Sunday, October 17, 2021

Singaporeans might as well buy electricity from SP Wholesale since electricity retailers exit when we need them the most

This week, iSwitch became the first electricity retailer to exit from the electricity market. About 90000 households may face 20% higher electricity bills as a result. 3 days later, Ohm Energy followed suit. It has been reported that 2 more companies are expected to exit.

Electricity retailers can charge cheaper electricity bills to households than SP Group to Singaporeans because they buy cheaper electricity from the wholesale market. What many Singaporeans are unaware is that we can buy cheap electricity directly ourselves from the wholesale market through SP Wholesale. So, why not simply bypass the electricity retailers who act as middlemen and buy direct from SP Wholesale? Wouldn't that result in a cheaper price for all of us?

The problem with buying from the wholesale market is the prices can fluctuate like the stock market. Cheap today can mean expensive tomorrow. The electricity retailers provide value to households by shouldering this risk on behalf of households. For households who do not feel comfortable with fluctuating electricity rates, they sign up for fixed price plans with the retailers. This way, if wholesale prices shoot through the roof, households need not worry about getting a shock from their electricity bill. That is provided electricity retailers stay in business to honour the contract.

Buying from electricity retailers instead of SP wholesale is similar to buying an insurance plan. We worry about shocking medical bills when we fall sick. This is why we buy medical insurance to give us peace of mind. What if the insurer close shop when your medical bills get too high? When you really need them, they disappear. Do you feel safe buying insurance from this kind of insurer?

Households transfer the risk of higher prices by paying an "insurance premium" to electricity retailers in exchange for a fixed price plan. The last we want to see happening is for the electricity retailers to transfer the risk back to us when we need them the most. Unfortunately, this is what is happening today with electricity retailers saying "Bye Bye" one by one in the face of rising electricity prices.

I want to emphasize that there is nothing unethical about electricity retailers closing their unprofitable businesses. It would be unreasonable of any customers to expect a business to continue loss-making operations to serve them. Nobody owes anybody else a living.

As a customer, I hope to see a consolidation in the electricity retail market so that we can have financially strong electricity retailers among the survivors. No point in buying insurance from an insurer  who is not financially strong enough to weather the storm and is likely to cancel the contract when customers need them to be around the most.

I am buying electricity from the wholesale market and am a customer of SP Wholesale today. 

EDIT: More Singaporeans on wholesale plan will be good for the country during an electricity supply crisis. Singaporeans on wholesale plan will try their best to conserve electricity when the country is in an electricity supply crisis. There is no incentive for people who are on a fixed price plan to help the country conserve electricity since their wallets are not hit by a supply crisis.

Influencing people's behavior with free market prices is probably the most effective cure for supply-side problems.

PS: I am not getting paid to advertise for SP Wholesale. I am sure SP Group will prefer their customers to stay on with their SP Regulated Tariff plan which is much more profitable.


Saturday, October 9, 2021

Gorgeous-looking suspected scammers spamming me on Telegram and WhatsApp. How I responded.

I receive at least 4 to 5 spams from suspected scammers on Telegram and WhatsApp every day. To capture your attention, these spammers always use a gorgeous picture profile. 

Here are some samples.

















They use the same sales pitch to catch their victim by copying and pasting from the same sales template. Initially, I simply block them but they keep coming back. 

I have changed tack. 

Since scammers play on their victims' psychological weaknesses such as fear and greed, I will use the same playbook on them to invoke fear of retribution for their evil deeds. It does not take much effort. I simply copy and paste from the standard reply template below;

Hi there, are you part of a scam? It is very selfish and despicable to rob innocent people's money earned through sweat and toil.

Are you not afraid of going to jail and being fined? The police are on the lookout now.

Even if you do not get caught by police this life, you will be punished in the afterlife. Christians believe in hell, Buddhists believe in karma. There will be retribution. Even if you earn good money now, retribution can strike you later in the form of bad luck. Accidents, cancer, Covid, investment losses can happen mysteriously to you.

Do you want to live righteously or continue your wrongdoings? You cannot run away. Either you get punished in this life or the next.

It is still not too late. Please stop what you are doing to save yourself.

The above reply was modified from a Christian who is holier than me.

I get more spam on telegram than the average person because I am an admin of 2 telegram groups Interactive Brokers Singapore Community and Singapore Telegram listings. The spam seems to have been reduced after I use the template reply.

Feel free to copy and paste the reply when you encounter suspected scammers on social media.

Sunday, September 26, 2021

My NTU engineering professor became a billionaire. Hope his achievements can attract more people to take on an engineering career.

Nanofilm launched an IPO in October 2020. It has been years since I saw a large IPO raising more than SGD500m on Singapore stock exchange that is not a REIT or business trust. Even better is that it is a high-tech company. Nanofilm Technologies is the biggest listing on SGX in eight years. The company was founded by Dr Shi Xu. He was one of my engineering lecturers at NTU. Today, he is a billionaire. Congratulations. 

I am not vested in Nanofilm but I am an admirer of Dr Shi Xu for his achievements.

Dr Shi Xu left a deep impression on me as a lecturer because he distinguished himself with his communication skills and good command of English. During those days, many foreign professors did not speak English well because their formal education was not done in English.

I am sure other students will remember him well too. I spotted several female students who like to sit among the front rows during his lectures. It is not hard to spot these female students because there were so few of them in engineering school. He was a good-looking lecturer. Coupled with his billionaire status, I think his wife will be greatly envied by many women today :).

Nanofilm jumped almost 17% on IPO debut (23Oct2020). I would like to see some animal spirits returning to the Singapore stock market scene. The Singapore stock market has been pretty dead for years. While value investing is a proven investment strategy, if most investors here are mainly dividend-hungry and value-oriented, no entrepreneurs will want to list their company on SGX. No self-respecting entrepreneur will want to list his baby at a cheap price and pay generous dividends to other shareholders at the expense of future growth. Some animal spirits and a tilt towards more growth investing will be a healthy development for the Singapore stock market. Meanwhile, due to the lack of growth and tech stocks in Singapore, the growth-oriented investors in Singapore have moved on to U.S, Hong Kong, China markets.

Just as no entrepreneur wants his baby to be a value stock, no salary worker will want to be a value stock either. Every boss will like to keep a value stock employee on their payroll forever because he is underpaid, yet delivers reliably. In the past, I have seen many engineers in Singapore becoming value stocks in the labour market. I had underpaid supervisors who would had been much better paid had they applied their brain-power to work in more lucrative sectors. So, it is not surprising that many intelligent engineers have switched to better-paying industries like banking and finance. Over time, this has led to a serious shortage of good engineers in Singapore. In recent years, we are seeing the consequences. MRT breaking down, lifts breaking down, flooding, basic infrastructure breaking down are related to the shrinking pool of engineers in Singapore. If we cannot even maintain our basic infrastructure well, there is no hope of technological progress to drive our country forward. Fortunately, I can sense that the situation is improving today.

I expect this problem to be partially solved in the public sector through higher salaries of public-sector engineers. There is a strong case here to do so because national security demands that we have a core group of local, rooted engineers to maintain our country's infrastructure. 

In the private sector, this is a much more difficult problem. The government cannot get over-protective of locals by restricting the supply of foreign labour too much as foreign companies will move their operations to other countries. The recent rising protectionist tide to prioritize local workers over foreign workers has come at a bad timing. More people are working from home due to Covid virus. If employers are comfortable with staff working remotely from home, then why not simply hire cheaper and equally competent staff from other countries with lower cost of living like India and Vietnam? Foreigners need not come to Singapore to take jobs away from Singaporeans. They can do so working from their homes. Rising protectionism may accelerate this trend. It is perfectly legitimate to punish some foreign employers who discriminate against local workers if they have a strong bias to hire and bring their own village over but Singaporeans need to be mindful that our economy is still very reliant on foreign companies who are free to leave. 

I hope more tech entrepreneur success stories like Dr Shi Xu becoming billionaires will attract more talented Singaporeans to consider engineering as a career in Singapore. I am happy to hear more stories of engineering salaries going up in recent years.

Show them the money, then more will come.

Sunday, May 9, 2021

My thoughts and action as shareholder of Singapore Press Holdings after SPH's non-profit move

Update:  On 2Aug2021, Keppel Ord announces that it is proposing to acquire Singapore Press Holdings (SPH) through a $3.4 billion privatisation offer.

Under the offer, SPH shareholders will receive $0.668 in cash, as well as 0.596 Keppel Reit units and 0.782 SPH Reit units per share.

On hindsight, my sale of SPH shares was a wrong, painful move. Time for self reflection.


On Thursday morning (6May2021), I was surprised to see trading of Singapore Press Holdings(SPH) shares halted pending an important news announcement. As a shareholder, I was positively excited. Based on past experience, when a stock has been on a run-up in the months before the trading halt, the news will usually be a good one😀.

I eagerly awaited for the "good" news. 

Soon, I received a news notification on my mobile phone. The word "not-for-profit" in the headline dashed my hopes. Investing and "not-for-profit" certainly do not go well. No investor will want to have anything to do with "not-for-profit" since the objective is to earn profit.

SPH is going to restructure its media business into a not-for-profit entity. Initially, I was expecting that shareholders will get something out of the deal. Normally, when a company spins off a major business, shareholders will get something back from the sales proceeds. After all, we are owners of the business. In this case, we get nothing. It is actually worse than that. SPH is not selling the media business. SPH is giving away the media business and on top of that, giving away cash and some of her own shares to the new media entity. Not only are shareholders losing a core business without getting compensation. We have to pay extra for the loss. Furthermore, SPH will assume certain liabilities, cost and expenses potentially arising from the Proposed Restructuring. I do not know exactly what these liabilities and expense will be at this moment.

It is a bad deal for shareholders. It does not look like a normal corporate restructuring deal. It looks more like a rich man paying expensive divorce fees. Is this "wife" really such a bad one?

SPH's investment portfolio of properties and stocks were bought using the cash thrown up by SPH media business during the good years. Without Singapore Press Holdings of the past, there won't be any "Singapore Property Holdings" of today. Throughout its long history spanning a few decades, SPH's media business has been profitable and only recorded its first-ever loss of SGD$11.4 million last year. It seems like this wife has been a wonderful partner throughout most of the marriage except in recent years. Is the husband getting too hasty in declaring divorce?

As a customer of SPH media, I know the media products are not dead or even dying. I still read the news everyday. So does everyone else around me. Nobody I know has stopped reading the news. The product is still very much alive. As long as a business is creating a product that customers want, it will not die. What has changed is the medium of delivery from physical print to digital. 

New York Times, The Economist, Financial Times, Wall Street Journal, Washington Post are still surviving fine as private for-profit entities. In fact, the shares of New York Times (NYT) even traded at an all-time high just a few months ago. Temporary pain during the digital transition is expected naturally. Cutting off the business only after 1 year of losses seems premature to me.

It is fair that shareholders who make bad investments lose money. The amount of loss should be fair. Since the media business is to be spun off, it is a reasonable request from shareholders that the business they own be sold off to recover some value and not be completely gifted away. 

As a Singaporean, I can understand the strategic importance of SPH's media business to Singapore. As shareholders, the objective is to make money. Companies which are asked to do national service and demand monetary sacrifices from shareholders will naturally be shunned by shareholders. This is one reason for the 15% price drop on Friday(7May2021). 

The other incident that has captured national attention is Umbrage. A reporter asked 2 questions at the press briefing. 

SPH CEO took umbrage at the first question which I thought was reasonable. The reporter asked whether the restructuring would result in an emphasis on editorial integrity ahead of advertiser interests and the CEO was unhappy that the reporter implied that SPH has conceded to advertisers. If you take money from someone, you are biased to please him. If the new not-for-profit media entity is less financially dependent on advertisers, then it naturally follows that advertiser interests will have less influence on editorial integrity. 

100% editorial objectivity is not possible as long as a news media is dependent on external funding sources. Yet, if there are no external funding sources, it is hard to survive. Therefore, 100% editorial independence is not realistic. As a reader who desires objective editorial content, I would like to see the new media entity dependent on a diversified pool of funding sources with no single dominant source. Nobody's behavior can be completely independent from his paymaster. The best scenario for objective, independent behavior is to ensure no single paymaster dominates.

The reporter's second question asked whether the corporate initiatives to improve media business has failed. Here comes the stab. She asked WHO was responsible for the failure. This was a unnecessary, rude and non-constructive question. 

The second question was unnecessary because the answer is obvious. The buck stops at the person who is paid the most buck. Of course the CEO is responsible for the failure. As a shareholder, I am ok with CEOs failing occasionally because it means they are not afraid to take risks. No risk, no gain.

The second question was rude because she is asking who failed to the person who failed and it is obvious who failed. I think many people would take personal umbrage if they were asked this question.

The second question was non-constructive because if you want to get good answers after something has failed, the first question to avoid asking is who failed. The moment you asked who failed, the people on the ground who are likely to have the best answers to fix the problem will get defensive. Transparent, good answers are not going to come from defensive people. No surprise the reporter did not get any answer for her second question and umbrage was taken on her first one.

Although I felt that the second question was unnecessary, rude and non-constructive, I still have to thank the reporter for asking the second question. Shareholders seldom get to see their top managers at work. Seeing how the managers react to difficult questions in public is useful. 

Failures are too expensive to waste. The first step to not wasting failures is to admit one has failed. It is easier for people like me to admit failure than people who have achieved very high station in life. Since growing an ego is natural as one climbs up, I guess it is harder for successful CEOs of listed blue-chip companies to admit failure.

As a side-note, I hope our decorated SAF generals will retain some humility as they attain the highest ranks in military. When a scholar has his career mostly planned out for him and encounters little failure on his way up, it is easy to grow an unhealthy ego. Like every Singaporean man, I am a soldier and so will my sons. Generals with an ego are vulnerable to psychological enemy tactic like 激将法. In the event of war, I do not want me and my sons to die in meaningless missions because an egoistic General was agitated by the enemy into making foolish, emotional actions. As a civilian, I can quit my job if I disagree with the actions of the CEO. As a shareholder, I can sell my shares if I disagree with the direction taken by the CEO. As soldiers, we Singaporeans do not have the freedom of choice to exit. Our lives are in your hands, generals.

Investors who bought SPH with the hope that its media business is on the road to recovery no longer has a good reason to hold the stock. Singapore Press Holdings has become Singapore Property Holding. Investors who are interested in property stocks have many alternatives to choose on SGX and HKSE. Several of them pay good dividends, trade at attractive discount to book value and have long experience in the property business. The new SPH has plenty of competition as a property play in the stock market.

SPH enjoyed a price run-up since the beginning of 2021. The short-term minded traders who hopped on early for the ride will be looking for a reason to take profit. The announcement in the press briefing gave them the perfect reason to realize their profits. This group of profitable traders will be running for the exit when the market opens. I had a bad feeling on Thursday night that the price will crash next morning.

I happened to be one of the lucky shareholders who enjoyed some profit cushion on the day when the bad news was announced. I am no longer a shareholder today. If you are a shareholder, please do not let my actions influence you because I have no idea whether I will be right or wrong. Furthermore, I will always be biased in favor of my own actions. Your decision to sell should be dependent on the reason you bought. You yourself know best.

Singaporeans might as well buy electricity from SP Wholesale since electricity retailers exit when we need them the most

This week, iSwitch became the first electricity retailer to exit from the electricity market. About 90000 households may f ace 20% higher el...