Age of Disruptions

Nothing lasts forever when change is a constant. Oh wait, that's a lot of cliche in one sentence. Overdose of it perhaps? Getting back to the subject ...

ComfortDelgro is being disrupted by the likes of Uber and Grab.

SPH's print media is being disrupted by digital media, even as it plays catch up while diversifying into retail malls and community care facilities.

SingPost snail mail is being disrupted by e-mail, while its eCommerce offers patchy slivers of opportunities.

Singtel is shifting from a pure play telco into a digital technology company.

It's hard for an incumbent business to adopt digital technology as it has to be accompanied by new business models. It's not just about bringing the traditional medium to a digital platform. The shift is hard.

Plus, there will be a lot of irrelevant work force that is ill suited for the digital age. Does the company stick to the past, or build for the future? With the workforce that is being displaced, what should it do? Should it listen to the heart or listen to the mind? Is there a place where both can coincide? There is too much at stake.

Will traditional consumer staples remain relevant? Can companies like QAF maintain its relevance in food if there is a changing pattern in food consumption? The fight against diabetes could have repercussions.

Will retail malls remain relevant with the increasing shift to eCommerce? Do consumers still shop?

Marine, oil and gas industries need no saying. While some may argue it's all about what Saudi Arabia chooses to do and that it's cyclical, long as it may lasts, perhaps it's also about disruptions from renewable energy?

Disruptions all over. Kodak moments, if you are even old enough to still remember Kodak.

Traditional Blue Chips start to look pretty blue ...

But it is in times of doubts and uncertainties that opportunities exist. Who will survive?

SingPost - From Postal Service to eCommerce

Not too long ago, SingPost was viewed as an excellent dividend stock on SGX. Being the monopoly in postal services, it was viewed as a bedrock income stock. However, with the advent of the Internet and pervasive mobile device access, one wonders what dinosaur still need to send letters around? Numbers have been clearly dwindling in this regard.

So it is with some risk, and I feel with much strategic foresight, that SingPost brought in a new management team and started embarking on exploiting their strength, rapidly moving into eCommerce logistics by acquiring several companies. At the same time, exploiting technology to enhance and improve efficiency in their traditional postal services.

If it was once a dividend-value stock, it is now more like a growth company. Its future could yet be most exciting.

Interestingly, I read that the US Postal Services (USPS) has also started thinking along this line, recognising that its existing reach could well put it in a position to challenge UPS and FedEx. USPS has been suffering from losses and cutbacks in recent years. They're a bit slow aren't there?

Being small can sometimes a be a strength - by being nimble, complemented by foresight and the courage to take action to reshape its future. Being large has benefits in terms of critical mass, and therefore enjoying economy of scale. But a large machinery moves too slowly sometimes, grounded by its inertia.

See previous:
SingPost Joins Hand with Alibaba and the 40 Thieves

SingPost joins hand with Alibaba and the 40 thieves

In an older post (Stock: SingPost), I noted the progression of SingPost from postal services to logistics. SingPost's traditional postal business is surely on a downhill slide and will remain so.

Well, have yet to see the 40 thieves, and hopefully wouldn't see any. But, latest news abound on the announcement of the partnership with Alibaba with the later taking up a 10%+ stake in SingPost. Interestingly, this is happening even as Alibaba itself is preparing for its IPO. With SingPost increasingly looking like an e-commerce company, this partnership offers interesting prospects for growth for SingPost. It looks like SingPost as a dividend yielding stock will remain sustainable.

   

Softbank (Japan) owns a slice of Alibaba (China) while the later owns a slice of SingPost (Singapore). Interesting. Perhaps time to take a closer look at Softbank as well?

Related:
Stock: SingPost
SingPost Investor Centre

Pattern of Behavior - A Review for 2013

I was reviewing a past musing I made in 2011 (Pattern of Behaviour) of several interesting companies that I was invested in and monitoring. 

Since then, Adampak, Cerebos, Hsu Fu Chi, Kian Ann all went through one form of general offer or another, and have since delisted from SGX.  Guess my bets were on the righthorses.  The original buys centered around these stocks that paid good and steady dividends.  In some cases, they had low Price-to-Earnings (PE < 15) and/or low Price-to-Book (P/B < 1.0) ratios.

More recently, I divested Innotek.  Seems like a dead horse.  But I may well have divested at its trough (pun).

Of the rest, most are still struggling at the fringe, especially M1, CSE Global, SingPost and Sing Inv & Fin.  SingPost in particular faces the challenge of diversifying itself from being overly dependent on a gradually declining domestic market.  Consequently, it has been taking on an aggressive M&A track.  However, these have yet to pan out.  It's all about execution.  For the rest, I remain optimistic for the longer term.

Of the balance, Teckwah and Zagro Asia have been doing well.

In nett therefore, out of 12 stocks, 4 exited profitably, 1 exited at a loss, holding 4 that are performing neutral, and holding 2 that are doing well - i.e. 6 wins, 4 draws, 1 loss.  Not too bad.

Recollections of 'my' companies

It's the eve of X'mas 2011, and it's a good a time as any to take stock of events in the year that relates to companies I've taken a stake in.  It's been a horrible and unforgiving year - tsunami in Japan, massive floods in Thailand and Australia, financial crisis Part II in Europe, SMRT coming out like a disaster movie, repeated floods at various parts of Singapore, and the bird flu apparently making a come back in Hong Kong.

Adampak had one of its factory underwater in Thailand when the floods hit. 

Qian Hu is still fishing around and doing poorly this year after the European market tanked.  Fishy.

SPH failed to deliver my papers on a few occasions.  Not getting their basic service done is a bad sign.  And the long time Chairman of SPH has become the President of the Republic.

In contrast, SingPost has consistently delivered my posts.  But the amount of junk mails these days is simply amazing!  But if it keeps the postman busy, it's good?

Singtel phone bills continue to increase throughout the year as the number of handphones I owned have gone up.  How many handphones does one need?  I am still not subscribing to any M1 services.  What will LTE technology bring to their businesses?  More data traffic is the way to go, ever since the rise of the iPhone and iPad.  Long live Steve Jobs!

Still haven't bought anything from Aussino.  I think I'm still happy with my bedsheets.  The trouble is that these things can last quite a while.  I'm not hopeful about their business.

HourGlass appears to be doing decent business.  Lots of tourists visiting Singapore these days and hopefully there're there in the branded class that the newly rich patronise.

SMB United is in the midst of a takeover bid.  Remains to be seen what the outcome will be.

Global Logistics Properties has dived in on the Japanese property market in the months following the Japanese tsunami and nuclear disasters.  Looks like some smart moves.  It's going to be sometime before we see these pan out.  China and Japan are all about exports and emergent consumption.  And that means there is a logistics battle to be won.

On the property front, the cooling measures seem to be gradually taking effect.  Amazingly, the E-Condo I'm living in now appears to be going at twice the price I bought, and that was just 5 years ago.  In land scarce Singapore, this is one area where there is no room for abundance, unless technology breakthroughs bring new opportunities.  I'd stay away speculating the home properties given that these will likely continue to attract frequent policy interventions.  This is one unstable "C" among the infamous 5Cs.  But Capita-Commercial Trust and Mapletree Industrial Trust are alternatives in the commercial and industrial sectors (REITS) for a 'stable' income stream.  That's not a bad thing.

Singapore banks have stood the test of the last two rounds of financial crisis in the US and Europe.  OCBC remains healthy and I'm sure their OCC 3.93% NCPS will continue to pay out annually.  How does the future hold for SP Reinsurance and Sing Inv & Finance?  I'm living off their dividends.

Water is the business for Hyflux.  However, I certainly wouldn't hold my breadth on Hyflux itself. It had banked on the rich African market which was unfortunately aborted by the Arab Spring.  Perhaps the opportunity will present itself again.  It has tried to diversify into China and we shall see how that transpires.  But their overall business in water and waste should remain viable and hence Hyflux 6% CPS should remain ok for the steady income stream it produces.  We need to drink, and we certainly have to shit.  One can die from not being able to do either you know.

CSE Global seems to be having trouble making profits out of their software projects.  It didn't help to find their customers caught amidst the rising tide of the Arab Spring as well.

Ah China!  Who knows where things will go from here.  One can certainly see the throngs of newly rich everywhere.  And I mean everywhere.  So perhaps it's healthy to benefit from their retail growth story via Capita Retail China Trust.

Tat Hong's factory near my neighbourhood seems to have either moved, or else all their cranes have been rented.  Bad sign, good sign, depending which way it went. But they're likely benefiting from their business down in Australia.  It's a reconstruction and recovery story after the floods in Australia had receded.

When economic woes abound, and the price of oil climbs to ridiculous levels, airlines businesses are all downhill, including filings for Chapter 11 (US)!  But I believe SIA will recover and will do well again when things pick up.  But one wonders how the new management team is fairing? 

By a similar thread, SATS' future rests on the recovery of the air transportation business.  They have just secured a contract to operate the new Cruise passenger terminal.  That could perhaps help broaden their business to the sea business.  In any case, they continue to have the stable business of providing food for the SAF.  National Service is good for SATS.

Speaking of food, Brands products from CerebosPac is a must have booster for kids preparing for exams.  What a year of exams!  That's a lot of Brands Essence of Chicken.  It also appears to be one of those staple items for hospitalisation gifts as well.  Students and hospitals, it's all about people!

Kian Ann, Innotek, Teck Wah and Meiban Gp?  Waiting for the manufacturing and engineering to recover perhaps.

With Certificate of Entitlements rising to epic proportion, car ownership has become another that has gone beyond-the-line-of-sight "C" for followers of the 5Cs.  But they all need to go for annual inspections, and the number of cars aren't getting any less despite this.  VICOM for next buy?

Merry X'mas!

Stock: SingPost

Despite the challenge of electronic media and the resultant cannabilisation of snail mail, SingPost remains the postal service within Singapore.  Aside from property/rentals, it is also leveraging its mail distribution service to go into logistics.

SingPost: Will logistics expansion dim its attractiveness as a dividend stock? [Investment Moat]