These Big Singapore Companies Are Not Performing Well. Why Is That So? – Sudhan from Seedly 

In episode #17 of Chills w TFC, we bring on the investment content lead of Singapore’s leading personal finance platform, Seedly. For many new stock pickers looking at Singapore stocks, there’s a natural gravity towards some big companies, like the big banks, SIA, Singtel, Sembcorp…But, all these brands that are supposedly household names, may not necessarily be performing well. And guest today will explain why.

Join me as I chill with Sudhan from Seedly to discuss about the business fundamentals for some of the big companies in Singapore. How are the banking, telco and airlines businesses in Singapore doing? How should we evaluate whether a bank stock is good to own? How important good management for companies in Singapore? How to balance high dividends and low growth? Is it a concern when companies start to acquire other businesses to grow instead of growing their own business? What are the main pointers to look out for when evaluation dividend companies? Tune in to find out!


podcast Transcript

Reggie: Stock picking is something that many people want to learn. For a lot of new guys, if you’re not exploring all your big ass names abroad and you only look at Singapore, there’s a natural gravity to some of these big companies, right? Like your big banks, SQ, Singtel, Sembcorp… all these guys that are supposedly household names, huge ass, but not performing very well.

So today I decided to bring on a great friend of mine to talk about some of these business fundamentals of these big names, stocks, and why are they not performing well. Through this process, we have distilled some core wisdom towards picking dividend stocks, finding good businesses and not be all excited about growth names and big names. So welcome back. 

Welcome to another Chills with TFC session. In this series, we want to bring on interesting, relevant people to help us learn better from various perspectives. Life is not always about learning from people that you already agree with. Perspectives shape a rounder thinker in our pursuit of the life we love while managing our finances. 

Well, our guest today requires no introduction. He is the investment content lead of Singapore’s leading personal finance platform and if you have not heard of him, I don’t know what you’ve been doing. You must have seen his articles around. Let’s welcome Sudhan from Seedly who, by the way, also worked for a writer for Motley Fool prior. So enjoy our time together.

Expand Full Transcript

You’ve brought up this point of management, management, management. There’s a lot of discussion on management and from what I understand, actually, management here in Asia or in Singapore is not as impactful as good management in the US. So I want to hear your thoughts about quote unquote “good management” here. How impactful, how important is it, having good management in Singapore? 

Sudhan: I think all companies… it’s good to have good management because at the end of the day, they are the visionaries. They have the plan for the company, especially founder-led companies. They know where they want the company to go and they have so much passion in the business itself. They really want to make it grow. So I think management is important, but I feel more important is also the business fundamentals. For example, you can have a very good manager in a lousy business, but the business is just going to be lousy all the way, most of the time. Yeah. There are of course caveats here and there, but in general, yeah. So yeah, I think management’s important, but more important is the business fundamentals as well. 

Reggie: Okay. So then when you talk about business fundamentals, if we look back at Singapore, fundamentally, in the STI, the banks form the biggest of the index and the market here. 

Sudhan: Correct. 

Reggie: I think close to 40% of the whole index is the banks. So how solid is the banking business here? 

Sudhan: Okay. I think in Singapore, like you’ve rightly mentioned, banks, DBS, OCBC and UOB, they make up 40% of the Straits Times Index and the other 27 companies are just like the rest. But banks in Singapore, they are super strong. They’re fundamentally very well-capitalized, strong and I think they also learned from the ’09 crisis. Even back in ’09, the banks were strong, but now they have learned from the crisis and even become stronger. I feel the banks in Singapore are fundamentally very strong and they wouldn’t go bust in a sense, and the whole Singapore economy relies on the banks.

Reggie: Okay. But even if they don’t go bust… so we talk about the business fundamentals, right? How do the banks actually operate their business? Try to help us understand because the bank sound like a very simple business, like just lending money, but actually it’s multifaceted and pretty complex from the back. So help us understand a little bit, how should we evaluate whether is the bank well-capitalized or is it a good bank to own? 

Sudhan: Okay. Basically, banks make money through this thing called the net interest income, which is basically the difference between the interest they charge on loans… For example, let’s take your housing loan or business commercial loan. They charge interest and the difference between that loan and the interest they give on deposits is how banks make money, the net interest income. Fundamentally, that’s how it makes money for all banks.

So net interest income makes up most of the revenue, total income. Other than that, they make money through these investments, selling insurance, credit card fees, late payment fees, credit card annual fees and stuff like that. So these are the ways that banks make money.

Some of the banks also advise companies, corporations on… let’s say they want to go public, they want to have a initial public offering. The advice from banks on how to do it, the whole process and then they take the fees out of it. But fundamentally, mainly they make money through lending out loans.

Reggie: Yes. 

Sudhan: Yeah, 

Reggie: That’s the biggest bulk of their business, which is why capitalization is important. But what is capitalization? 

Sudhan: Okay. Basically, to make sure that the banks are strong businesses… Before I go to capitalization, I will talk about some of the indicators to look out for. The main indicators to look out for is net interest margin. It’s similar to operating margin for a normal non-banking company. The net interest margin shows the average interest margin that a bank is earning from its borrowing and lending activities. That’s one thing to look out for. The higher the net interest margin is, the better it is, but for last year’s results, 2020, the net interest margin came down mainly because the US federal reserve has been cutting rates to boost the economy after the COVID crisis. Yep. So that’s one: net interest margin.

Second is return on equity (ROE). This tells us how effective a bank’s management is in maximizing profits from shareholders’ capital. So ROE… same for non-banking companies. It’s a very good metric to analyze how strong companies and how well management is doing his business, whether it’s doing, running his daily operations as well. You asked about management, so to assess the management’s quality, this is another way to look at it. Look at ROE.

Reggie: Yep. 

Sudhan: Another ratio is the non-performing loans (NPL) ratio. Basically it’s when a borrower is unable to pay off the loan, it adds onto these non-performing loans ratio. So… 

Reggie: Bad debt huh?     

Sudhan: [Yeah, bad debt basically. So the lower the NPL ratio, the better it is. Capitalization, you mentioned, basically in a simply put way how strong the balance sheet is. Does it have good enough cash cushion to ensure there’s no bank run, everybody goes to withdraw their funds and then the bank is left to go bankrupt or something… to ensure there’s no bank run. So in a sense, I think Singapore banks are very well managed, all the three banks and the MAS is also hard on the banks as well. Singapore is known for the banks to give out good dividends. So last year, MAS…

Reggie: Famous. 

Sudhan: Yeah, very famous. Like you know banks…  

Reggie: You want buy bank dividend.    

Sudhan: There was one point in time, I think DBS was getting 5% dividend yield. It was almost like a REIT kind of a dividend distribution yield. So yeah, banks were famous for giving high dividends in Singapore. Because of that, a lot of retirees, income investors invested in banks. But last year, because of COVID, MAS said that we have to cap our dividends to 60% of your previous year’s dividends. Your 2020 dividends only can be 60% of 2019 dividends. That made banks give out lesser dividends because of the cap… logically. And because of that, the stock prices of the banks actually fell.

But investors should realize that all these banks are actually super strong. They can continue giving the 2019 dividends as the full dividend and even add on some more for 2020, because they are really very strong, well-capitalized. Even MAS has said that the move by them is a preemptive move since the banks already have strong balance sheets. Yep. So in a way, it’s kiasu (afraid to lose) lah. 

Reggie & Sudhan: [laughter]   

Reggie: And it’s a one-off thing, right? 

Sudhan: It’s a one off thing. It’s good lah, it’s good that the regulators are stepping in to help Singaporeans and help everybody in the economy as a whole to recover as well and to ride through the crisis. I’m very grateful for that, for the Singapore government. I’m not promoting the government or something like that, but I’m really thankful for what we have gone through in Singapore and our government managed to curb the crisis almost instantly compared to other countries that are still suffering and stuff. So good governance is also another thing to look out for as an investor in the country.

Reggie: Yes. But the thing about high dividends, right? It’s usually pretty synonymous with low growth. The companies are not growing, that’s why they’re not reinvesting their capital and then they just give you a dividend so that you hang out and stay with them. So how do you balance this thing then? 

Sudhan: Yeah. So in general, what you said is true. When they give off high dividends, it may mean that there’s not much growth left. But there are companies that are giving high dividends in Singapore and also have good growth. One example is Micro-Mechanics. They have been giving out good dividends, growing dividends, but the yield is also respectable, around 3-4% before the run up in share price, it was giving 4% dividend yield and it’s still growing with semiconductor market. Micro-Mechanics is involved in the semiconductor industry. This is still a growing company, but it’s still paying out good dividends. So what happens is that it just grows so much that there’s so much of cash, cash coming in, that they may not see a need to reinvest in their business so they can return back to shareholders. 

So in terms of dividends, if you are looking at different companies, there’s a whole suite of things to look at, to analyze dividend companies. But yeah, in general, it may not always be true… if it’s high dividend paying company, it still has growth. So it’s just how you are going to pick it out. Yeah, it’s not easy to pick it out, but there are such companies.

Reggie: Like you said, there are some pointers to evaluating dividend companies. How do we go about doing that?

Sudhan: There are mainly three criteria to look at. One is the dividend payout ratio. Another one is… make sure the company has strong balance sheet, more cash than debt. And the third one is to ensure the company is growing basically. Because if you want growing dividends, you have to make sure that company is growing in the first place.

Reggie: [laughter] 

Sudhan: Yeah, yeah, yeah, so these three things. I will touch on the last point first. Growing companies, growing revenue, profit and this thing called free cash flow ensure that business is strong. This will make sure that it can grow year after year revenue-wise, profit-wise. Most of us would know what is revenue and profit, but there’s this thing called free cash flow, which is basically the cash that comes in through the company after netting off all your expenses, to pay off your factory upkeep and all this stuff, which is called capital expenditure. So basically, it’s cashflow from operations, from operating activities minus your capital expenditures, what you get is free cash flow. So with this free cash flow, what companies can do is basically… 

Reggie: And these are all one liners in the FS, right? Financial statement. It’s very easy to find them. 

Sudhan: Yeah. 

Reggie: It’s not as complicated as what people think it is, right? Because we are just throwing out all these technical terms. But actually you’re going to read the financial statements, there’s a one liner that clearly says this, right? You could just pluck the number if you need to. 

Sudhan: Yeah, it can be obtained simply from the statements, but for the free cash flow, you have to do some simple maths, just subtraction. 

Reggie: Yes.  

Sudhan: So yeah, financial statements 101. How to find the free cash flow is basically go to cashflow statements… there are three cashflow, three statements that make up the financial statement: the income statement, balance sheet and the cashflow statement. For the free cash flow, just go to the cash flow statement and look at this line called net cash from operating activities. There’s this number, then just below, there’ll be purchase of plant, property and equipment. That’s CapEx, capital expenditure. So the a) on top figure minus the bottom figure, you get c) free cash flow. Yep. So… 

Reggie: Essentially it means extra cash, right? Extra, there’s no real use for it for now… 

Sudhan: Correct.  It’s basically like you get an income… 

Reggie: Minus everything, and that’s the extra… 

Sudhan: Your savings. 

Reggie: Savings right? 

Sudhan: Yup, correct in a way. So it’s savings that are for individuals or free cash flow for company. With your savings, you can do other things. You can maybe splurge on luxury goods, you can use it to invest in the stock market. But for companies, what they can do is with this free cash flow, they have to decide as well, just like us. What they can do is basically 1) reinvest in their own business, get the money and put it back into their own business. 2) pay off debt if they have a debt on the balance sheet, pay off the loans and stuff like that, 3) they can buy back own shares so they can go to the stock market and tell the stock market “hey, I want to buy back X number of shares”. It will improve certain few metrics down the road if you do that. Yeah, we won’t touch on that. The fourth one is basically dividends. What they can do is pay dividends to shareholders. So what this means is… like you mentioned earlier, they may not see the need to reinvest in their own business, they may not have that much growth. So what they can do is pay dividends to shareholders because shareholders can decide what to do with the money. They can reinvest into other companies or they can buy…

Reggie: More shares…

Sudhan: Buy more shares. 

Reggie: Of the same company… 

Sudhan: Yeah. 

Reggie: …what have you not. 

Sudhan: Yeah. Correct, and basically when you reinvest the dividends, you make the compounding even faster in the stock market. So, look at free cash flow because that’s an indicator of rising dividends as well. There’s a chance to pay higher dividends if there’s higher free cash flow. So that’s one, rising revenue profits, free cash flow. 

Two is to make sure this company has a strong balance sheet. What I like to look out for… ensure the company has more cash than debt on the balance sheet. Inversely, if you have more debt than cash, basically it means if an economic recession comes, you’re going to be in trouble, the bank is going to be hounding you and ask you to pay off our loans, we need the money back and stuff like that.

Protect yourself first as an investor. Protect your downside before looking at the upside. Protect yourself by ensuring the banks have strong balance sheet. This is both in terms of good times or bad times with the… the market can have a bull run for 10 years, but ensure that you invest in strong companies. We don’t slack off in our investing just because it’s a bull market. “Share price surely go up lah, no need to look at all these”. 

Reggie & Sudhan: [laughter] 

Sudhan: [Yeah. 

Reggie: Yes. 

Sudhan: Yeah, make sure… always protect yourself as an investor. I’m a very conservative investor, so these are the things I look out for: strong balance sheet, more cash than debt, even if there’s debt, ensure that the debt is not exorbitant and highly leveraged, the companies are not highly leveraged. So that’s two. 

Three is dividend payout ratio. It’s a ratio where the dividends… you can take the dividends divided by the earnings per share. Yep. So dividend per share divided by earnings per share or in a more advanced way, dividend per share divided by free cash flow per share so that’s in a way more accurate. So mathematically, if it’s a hundred percent, it means that whatever… 

Reggie: They are giving out everything. 

Sudhan: Correct. Yeah. Whatever earnings… 

Reggie: All the extra. 

Sudhan: Yeah, whatever the earnings the company is getting, it’s paying out the shareholders. It’s not reinvesting into the business. So these kind of companies are the mature companies, the super mature companies, for example Johnson & Johnson, Proctor & Gamble in the US… super mature companies that may not have that much growth. But if you want growing companies and at the same time growing dividends, you must ensure that the dividend payout ratio is below a hundred percent. So what I like to look out for is at least below 80%. Anything above 80%, I wouldn’t really want to invest as a dividend company.

Reggie: You still want to see that they are putting money into growth, to grow their business or whether… acquire other businesses? 

Sudhan:  Correct, yeah.  

Reggie: Is this a concern when companies start to do parallel acquisition, where they start to acquire other businesses to grow instead of growing their own business?

Sudhan: I think it depends on the business itself. Some companies acquire to grow, but some can organically grow year after year. But personally as an investor, I like to look at companies that grow organically within themselves. Don’t need to look outside because at the end of the day, when you don’t have any companies to acquire, then no, your growth might just stop, will falter. I like to look at companies that grow within them internally. There’s a strong tailwind in industry, so you can just keep on growing and growing and growing without acquiring other businesses. 

But… doesn’t mean acquisition is not good if it’s done for the right reasons. Let’s say this company, they want to grow into adjacent businesses to make it a stronger company, to diversify their business. I think it’s okay. Yeah. So it’s just case by case.

Reggie: Case on case. It’s very “art”, right? It’s not that sciency. 

Sudhan: Yeah, correct. 

Reggie: Okay. One of your metrics that you talk about is debt, right? As long as the debt compounded on this is not too much, it’s not too crazy… 

Sudhan: Yeah. Basically don’t highly leverage yourself to acquire another company. Do small, bolt on acquisitions, they would say… stuff like that. For example, SGX is good… just recently announced a few acquisitions just to expand their reach. They bought FX company, I think BidFX or something, and Scientific Beta. These kind of companies, they are acquiring small acquisitions just to entrench themselves even more into the market. I like this kind of small, small acquisitions just to give extra growth and stuff like that. So that’s one thing I look out for.

But back to the dividend payout ratio, 80%… why I like to look at companies below a hundred percent payout ratio is that let’s say, for example, a recession comes, companies paying 50% out their dividend and having a high dividend yield still… if a recession comes, if the earnings drop, at least they can still maintain… the dividend is still…

Reggie: Mmm.  

Sudhan: It’s just maths. Yeah. 

Reggie: Yeah. 

Sudhan: So if 50% where they… Let’s say the earnings drop and then your ratio goes up to 80%. They can still maintain the same absolute dividend just that the ratio will go up. There’s this margin of safety. You know in engineering, I was from engineering previously, so we always have this margin of safety. Make sure the bridge, when you build it, if you can tahan (bear) one ton of weight, don’t just build it for one ton. Build it higher, 1.5 ton or stuff like that. So there’s this margin of safety built in investment.

Another way to have margin of safety is basically look at strong balance sheet companies. Companies that have long runway for growth is in a way, margin of safety as well.

Reggie: Mmm mmm. But growth is a whole different discussion. 

Sudhan: Yeah.  

Reggie: It’s a very, very complex, different discussion. We’ll do that another time… but on the topic of strong companies and good dividend payouts, I think there are a lot of famous names here, big names like SQ, SPH, Starhub and… all these are household names, people know them and they come up so often in retail investors’ discussion. You know what? When I hear people talk about it, I’m a little turned off. But I want to hear your thoughts because I saw you wrote an article about some of these big names that are household names, but they’re actually fundamentally not that strong other than their brand stickiness. 

Sudhan: Yep yep. So yeah, I wrote an article on these five companies to avoid in 2021. These companies are like Keppel, Singtel… 

Reggie: I think you avoid more than 2021 lah… avoid them a lot longer [laughter] 

Sudhan: Yeah, yeah. Avoid them all the way lah, in a sense. Avoid them all the way, these five companies, but I made a mistake with the Sembcorp industries. Yeah, that was back many years ago. I wrote about it as well in the lessons. These are the companies I’ll avoid investing in, basically because there’s a famous saying in the market that all these companies won’t die. It’s like government-backed…

Reggie: Yeah yeah yeah. 

Sudhan: …it’s Temasek-backed and stuff like that. They won’t die, but they won’t thrive either. They won’t grow either in my opinion. There’s always this opportunity cost. Let’s say there’s two companies: company A, company B. Company B is like Amazon, Zoom, the DocuSigns of the world. Company A is like faltering companies that can’t really grow. Which one would you put money into? 

Company A may not die, but company A may not grow either. Your money will just be like… you put in $1000, your $1000 ten years later it will still be $1000. But compare with company B, you put in $1000, ten years later your $1000 might be tens of thousands of dollars. It just compounds… grows and grows and grows. So there’s this opportunity cost involved. In the short term, you may not see it. Long-term… if you have 5 years, 10 years, 20 years, 30 years, 60 years to retirement, it’s really a huge game changer. 

Reggie: Yes.  

Sudhan: So yeah, I avoid these companies. By all means, they brought Singapore to where it is, like Keppel Corp, Sembcorp, SIA… stuff like that. It puts Singapore on the world map… you know SIA. Whenever you say SIA, people know it for its brand, for its customer service. But as an investment, I wouldn’t really put my money into this kind of companies. I would rather put it into strong companies that can grow. 

Reggie: Mmm. 

Sudhan: Yep.  

Reggie: So let’s be a bit more case-specific. Why not SIA? SIA is super popular. Everybody tell me “won’t die one, government-backed” blah, blah, blah, blah.

Sudhan: Yeah. So SIA is another good example. I wrote an analysis of SIA, I think back in last year March, I think the first analysis. That article really did very well because it was like a bare case against SIA, why I wouldn’t invest as an investor. It’s my own perspective. What I wrote there is basically, SIA is operating in a very price-sensitive industry. As a traveler myself, whenever I want to travel, I go Skyscanner, search all the cheap tickets… like Jetstar or AirAsia and go for the cheapest ticket. We are all budget-conscious, especially when you just want to go to Bali. You wouldn’t want to take SIA, pay like a few hundred dollars more just for the comfort… extra “good morning, sir”. You wouldn’t want to pay extra for that. 

Reggie: [[laughter]   

Sudhan: I don’t mind not having that. I don’t mind not having entertainment. I don’t mind not having the food for the next one, two hours. Even if I want food, I just pay $5 extra… We being very price-conscious, especially individuals like me, I want to get the cheapest ticket basically. So I go for Jetstar, AirAsia and stuff like that.

The industry itself is very price-competitive. There’s so many airlines vying for the consumer dollar. I think Richard Branson has this famous quote where he says “you want to be a millionaire, be a billionaire and start an airline”. It’s known to be a competitive industry. So in the sense, economics wise, it doesn’t make sense to me to invest in it.

And if you look at it further, deeper, for SIA especially, because it wants to be world-class, top class, it wants its planes to be new. Because if your plants are new, you need lesser maintenance. I was from the aerospace industry, so I kind of understand this industry a bit more. If your planes are newer, you need lesser maintenance, and the planes wouldn’t spoil as fast. The average fleet age for SIA is around five to six years, so that means every five to six years, they need to borrow money to buy new planes and planes don’t cost millions of dollars. They cost billions of dollars. When I mentioned CapEx earlier, what SIA does is using CapEx to buy new airlines. Theoretically, they can’t reinvest in their own business because the cash is tied up to buy airlines and every 5-6 years you have to do this upkeep, this maintenance, these purchases. They can’t reinvest in their own business and basically, there’s not much growth left. So that’s another thing. 

Another aspect is it has a lot of debt in my opinion, is that a strong balance sheet? If my memory doesn’t fail me. It’s like 80% debt to equity ratio. It’s quite high in my opinion. So yeah.

Reggie: But they have built this integration of hardware right, where they fly SQ and then 5-7 years later it goes to SilkAir and after that, it goes to Scoot. So they have a brand integration there. Do you think that is an advantage in their space? 

Sudhan: It could be as an advantage as a group for SIA itself to compete against other airlines. But on a group level, the whole investment thing doesn’t make sense to me. It may be good for them to compete with the other… Qantas or Emirates, but as an investment, it’s still back to that economics. 

Reggie: Do you hold any airlines to begin with?

Sudhan: No I don’t. 

Reggie: Okay. So generally, you are not pro this sector because of the competitiveness in the margins and the high CapEx. 

Sudhan: I’m actually involved in this sector through SATS. 

Reggie: Ah yes, I like the company as well. Share with us more. Yes, share with us more about SATS. 

Sudhan: So in the aerospace industry, there are different, different value chain if you put it that way. There’s airlines, there’s the maintenance arm. In Singapore, the listed one is SIA Engineering and ST engineering through ST aerospace arm. The third one is this services business, for example SATS. They do ground handling for passengers, for the airlines… load up your baggage and do security checks. They also have the food arm where they provide food for the airlines and not only airlines, they are also in non-aviation businesses. For example, in China, they serve the fast service food restaurants and stuff like that. 

With COVID, actually the non-aviation businesses kind of picked up… did well in a sense compared to their aviation business. Also, since they have a cargo business as well, now the vaccine drive is also helping them to cushion the business.

So I think SATS as a whole, is in a much better place than a pure airline itself. Even though SIA is a major customer of SATS, I feel that the aviation industry will pick up. We won’t know when, it will pick up… people want to travel. There’s always this pent-up demand, especially for Singaporeans. We love traveling. The aviation industry will pick up, just that the thing is when?

In the investment space, if we are convinced about the business, we have to hold onto the investments and maybe even reinvest more money into the company by buying stocks. I feel SATS is a strong company. When the recovery comes, there’s all these non-aviation services that it’s doing and revenue that’s now coming in ready, and when the whole economy picks up, there’ll be more businesses coming in from non-aviation side as well. All these will come together and help the company and it has a strong balance sheet as well, so it helps to tide through this storm for them.

Reggie: Yeah, for sure. I think SATS is way better, way better than SIA. But we’re not recommending. Education, entertainment purposes only.

Sudhan: Just own experiences. 

Reggie: Yes, own experience. Go and read on the company, I think it’s a pretty interesting company. But if we go into this other big vertical of telecoms, in the space of telecommunications, you also wrote about why you will not own Starhub. 

Sudhan: Yeah. 

Reggie: I’m just kinda curious. Why do you not look at the telcos as a big business?

Sudhan: Okay, so telcos: Singtel, Starhub and previously M1 was listed, now it’s unlisted… privatised. Previously, before… Many years ago, it was very strong dividend companies, I think like maybe in 2011, 2012? 

Reggie: Margins are very high in this business… 

Sudhan: Yup. 

Reggie: …in the past. 

Sudhan: Correct, correct… in the past. We all know what happened to the industry. So basically… 

Reggie: Circles Life, you mean? Circles Life versus big telco right? The ad [laughter] 

Sudhan: Correct correct… so I still remember, I think many, many years ago, when Starhub was launched, they had this airship in the sky. I think during NDP, one of the years, this advertisement on… 

Reggie: Really? 

Sudhan: Yeah so basically… 

Reggie: I don’t remember. 

Sudhan: Yeah. So basically, they launched an airship to advertise their services… I think when they started off. So during NDP, it was just floating around on top, I think National Stadium or Padang or somewhere that year.

Reggie: Something somewhere lah. Somewhere. 

Sudhan: Yeah. 

Reggie: [laughter]   

Sudhan: You can see this airship. Those times, people were locked in to telcos. For example, when you buy a phone, you have this two-year contract.

Reggie: Yes. 

Sudhan: And you can go to M1, Singtel or Starhub. You can’t… 

Reggie:  Yes. 

Sudhan: There wasn’t Circles Life, there wasn’t like TPG, Giga and stuff like that. So those days… I think it’s gone. Now there’s so much competition and ever since Netflix came into the world, into people’s minds, I think it’s another game changer for them. So they had this SIM card business, this phone line business, and they also had this pay TV business, for example Starhub. But when Netflix came in, you actually can see when you go back to the… I actually pulled out all the numbers for Motley Fool previously, you actually can see when Netflix entered the space in Singapore, Starhub’s pay TV… average revenue per user actually dropped, really can see the drop year after year after year.

I think Starhub was very slow to the game. I think they felt that Netflix wouldn’t be a challenge to them and they were slow to move in and stuff. But now Netflix is dominant, even Singtel is affected, Starhub is affected, and now there’s Disney+.

So I think it’s just how it is now. The days of Starhub/Singtel being a good dividend payer, especially Starhub, a lot of people own it for the divided… I think it’s over. I also did an analysis showing that… I talked about free cash flow, the dividend payout ratio. You could see dividend cuts were coming because when you analyze the numbers, you can see it’s unsustainable, the dividends. I also wrote about all this stuff for Motley Fool, even for Seedly as well. If we would just do a bit of more homework, more research, just plugging in numbers here and there… you can see it coming as well. We just have to do the research, not just listen to people talking about it. Your friends or the media… just do your own research, due diligence.

Reggie: And the dividend research business is not that difficult…

Sudhan: Correct. 

Reggie: …compared to the growth, plot the charts, plot the possibilities. That’s a lot more complicated. I think… like you’ve broke(n) down the dividend understanding. It’s not that… it’s a lot simpler relatively. So then if we bring everything together to look at the Singapore markets, do you think people should… young people that are trying to invest or people that have some money, should they be vested here? Or should we look abroad?

Sudhan: I would say… Personally, I’ve invested in Singapore, I still have investments in Singapore. I use my CPF, my funds to invest in the STI ETF. I still believe Singapore will grow, but may not be in the stage of S & P 500 or NASDAQ. But Singapore will still grow. The banks will still grow, making up 40% of the index… even though there are laggards like Singtel and stuff like that. I think generally, the Singapore economy will do well, the market will do well.

The STI ETF is known for… because the banks are paying good dividends. The ETF also… because of how it’s made up, it also gives alright dividends, yield wise. So I’m okay to just park some money in my CPF, in STI ETF. But most of my cash portfolio is in the US. It just depends on where you want. If you are a retiree, if you want dividends, I think Singapore is a great place. But if you’re young, you want to have more growth, I think you can look into the US, China market, Hong Kong market. There’s so much more growth just by the size of the businesses listed there versus here.

Reggie: So much more exciting, right?  

Sudhan: Yeah, that’s right. 

Reggie: [laughter] Okay, that’s cool! Thanks for sharing. I think we learnt a lot of good juice today. Thank you! 

Sudhan: Thank you Reggie, thank you for having me.

Reggie: Hey, I hope you learnt something useful today and truly appreciate that you took the time off to better your life with The Financial Coconut. Knowledge, it’s that much more powerful and interesting when shared, debated, and discussed. Join our community Telegram group, follow us on our socials, sign up for our weekly newsletter. Everything is in the description below. And if you love us, want to help us grow, definitely share the podcast with your friends and on your socials. Also, if you have some interesting thoughts to share or know someone that you want to hear from, reach out to us through With that, have a great day ahead. Stay tuned next week, and always remember: personal finance can be chill, clear and sustainable for all..

Okay, so I’m just going to ask you three questions that we ask everybody. 

Sudhan: Okay. 

Reggie: The first question is: what is one of your core life principle that you hold close to? 

Sudhan: I would say be grateful for things in life. Because I think every single person in the world has played a small part directly or indirectly in your wellbeing. We may not know it, but the world is keeping us alive…. yeah, basically so just be grateful for life. Be grateful for what you are and… Every day, you can just say thank you to certain things that you have done for the day. I think gratefulness… gratitude is a very, very important thing. Yeah. 

Reggie: Cool. Awesome. What is a personal finance advice that you feel needs to be more propagated? 

Sudhan: I think financial knowledge, investing knowledge. I would say a lot of people think that investing is only for the elites, for the fund managers or portfolio managers, the BlackRock of the world, Goldman Sachs of the world. Actually it’s no. Everybody needs to learn to invest because we put money in your bank, leave money in the bank. Now it’s even low interest rate, less than 1%. And it will never ever go above what the stock market will give you. Yep. So everybody has to invest just to beat the inflation monster because if you put the money in the bank, it’s just basically putting money in the Khong Guan tin biscuits. No difference.

Reggie & Sudhan: [laughter] 

Sudhan: There’s no difference.  

Reggie: Do people still eat Khong Guan tin biscuits? 

Reggie & Sudhan: [laughter]  

Sudhan: I still eat… I still eat the square biscuits. 

Reggie: Okay okay [laughter] 

Sudhan: It’s still nice but it doesn’t come in the tin biscuits form anymore, it’s in the packet form. It’s the similar understanding, putting money in the bank… maybe it gives you for every thousand dollars, it gives you a few cents or a few dollars. Yeah, you have to invest in the stock market. Even if you don’t know how to read company’s financial statements, even if you don’t know how to pick individual stocks, you can still invest through ETFs, through robo-advisors. All these businesses are doing great job to propagate investments. Even at Seedly, we have review platforms for people to make the decisions on which brokers are the best, which robo advisors are the best. So they can just go onto Seedly and find more information on this as well.

Reggie: Nice! Cool stuff. Stay invested, okay? And the last question is: which part of your life are you giving extra focus now? 

Sudhan: I would say my family. Now I have a son. 

Reggie: Aww, so cute. 

Sudhan: Thanks. So yeah, just family now. I think fatherhood changed my perspective about life as well. Just being grateful… I think bringing a child to the world is a miracle in itself. I tend to think a lot. But when I think about childbirth, or even conceiving a child and stuff, even without our input, our thoughts, there’s the gestation period going on for nine months. You can’t fasten it, you can’t slow it down. It just happens… as and when, the nature’s way.

So looking at that has totally changed my mind. I can’t describe… I just have to go through it to know. I think a lot of fathers would understand… mothers who understand what I’m trying to say. Childbirth gave me a whole new perspective that I haven’t… I wouldn’t imagine. I didn’t know how I came into this world, but through a child, I could see how I came into this world and how I was brought up, how my name was given… even giving a name I felt at that point in time, it’s a label. I’m labeled as Sudhan, just like this is a mic, there’s a table, there’s a chair. so we are all going around in labels. But these labels are creating so much of ego, so much of tension, it’s you against me, that against this. I just feel… it’s a total life changer for me, childbirth. 

Reggie: Nice, nice. One day, I’ll get through that. Thank you, thank you. 

Sudhan: Thank you Reggie. 

Reggie: Thank you so much. Awesome.

Related episodes

How Seedly Maintains An Unbiased Stance [Chills with TFC 113]

Is anything truly unbiased? Even our own views and opinions are never truly unbiased. However there is one company out there that boasts it’s unbiasedness. Seedly, the unbiased finance assistant platform that aims to help users make smarter financial decisions through their expense tracking app and crowdsourced knowledge, makes it their mission to ensure that all the information put out on their forums are unbiased. How do they do it? Learn their strategy to combating biasedness on this episode of Chills with TFC!

TOP Financial Blogger Enters Wealth Advisory, Investment Moats gone rogue? [Chills 112 with Kyith]

A step in the journey of financial wealth is the financial plan, a part where most people get lost and confused as to where and how to begin. Most times when in a situation like this, we tend to turn to “influencers” for a solution but as you go on you notice the pieces of advice they give are pieces for an entire different puzzle set.

Getting your financial plan checked and revised is an important step to financial wealth but before we get to that, we have other crucial questions to ask like, “how do i find the right financial advisor” or “Can I trust robot advisors?”. Well who better to advise you than the best financial blogger in Singapore! We’ll give you the scoop on tips and tricks to managing your plan, key things to look for in a financial advisor and much more!

Our guest today is none other than the Kyith Ng aka the big man behind the blog “investment moats”. Kyith’s goal is to share his experiences making sense of money, how it works and ways to make it grow, hoping that season investors can advice and critique his decisions and new investors are able to learn from them.

“Sustainable Renovation” is smart budgeting for tomorrow! [Chills 111 ft Solar AI, Tingkat & Gush]

Sustainability has become a fashionable idea, everything seems to need to be aligned with it, and sometimes it feels a little much. But did you realize that the wet market is already a very sustainable system? Where is the packaging? So it seems, maybe being sustainable is not always about moving forward and embracing new ideas but looking back and wondering, is there a way to live well without hurting our planet?

Today we focus on renovation. A big step forward for young couples in Singapore. While many are renovating, the 2 extremes are “this is my home, we must use the best” and “we just spent a lot on the home, maybe we want to avoid a renovation loan?”But is there a sweet spot between the 2 extremes that lets us live comfortably, sustainably and cost-friendly?

Joining us today are Start-up founders, Bolong Chew from Solar AI, Lester Leong from “the very expensive paint company” GUSH and Corporate Sustainability Advisor Pamela from!

Is there such a thing as “Rich Enough”? How much hustle will you go? [Chills with TFC 110 with DareToFinance]

 Have you ever been in this scenario? 

Me: “Wow working life is so tiring.. I want to stop working when I’m 50. But can I afford to do so? ” or “I wanna travel the world and eat this and buy that… but how will I ever afford it?”

We all have desires and it is always in a tussle with “how much do we want to put in?” The road of endless accumulation may not be something everyone wants to go on, how far will you go? 

Well if this is you then tune in to this episode of Chills with TFC as we sit down with Darren and Sakura from Dare To Finance and talk about how YOU can start planning for your dream life!

Dating on a Budget: LDR [Chills 109 with Cheryl and Chris]

I cannot imagine being in an LDR, the lack of touch, the endless thoughts and the sheer distance, I simply can’t. Then there is weird Farmer Chris and now wife Cheryl that did 3 years of LDR. They just got married and Chris says “LDR is cheaper and better la!”. Does this mean I can now adjust my Tinder location and embark on my new budget dating strategy? Wow.

Join us on this weeks episode of Chills as we discuss Cheryl and Chris’ LDR experience and how being in an LDR might have been the best money saving strategy for THEM! And maybe for you too?