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.

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.

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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.

 https://investor.sph.com.sg/newsroom/20210506_102600_T39_AYO9VPTD5YJANBTE.3.pdf

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.