simply kept them in my digital wallet until now. This dress would then cost me even less!
Use the DBS Visa Debit Card linked to your MCA when you’re travelling overseas
When you book your train tickets and accommodation in advance for a trip, you can also use your MCA Visa Debit Card to pay in the local currency and skip all the FX / DCC charges!
You can also skip that trip to the money changers to convert your cash right before your trip, and avoid being stuck carrying huge wads of cash around hoping that you won’t be robbed (whether in Singapore or overseas). Just swipe with your card overseas and pay in the local currency.
Ran out of cash overseas? No need to be fleeced by the ATM or foreign moneychanger’s rate when you can simply withdraw from your MCA overseas (just pay the nominal ATM withdrawal fee – it is a small price for convenience and is usually about S$5 per withdrawal). Have insufficient foreign funds in your MCA? No worries, simply log on and transfer the foreign amount you need, and continue spending using your debit card overseas. No sweat!
You will no longer have to try and force yourself to shop at the airport in a bid to use up your remaining local currency before you fly home either. Just use your MCA 😉
Stock up on foreign currencies at favourable rates
Now here’s the trick: “stock up” on your foreign currency at favourable rates and keep them until you need it.
You can monitor exchange rates on the DBS FX website and make conversions when you see an attractive rate.
Remember how everyone was rushing to moneychangers to exchange for EUR when Brexit happened? I wanted to do that too, but I hated the idea of keeping thick wads of foreign cash in my drawer at home, especially when I can’t be sure that my pesky sibling isn’t going to steal it.
Well, I can just do it online with my MCA next time via iBanking!.
Note that this is ultimately a debit card
For those of you who are into the miles or cashback rebates game where you spend using your credit card overseas to chalk up rewards, note that these rewards do not apply for your DBS Visa Debit Card.
So you’re basically choosing between (a) zero forex fees + no DCC charges or (b) credit card rewards but incurring the additional FX & DCC charges
My preference is still for Option A, because I already try not to spend using my credit card overseas unless I have to (not entirely a fan of all those extra charges just for 10x more rewards!).
The fine print
– There is a fall-below fee of S$7.50 (for balances <S$3,000 equivalent) but it is waived for the eMCA account if you’re up to 29 years old).
– Store sufficient foreign currency funds in your MCA before you swipe your card to pay. If you don’t have enough foreign currency in your MCA, the transaction will be deducted from your SGD funds instead and you’ll end up incurring FX fees at the prevailing bank rate (eg. JPY à SGD à JPY).
– Your spending will have to be in full i.e. if you have only AUD 500 left, your AUD 1,000 purchase will be deducted in full from your SGD balance instead of just converting the remaining sum.
– This is a debit card, so you won’t be getting any miles from overseas spend. Nor will you be entitled to the 5% cashback on the DBS Visa Debit card (as that only applies to local Visa payWave spending).
– If you deposit or withdraw foreign currencies at the bank branch, you’ll have to pay the nominal fees charged (as a percentage of your withdrawal sum; similar to other banks’ practice). Skip this headache by simply going cashless!
Read more of the fine print here, and more FAQs here.
How to sign up
Existing POSB / DBS customers
Do it instantly online. Log into your DBS iBanking à select Apply à Deposit Accounts à DBS eMulti-Currency Autosave Account
Remember to also apply for the DBS Visa Debit Card separately if you don’t already have it. Link it to your MCA account so that it becomes your primary debiting account when you use the card.
New DBS customers
You can apply online as well and the DBS Visa Debit Card will come automatically with the account.
This truly is an innovative product, one that you should consider if you’ve always disliked the fees involved whenever you make payments with foreign currency. I’m now waiting for the rest of the banks to follow DBS’ lead.
This article is written in collaboration with DBS (after I watched their rainbow sprinkles ad in the cinemas, which was how I came to know about the product). All opinions are of my own.
Wow this has been a pretty busy season for IPOs thus far. The newest player to join the game is Union Gas Holdings, which will be listed on the Catalist Board. But before we delve into the analysis, let’s take a look at how the recent IPOs fa…
Bank of China Home Loan
DBS Home Loan
CIMB HDB Home Loan
I was alerted to NetLink’s IPO by my broker, who contacted me two weeks ago to offer private placement shares. The IPO officially opens tomorrow for public subscription, and there’s been a lot of media hype over what is being said to be the year’s “biggest IPO”. I’ve started analysing the IPO prospectus last week but sat on this post for the longest time because its insanely verbose and boring 516 pages put me to sleep on a few occasions -.-
Sorry to everyone who has been waiting! Without further ado, here’s my take.
– 2.89 billion shares for offer at $0.81 each
– XXX public tranche (to be updated tomorrow)
– IPO closes on 17 July 2017, 12 noon.
Even though you’ve probably never heard of NetLink, the business isn’t new. Back in 2008, OpenNet won a tender to design and maintain passive infrastructure in Singapore in order to build a high-speed broadband network in Singapore. SingTel was supposed to transfer its manholes, ducts and exchange buildings to OpenNet, and so in 2011, SingTel established NetLink Trust to which it transferred its infrastructure assets to. NetLink then acquired OpenNet in 2013, with IDA mandating that SingTel needed to divest the majority of its ownership in NetLink by 2018.
Which leads us to this week’s IPO.
In a nutshell, NetLink designs, builds, owns and operates the passive fibre network infrastructure of Singapore’s Next Gen Nationwide Broadband Network. This currently consists of ten Central Offices and approximately 76,000 km of fibre cable, 16,200 km of ducts, and 62,000 manholes.
The majority of its network is used to support 3 types of end-user fibre connections:
1. Residential (currently supports 3 in 4 Singapore homes)
2. Non-residential / Commercial
3. Non-building address point (NBAP) connections
Who are its customers?
There are a few tailwinds driving NetLink’s business in the near future – the growth in data consumption and demand for faster Internet speeds, as well as Singapore’s Smart Nation initiative. I’ll elaborate more on these across the 3 segments later.
It is a monopolistic and resilient business model. Ultra high-speed fibre broadband has become a necessity and having tasted faster Internet speeds, who would want to go back to the age of the dinosaur? I quite like how the business is pretty much a monopoly (in the area of residential fibre connections). Its economic moat is quite strong as it will take a lot of resources for any other competitor to enter the market and set up its own infrastructure (not to mention near impossible, given the regulatory regime). For those of you who prefer investing in defensive stocks like telcos (SingTel, Starhub, M1) and rubbish-clearing services (800 Super, Colex), this will be another one you might want to add.
It has recurring revenues that are almost guaranteed. NetLink is highly cash generative, with an estimated $140 million for 2018 and $217 million for 2019. It is not hard to see why, as its revenue comes from a one-off installation charge for each termination point (upon the initial connection) and thereafter, a recurring monthly connection charge. The business is also resilient through economic cycles (would you use less / slower Internet in a recession? Nahhh…you’ll probably be watching more dramas in your free time instead!) With online video and audio services such as YouTube, Netflix and Spotify becoming a key lifestyle feature, user demand for data and faster speeds will only continue to grow.
Let’s take a look at its 3 different revenue sources:
Residential – NetLink is currently the market leader and while there is definitely growth in this segment (especially with new houses being built), there is a cap as there are only so many households in Singapore.
At the moment, its total debt /EBITDA ratio is still at a healthy 2.3x. However, there will be high capital outlay until 2019 as the Trust expands its network infrastructure and management intends to fund this through bank loans. In today’s environment of rising interest rates, this will be a growing liability to take note of, and we should see its gearing increase accordingly in the next 2 years. The managers have also said that they expect the earnings (per unit) to drop from its current 2.06 cents to 1.14 cents next year, which means we’re looking at a potential 45% drop in net income next year, and this may or may not result in a knee-jerk reaction in its stock price, giving us another opportunity to buy in.
The growth story promised by the Trust may very well sound appealing, with fantastic revenue increases of $258 million to $300 million in the last 2 years to boot. However, note that there is a cap on its growth in residential connections especially once it hits 100%, which shouldn’t be that far off in the near future. I’m less hopeful about its growth in the non-residential market for reasons detailed above. NBAP is promising but it remains to be seen how significant it will be in its revenue model. There is insufficient data at this point in time to gauge conclusively.
Potential compensation for downtime
IMDA is currently investigating the fibre service interruption incident which affected the Tanjong Rhu area on 13 December 2016. In addition, NLT’s fibre cables were damaged by a third party on 11 April 2017. The cable cut incident occurred along Boon Lay Avenue and damaged a total of eight fibre cables. As the cable cut affected more than 500 end-user connections, and full service restoration took longer than the 12-hour safe harbour, we might potentially be looking at a fine similar to the $500,000 imposed on OpenNet in 2014. If further interruptions were to occur, especially on a more major scale, I do not rule out the possibility that the Trust’s cashflows will be impacted by potential fines in the future.
Dividends are not guaranteed
This is a business trust, so don’t mistake it for a REIT where 90% of its taxable income is mandatory to be paid out to unit-holders.
At 81 cents, is the stock overvalued?
P/E: 39x (using 2017’s EPU of 2.06 cents) is extremely high. To be fair, you’re basically paying a premium for its monopolistic and resilient business model with guaranteed resilient cash flows.
P/B: approximately 0.9x but I’ll take this with a pinch of salt because it is quite unlikely that the Trust will be able to sell off its assets without regulatory intervention.
Has the growth story been fully factored into its current price?
NetLink’s growth is primarily limited to Singapore, and I’m more inclined to believe that the growth has already been factored in given its premium valuations. Unless NetLink finds another way to innovate and utilise its infrastructure to generate revenue through other newer means, there is a limited runway for this business to grow.
Who benefits the most from this IPO?
SingTel? After all, they’re looking at a potential $2 billion windfall from divesting 75% of their ownership in NetLink through this IPO.
NetLink has a highly appealing business model which is resilient through economic cycles and poised to ride on Singapore’s Smart Nation initiative in the coming years. With a yield of 5+%, this is a good stock to hold for the long term for stable income payouts (as long as they don’t cut or withhold dividends completely).
Given the hype surrounding this IPO, I’m more inclined to take a contrarian approach since many people (even novice investors) have told me they’ll be buying. In the words of Warren Buffett, be greedy when others are fearful and fearful when others are greedy.
When I started on this analysis a week ago, it was stated that the IPO price would range from 80 to 91 cents per unit during the book-building phase. Since the price has been finalized at the lower end, it signals that there was probably lacklustre demand during this phase and thus I do not expect the price to rally too much on the first day of listing.
If it continues to be hyped up in the coming week, I won’t be surprised if the price increases slightly upon listing, only to drop again later on. I will sit on the sidelines for now and wait for a better chance to buy in.
There, I’m FINALLY DONE with 516 pages! >.<
I’ve recently finished reading Millionaire Teacher by Andrew Hallam and it was a really good read! It is a title I would highly recommend to anyone who is just starting out on their journey to better manage their personal finances and get started on in…
One of the biggest rewards from maintaining this financial blog is when readers write to me to share their own success stories, and recently I received a story so touching that I couldn’t not share it. After all, there’s no greater joy than the knowled…
Is the stock market picking up? In just two weeks, we’ve seen 3 IPOs on SGX – usually a sign of a bullish market sentiment.And while I prefer to sell during such times, I don’t usually rule out spending on IPOs especially if their valuations are cheap …
Can we really trust analyst reports when it comes to stock recommendations?My answer is no. I’ve never trusted analyst reports. While I do read them, I don’t rely on them to decide whether or not to buy a certain stock. Sometimes when the opportunity i…