Expenses - April 2020

Total - S$3,910.27

Total expenses in April 2020 came up to S$3,910.27, at c. 97.8% of budgeted amounts. 

Largest category was gifts at S$2,223.00. This was largely attributed to a purchase of an iMac for my partner, given working at home full time on a laptop screen generally leads to squinty eyes and optical degeneration. 

And with the circuit breaker in play, Groceries came in second. Enough said on this. 

Third category was Eating Out. This is basically takeaway / delivery food items, with one massive memorable meal at New Ubin Seafood a couple of days before we received notice of the circuit breaker being imposed on us. That was absolutely delectable. 

Special mention to the fourth category - Alcohol. Haven't seen this level of alcohol expenditure for quite some time, and this could be largely attributed (at 66% or so) to a one time purchase of certain quality wines that were being sold at massive discounts, possibly due to a rush to clear inventory given the dire economic situation. I've opened a few bottles of them and they are seriously of high quality to price. Good value. 

This month was pretty much another example of what retired life looks like, especially when there are no travel plans being put in play, and one has to stay at home most of the time. Sans a one time expense for gifts and donations (had donated some part of my short term trading gains), the "steady state" expenses was at c. S$1,500 for daily expenses and this is in my opinion living quite large. 

Of course, there is rent / mortgage, or in my case parental allowance / separate home contribution allowance, that I've left out in my spending reports given the fixed fee nature of it, but that has been factored into my own drawdown / budget analysis. 

I reckon May will plumb new depths of low spending. As of 29 May, I'm barely hitting S$1,300 all in, and this is before write backs of certain expenditure incurred over the past few months given refunds due to cancellation of certain activities. 

Perhaps I should do a post on what I've been up to over the last couple of months given the COVID-19 situation has been put in place, but that's another story for another day. 

Hope all of you reading this are holding up well, and if not, just know that this current situation, like all others, is impermanent and it will pass as well. Take care, and be happy! 

Expenses - March 2020

Total - S$2,132.90

Total expenses in March 2020 amounted to S$2,132.90, which was roughly 53% of the budgeted amount. 

This month is probably the first month I've stayed at home for majority of the time, given the developing COVID-19 situation. 

Eating Out was once again the largest contributor to expenses at S$680.74, as we could still bask in the luxury of ding out. I remember I had a great meal at Wagyu Express around the Tanjong Pagar area sometime then. 

2nd largest category was Self Improvement at S$365.97. I had signed up for a 200 hour yoga teacher training course and 

3rd largest category was Gifts at S$337.70. I celebrated the birthday of one of my siblings and we had a good meal outside. Also gifted my domestic helper some monies as her birthday present too. 

Other items of note was the purchase of a Canon multi function laser printer that cost S$259.  

Temasek shows up for SIA with a fair deal for stakeholders

So we saw a strong showing in the Resilience Budget yesterday, and this unyielding effort is further seen in what has to be nothing short of a massive show of support by Temasek in Singapore Airlines. 

I was closing out my minor US trading positions early this morning when I saw the press release on CNA, and subsequently went through the SGX announcement. Please do point out and pardon me if there are any factual errors in my summary below. 

Key Transaction Highlights - Singapore Airlines Rights Issue and Convertible Bond Issuance

* Total immediate new funding of S$8.8bn, comprising S$5.3bn equity and S$3.5bn 10 year mandatory convertible CB.

* Another S$6.2bn of dry powder in the form of a similar mandatory convertible CB to be on standby

* All new funding to be fully backstopped by Temasek

Rights Issue – S$3.5bn

* 3 Rights Shares (at S$3.00 issue price) for every 2 existing SIA Shares, existing shareholders diluted to 40% of original shareholding if choose not to subscribe to Rights Shares
* Rights Shares to raise proceeds of c. S$5.3bn
* Theoretical Ex-Rights Price (“TERP”) of S$4.40 per share

* Discount to TERP of 31.8%

* Discount to Last Traded Price of 53.8%

Convertible Bond – S$3.5bn in immediate funds, with another S$6.2bn of “dry powder”

* Additional 10-year zero-coupon Convertible Bond (“MCB”) to be issued, notional of S$3.5bn, at 295 MCBs for 100 existing SIA shares, denominated at S$1.00 per MCB (but trading lot size of S$1,000)
* Conversion Price at MCB set at 10% premium to TERP – S$4.84, convertible only at Maturity at Accreted Principal Amounts (“ACP”)
* ACP of MCB:
- 4% p.a. within first 4 years of issuance
- 5% p.a. in next 3 years (year 5 to 7)
- 6% p.a. in subsequent 3 years (year 8 to 10)
- All amounts compounded on a semi-annual basis
* Issuer has call option on MCBs subject to payment of Accreted Principal Amounts, only to be exercised semi-annually from issuance of MCB
* No put option on MCBs for investors
* Issuer seeking approval for another S$6.2bn of MCB (at substantially similar terms) to be made available for issuance within 15 months from EGM approval date 

Potential Shareholding Dilution for Minorities – limited to only effects from this corporate action

* If you choose not to subscribe, on immediate completion of Rights Issue, you retain 40.0% your original ownership

* Post completion of Rights Issue and if new S$3.5bn MCB is converted in 10 years, you retain 28.0% your original ownership

* If a further S$6.2bn MCB is converted in 10 years, you retain 18.3% your original ownership

My thoughts

Whenever my friends and I talk about single stock investing in the Singapore landscape, the conversation invariably involves our esteemed sovereign wealth funds (GIC and Temasek), and somehow, someone will always come up with the idea that if you’re lazy, or at a loss of what to do, besides investing in index trackers, maybe you can just mirror what Temasek / GIC does. After all, given the intertwining of the business landscape between GLCs, Government and SWFs in Singapore, even if you get fucked, you won’t get fucked so bad. There’ll likely be some reprieve and most likely a decent ongoing yield.

While I have my own reservations on the investing methodology as described in the above paragraph, there is no doubt at all that the situation with Singapore Airlines epitomizes the above thinking. Look, I know bad is relative, at least your investment in Singapore Airlines won’t go to a big fat donut – congratulations you just got bailed out.

Temasek is certainly pushing out the boat here – backstopping S$15bn of funding for Singapore Airlines, but of course, there is no doubt that Singapore Airlines is a critical strategic asset that cannot afford to fail. If this fails, there is a high probability that our entire aviation sector will collapse like a house of cards. Just think about it – T4 was pretty much empty even before COVID began, and remember all the ancillary services that generates revenue from the servicing of aircraft, catering, etc? I’m not quite sure they can survive if the anchor tenant of Changi is gone.  

Now that we have answered the existentialist question of “to save or not to save”, the question is – what can Temasek do to provide a lifeline that will not make for bad optics (i.e. fucking existing minority shareholders, being called out by the public for spending inefficiently or in excess, etc)?

They could call for a general offer to take private Singapore Airlines. The upside is that no more having to deal with quarterly updates, answering to the public on why this why that, ease of doing more strategic moves, etc. But then there will be other issues like what acquisition premium to give, decrease of depth in an already thinly traded market, perceptions, etc.

They could do a direct primary share issuance with Singapore Airlines, or a convertible bond, but that would mean fucking over the minorities, especially long term existing shareholders who will no doubt be diluted down in shareholdings.

So my view is that this particular course of action, is right and fair for a situation of this nature at this point in time.

Why? Everyone has the right to participate equally in this. You have a choice to maintain your current shareholding percentage levels.

No doubt, there will be guys who will say fuck man, this is some nasty pricing going on – why couldn’t they price the Rights Shares better – less discount to TERP or Last Traded Price. Give some chance to the minority investor lah, value the company higher leh. Especially the long time shareholders who have been there before COVID struck, say shareholders whose purchase price was S$9.50 or more. In my humble opinion, the discounts to TERP and last traded price do seem to border on the high side. 

But then again, why should another investor do so? Especially one such as Temasek where they’ll be scrutinized by the general public in their every move. There isn’t any motivation to do that, after all they are in the business of generating investment returns too. Furthermore, if you can get in at a value price, why not? This is quite a decent deal for Temasek, and they have actually managed to wrangle some juice in the MCBs for the minority investors. 

As a minority investor in the MCBs - you get a 4% redemption premium at the very least, and this is compounded. This is better than the SIA dividend yield no? Albeit you’ll only get this in cash when the investor calls for it, or in shares at the end of 10 years.

If I recall correctly – this pricing levels make this debt one of, or if not the most expensive “debt” SIA would have on its book. It steps up after 4 years too, so this would probably be first port of call for any potential deleveraging. 

Next steps for Existing Investors?

FYI - I’m looking at next steps below through the lens of an existing investor only. As a new investor, a different lens is warranted given the amount of opportunities out there at the moment.

Entitlement of the Rights Shares and the MCBs will be listed and traded on the SGX. If you are not in a position, or do not want to subscribe to the Rights Shares or MCBs, please remember to sell those entitlements, so you can get at least some cash even though you’ll be diluted down to 40% from the get go.

If you only have some spare cash, subscribe to the MCBs for certainty of return, well at least as long as SIA is a going concern and I can assure you there is a high chance it will be – I suggest to take comfort in this action by Temasek.

If you have sufficient cash, I urge you to subscribe for both, or even take up excess rights (there is a provision for that). You average down your cost price, at least maintain your ownership levels, and get MCBs for some “income” return, or more SIA shares at the end of 10 years. Think long term – the Singapore Government cannot afford to let the aviation sector in Singapore fail, given the tremendous amount of investment already made. And Singapore Airlines is one of its prized jewels on that crown.

But whether that will translate into a healthy investment return for the existing investor – I don’t know for sure, but I can see a decent margin of safety at these prices.

Thanks for reading and I hope you found this helpful. Leave comments below!

Expenses - February 2020

Total - S$2,806.6

Total expenses for February 2020 came up to S$2,806.60.

Largest category was "Vacation". Spent half a week in Ubud, Bali during the earlier part of February to celebrate my partner's birthday. We're just thankful the timing seemed to work out okay, inspite of the overarching COVID-19 landscape then, and even more so now.

Second category was "Eating Out". Enough said about that. Only major expense in this category is attributed to a wine dinner with family and friends at our current favourite wine place.

Third category was "Diving". Was planning to head up to East Malaysia for some diving come mid May, but given the COVID-19 crisis escalating at the moment, I think this will have to be put on the back burner for the time being. That being said, I've still got to pay up for the trip.

So I ended the month at 70% of budget, which ain't too bad. I gather if I cut out most of the vacations and stay in Singapore, my steady state expenses will possibly only top S$2,000ish monthly. But let's see, given no immediate need to cut my budget in the near future :)

Expenses - January 2020

Total - S$3,166.32

Total expenses for January 2020 came up to S$3,166.32.

The largest category was "Motorcycle" - my motorcycle repair and maintenance job. I've an 8 year old KTM Duke 200 (class 2B bike) which I rarely use. That means high degradation of parts and voila, I came back to a faulty fuel pump and a nasty case of dried out rubber for some of my lights. Add a poor DIY job on the front brake fluid system, and normal servicing works (engine oil change, etc), this baby cost me S$849 for it to be put back on the road safe.

Strangely enough, the mechanic's advice was : "Bro you got to ride more, because this kinda bike if you don't ride enough it'll all get gunky and rough, then you'll have these kinda problems. These one can't be left alone for long. You want something you can just leave alone for awhile and continuously use - buy a scooter." Well, suffice to say, I've been putting in some mileage since then, though the weather has gotten drastically hotter over these two months. Anyhow, I've put up my bike for sale, so let me know if you come across this pseudo advert and would like to know more.

The second largest category was "Eating Out". Stayed in Singapore the entire month, so this definitely would be a top 3 category. Notable entries included paying S$70 for a Burpple Beyond membership, which I have not used yet, and also some wine dinners with my friends and family.

The last category was "Gifts". Chinese New Year came early this year, and I had to pony up for the customary ang pows to my parents, and domestic help.

In conclusion, I came in below the S$4,000 budget (79%) and have some surplus savings. There aren't any major plans to go traveling this year, so I reckon I can keep to well within the S$4,000 bogey. In fact, if there wasn't that major expense for my bike, I'll be hovering around the $2,300 mark, with no real focused cost cutting measures put in place yet. So all's good. 

Expenses - December 2019

Total - S$2,295.33

Total expenses for the month came up to S$2,295.33, which was surprisingly low for December.

Gifts was the largest expense, largely attributed to my attendance at a wedding right across the border as a groomsman for one of my buddies, and various Christmas / birthday gifts across the month.

The second largest category was Vacation Expenses, which was mainly attributed to across the border spending for the aforementioned wedding, given it was a mini vacation of some sorts for my partner and I.

Eating Out was the third largest category - there is only so much one can say about this. But this category was relatively lower in December compared to other months, as I spent a week on retreat across the border.

So I've spent about 57.3% of my budgeted expenses this month, which ain't too bad, and well within budget.

That being said, I expect to spend more in January 2020 as I send my motorcycle in for repairs / servicing, associated expenses for CNY (got to distribute some to my parents), and also front load a bit of expenses for a few other upcoming trips in 2020.

Managing your weight

Over the last few weeks, I had the good fortune to read a book called "The Obesity Code: Unlocking the Secrets of Weight Loss" by Jason Fung (M.D), which was published in 2015.

It has been some time since I read a book on physical health and weight management that was so good that I feel certain concepts it espouses could be more widely shared through a short blog summary.

The main purpose of the book is to find out exactly what causes obesity and to provide permanent solutions to manage it.

From the perspective of a 35 year old Singaporean male who spent 10 of his younger years as a former member of the Trim and Fit (TAF) club, where its name is by itself is a mockery of its esteemed members who are all overweight, I do feel that the suggestions put worth by the book are worthy of further consideration and experimentation.

What causes obesity?

There has been many suggestions from various sources on what causes obesity. Some of the more popular ones are: “calories in > calories out”; “too much carbohydrates”; “too much fat”, etc.

The author has suggested that instead of the traditional suggestions of the causes of obesity, the main causes are instead the increased levels of insulin, heightened insulin resistance and increased cortisol (stress hormone) levels, putting forth the argument that obesity is really very much a hormonal issue instead of the widely held belief that it boils down to ONLY personal discipline. 

So as long as one's insulin levels, insulin resistance and cortisol levels (“Factors”) are managed, one should be able to maintain a healthy weight / fat levels.

Essentially it boils down to what you eat, how often you eat, and how much stress is present in the body, as these points directly affect the Factors.

Solutions to obesity

The author has identified a multi factorial approach to tackling the obesity problem:

1.    Reduced consumption of added sugars

2.    Reduced consumption of refined grains

3.    Moderation of protein consumption

4.    Increased consumption of natural fats

5.    Increased consumption of protective foods (fiber producing foods, vinegar, etc.)

6.    Intermittment fasting

7.    Mindfulness meditation

8.    Sleep hygiene

My own weight loss experience from my younger years involved adoption of many, if not all of the solutions above, except that of solution 6, 7 and 8, which are new to me in the battle of the bulge.

I’ll touch on 6 for a bit. 

Folks who have undertaken diets before, be it low sugar, low fat, low calories / high output, etc might be familiar with a plateau in weight loss, or a nasty reversion to the original or increased weight levels.

What the author suggests is that one of the keys to unlocking the dreaded plateau or weight reversion is increased insulin resistance, where eating wrong over many years has resulted in needing more insulin to absorb similar levels of glucose, and a higher baseline level of insulin leaving us more ravenous,increasing the storage of glucose / glycogen / fat and decreasing the ability for us to burn fat.

In order to tackle increased insulin resistance, one can undertake intermittment fasting so the body has a chance to reset the “insulin baseline” and its resistance levels. The author advocates doing a 24 hour fast a few times a week, or a daily 16 to 18 hours fast / 6 to 8 hour eat timings, but the key is to eat similar level of calories, and of course healthy food that does not spike your insulin levels to the max.   

It doesn’t mean that because you only eat for 8 hours a day, once a day, or once every 2 days, that you can gorge yourself silly. In fact, there is a suggestion that following solutions 1 to 5 would lead to increased satiety such that one would naturally know when to stop when enough food has been taken in by the body. 

Parting thoughts

The book certainly leaves a lot of food for thought, and while the above isn’t a comprehensive representation of the book (there is much more meat that I have been unable to share in this summary), I do hope it has given you some inspiration to delve deeper and that it assists in the development of your personal health.

After all, health is wealth isn’t it?

Maybe intermittment fasting is really the key to getting the last few stubborn extra kilograms of fat off my body. I shall certainly endeavour to try this approach in 2020.