Thursday, 20 July 2017

Is the Nightmare Finally Over for Singapore Post? [Part 1]


Readers may well be aware of the TradeGlobal (TG) saga at Singapore Post Limited (SGX: S08) (“SingPost”).  The company took a massive impairment charge of $185.0 million for the eCommerce subsidiary in the final quarter of FY2016/17.  SingPost had previously paid $236 million to acquire the 96.3% stake from private equity firm Bregal Sagemount in October 2015.  This impairment wiped off nearly 80% of the deal value.

Figure 1. TradeGlobal logo.

Earlier this year, SingPost had appointed WongPartnership (“WongP”) as legal counsel to review the TG Acquisition, and also appointed FTI Consulting to assess the adequacy of the financial and commercial due diligence performed in relation to the transaction.  On 17 July 2017, SingPost submitted a preliminary report of the review to the Singapore Exchange.  You can download the report here.  Straits Times had published a summary of the report.  You can read it here.

TradeGlobal Acquisition

The report proved pretty damning.  It revealed that SingPost (or to be precise, SingPost’s board of directors) failed to cover pertinent issues before going ahead with the acquisition in 2015.  There were red flags that should have been raised during the due diligence process, but were not.

One red flag is that SingPost’s intended purchase price for TG was much higher than what previous owner Bregal Sagemount had paid.  SingPost’s board came to know this information a week before the signing of the purchase agreement, but no further due diligence was carried out.

Another red flag is that TG’s main subsidiary had significantly underperformed its forecasts in the two fiscal years before SingPost’s acquisition.  In the preliminary report, WongP wrote,

“The significant underperformance in the years immediately prior to the TG Acquisition, in view of the Aggressive Forecast Risk, warranted greater scepticism as to the achievability of the forecasts, and a more conservative valuation of TG may have been arrived at following an examination in greater detail of previous and current forecasts.”

 WongP added further that,

“Where forecasts of a target company’s performance are potentially aggressive, it would have been best practice to explicitly consider the implication of historical multiples on the valuation of TG.  Despite the Aggressive Forecast Risk, the valuations presented to the Board were based only on forecasts, and no valuations based on historical multiples were presented.”

In short, SingPost did not fully consider all angles before proceeding with the acquisition.  But to be fair to SingPost’s board of directors, it is mind boggling, or nearly impossible – “nearly impossible” because in hindsight, everything looks possible – to take every speck of data into consideration before arriving at a business decision.  (Imagine if you have to carefully weigh your choice of food between the calories and reviewers’ ratings on HungryGoWhere, would you still be able to have any lunch at all?)

The Road Ahead

My apologies to SingPost shareholders (my wife included) if my analogy isn’t appropriate.  SingPost’s board of directors should have taken a more conservative stance, since we are talking about multi-million dollar acquisitions, not ten dollar lunches here.  Investors have reacted bearishly since the FY2016/17 results release.  The stock had plunged 11 per cent before recovering to a loss of 2.9 per cent till date.

Figure 2. SingPost’s price movement since FY2016/17 results release.

At this point, the damage is done.  The impairment charge has been taken, and SingPost’s management is now executing a turnaround plan for TG.  What lies ahead for SingPost from here?

In my next post, I review contemporary research on the prospects of various business segments that SingPost operates in.

Watch this space.

The Eleutherian Odyssey

Quick Facts

Monday, 17 July 2017

Is the CBD Ready for Another Glass Tower from CapitaLand Commercial Trust?


Come 31 July 2017, the iconic Golden Shoe Car Park (GSCP) next to Raffles Place will be torn down to make way for a new office building.

Ex-CapitaLand CEO Liew Mun Leong first mooted the idea in February 2012 during a Straits Times interview. [1]  In October 2016, management of CapitaLand Commercial Trust (SGX: C61U)(CCT) sought regulatory approval on the redevelopment. [2]  Provisional approval was given by the Urban Redevelopment Authority a few months later.  After receiving the Differential Premium amount from the Singapore Land Authority, CCT’s management worked out the cost and decided to proceed with the plan.

CBD workers will know that Golden Shoe Food Centre is located within the same building.  Sadly, I will miss the sumptuous food from my favourite stalls.  (San’s Cuisine, anyone?)  Nonetheless, as a CCT shareholder, I am quite excited about the proposal.  Yet at the same time, I am concerned about the financing and the market timing.

I have decided to study CCT’s proposal, which was released on 13 July 2017, in detail.

The Building

Figure 1. Artist’s impression of the redevelopment. Source: [3]

The new building will be 280 metres tall – one of the tallest at Raffles Place.  With a gross floor area (GFA) over a million square feet, the building will contain 51 storeys , comprising Grade A offices (80% of GFA), serviced residences (14%), retail units (2%) and a food centre (4%). [3]  It is expected to be completed in the first half of 2021.

Figure 2. Proposed building concept.  Source: [3]

From top to bottom, Grade A offices will occupy 29 floors, followed by a 4-storey high green zone.  The 299 serviced residences will occupy the next 8 floors, and will be managed by CapitaLand subsidiary, The Ascott Limited (no surprise).  Finally, there is the 5-storey car park, and the main lobby adjoining a food centre and retail outlets on the ground floor.

The building will incorporate ‘future of work’ features (more of this later) and work-play-live experience.

The Financing

The redevelopment costs $1.82 billion in total.  CCT will take a 45 per cent stake, together with parent firm CapitaLand (45%) and Mitsubishi Estate Asia (10%)(MEA).  Bulk of the cost goes to paying for the land ($1.12 billion or 61.5% of total), with the remainder split between construction (31.6%) and miscellaneous fees (6.9%).

The deal will be funded via a project financing loan (60%) and owner’s equity (40%).  CCT will assume a loan amount of $491.4 million and pay up $327.6 million in equity.  According to CCT’s management calculation, the debt will lead to a pro forma gearing ratio of 35% (CCT reported 38.1% in Q1 2017 – more on this later).  CCT will pay for the equity portion with proceeds from recent asset divestment.  (CCT had just sold Wilkie Edge and 50% of One George Street earlier this year.)

Figure 3. CCT's cost of the redevelopment.  Source: [3]

CCT will have a call option to acquire MEA’s stake at market valuation or a minimum pre-determined price.  CCT can choose to exercise the option at any time up to five years after the temporary occupation permit (TOP) has been received.  (The arrangement looks similar to the previous deal for CapitaGreen.)

CapitaLand Commercial Trust’s CEO Lynette Leong wrote,
“The redevelopment is in line with our portfolio reconstitution strategy for CCT where we maximise the land use intensification of GSCP and consequently enhance its value.  The redevelopment is expected to generate a yield-on-cost of about 5.0% per annum on a stabilised basis.  As there is no known new supply in Raffles Place after 2018, we and our partners are confident that the exceptional features of this prestigious development, together with our concerted placemaking efforts, will create a vibrant, vertical community that will attract discerning companies that place high value on human capital and talent retention for their businesses.” [3]

My Thoughts – The Positives

CCT’s management has added several noteworthy elements into the proposed redevelopment instead of just erecting another glass tower like CapitaGreen.

1.   Considering GSCP’s prized proximity to Raffles Place, a service residence will likely be in demand.  When a longer term stay does not justify booking a hotel room, there are not many alternatives available for work visitors in the vicinity.  Ascott Raffles Place and The Sail at Marina Bay are two that come to mind.

2.   Unlike CapitaGreen, a food centre will still be built adjoining the office tower.  The food centre will be owned and managed by the Ministry of Environment and Water Resources.  From 1 August 2017 until completion, former GSCP stallholders will operate from an interim food centre located next to Telok Ayer MRT station on Cross Street. [3]  (Affordable and tasty food is rare in the CBD.  I’m glad the authorities have catered a place for hawkers to continue their business.)

3.   The adoption of latest ‘future of work’ trends is welcoming too.  Property research firm CBRE recently wrote that co-working space is getting hot in demand. [4]  Straits Times also reported in May 2017 that co-working space is not just being sought after by start-ups and SMEs, but by multinationals too. [5]  CCT’s redeveloped property will possess collaborative workspaces and flexible office arrangement to cater to the needs of these tenants.  In a nod to the government’s drive toward a car-lite society, the redeveloped property will feature a cycling path, 165 bicycle lots and end-of-trip facilities to encourage tenants to cycle to work.  (Say hello, oBike!).

4.   Lastly, CCT’s management is known to be pro-active in recycling capital.  Sale of mature assets unlocks equity and the Trust can invest the funds into other assets with better potential for gain.  As asset enhancement initiatives can only do so much to enhance the yield, capital recycling for REITs is the next best option.

My Thoughts – The Negatives

1.   The redevelopment comes at a sizeable cost.  CCT (and its shareholders) will take on an additional debt burden of $491.4 million, on top of the existing $2.64 billion reported as of Q1 2017.  In the proposal, CCT’s management made two assumptions:

  • First, sales proceeds from Wilkie Edge and 50% of One George Street will partly go into reducing the existing debt;
  • Second, the $175.0 million convertible debt due on 12 Sep 2017 will be fully converted into units based on a conversion price of $1.4265 per unit.  (CCT’s current share price is $1.68.)  In fact, full conversion of the debt was announced by CCT on 14 Jul 2017. [6]  Per CCT’s management commentary in the Q1 2017 Results, the newly converted units will reduce Q1 2017 Distribution per Unit (DPU) by 0.09 cents, representing a 4% decline in DPU.  The happy news is that aggregate leverage will lower from 38.1% to 36.1%. [7]

Considering the GSCP redevelopment will only be completed in 2021, logic tells us there will be more hands reaching out for a share of a smaller pie in the interim.  In other words, there is short term pain before a longer term gain.

Similar sentiment was echoed by Religare Capital Markets analyst Ti Pang Wee.

“With the loss of income from the recent divestment of 50% stake of One George Street, Wilkie Edge and GSCP, DPU in 3Q is expected to come under pressure,” wrote the analyst as quoted by The Edge Singapore. [8]

“After factoring in the capital that CCT has to inject into the JV in FY17/18, Ti expects CCT’s leverage to rise to 35.3%/36.7%, while DPU is expected to lose 2% as a result of the sale.”

2.   In the proposal, CCT’s management assumed a deposited property portfolio of $8,960.6 million to work out the pro forma gearing ratio of 35%.  In the 13 Jul 2017 Asset Valuation notice, the reported portfolio value is only $8,168.1 million.  I couldn’t reconcile the valuation discrepancy of nearly $800 million, and have written to CCT’s Investor Relations department for an answer.

3.   CBRE, Jones Lang LaSalle and Savills have separately reported a smaller decline or bottoming out in Grade A office rental rate.  [4], [9], [10]  But it is still too early to declare the downward trend – which started in Q2 2015 – has ended. [11]  Hopefully, by the time the redevelopment achieves TOP, the market will be in a better state to absorb the new supply coming online.

4.   GSCP is located in the ‘old’ Raffles Place neighbourhood, not in the newer, sexier neighbourhood of Marina Bay Financial Centre.  If you like the riverside charm (read: Boat Quay), GSCP is just a stone’s throw away.  But if you prefer open spaces and a waterfront promenade, then GSCP is far from the scenery.  The attractiveness of the redevelopment will eventually depend on how the surrounding area shapes up and appeal to tenants in the future.

Figure 4. 3D map of the Central Business District.  Source: Google Maps


CCT’s management has decided to go ahead with the redevelopment of GSCP.  The new building promises several exciting features, which the Trust hopes to attract quality tenants keen in the proposed work-play-live integrated concept.  CCT’s management has shown pro-activeness and proficiency in unlocking capital in mature assets and re-investing in properties with better potential like GSCP.

However, success in the redevelopment will also depend on the office rental market at TOP, and how the neighbourhood metamorphoses into a trendier address.  Such factors are beyond the forecast and control of CCT’s management.

For the previous redevelopment CapitaGreen, CCT’s management took a year to achieve above 90% occupancy after TOP.  I hope the new project will take a shorter time, and at a favourable rental yield.

The Eleutherian Odyssey

*Disclaimer: I am currently vested with shares in CapitaLand Commercial Trust.

Quick Facts


1., “Another CBD carpark may go”, 8 Feb 2012.

2. CapitaLand Commercial Trust Management Ltd, Press Releases, “CCT seeks approval to redevelop Golden Shoe Car Park”, 19 Oct 2016.

3. CapitaLand Commercial Trust Management Ltd, “Joint venture with CapitaLand and Mitsubishi Estate Co., Ltd. to redevelop Golden Shoe Car Park”, 13 Jul 2017.

4. CBRE, “Singapore Viewpoint - Office Space Redefined April 2017”, 27 April 2017.

5. Straits Times, “Rise of the shared workspace”, 29 May 2017.

6. CapitaLand Commercial Trust Management Ltd, “S$175,000,000 2.5 Per Cent Convertible Bonds Due 2017-Cancellation Of Bonds Pursuant To Conversion”, 14 Jul 2017.

7. CapitaLand Commercial Trust Management Ltd, “CCT's 2017 First Quarter Financial Results”, 19 Apr 2017.

8. The Edge Singapore, “Golden Shoe to cause short-term bruising for CapitaLand Commercial Trust”, 14 Jul 2017.

9. Jones Lang LaSalle, “Singapore Property Market Monitor 2Q17”, July 2017.

10. Savills Singapore, “Singapore Office Briefing Q1 2017”, 5 May 2017.

11. Urban Redevelopment Authority, “Release of 1st Quarter 2017 real estate statistics”, 28 Apr 2017.

Thursday, 13 July 2017

Is ST Engineering Overly Reliant on Government Contracts?


I was having coffee with an ex-colleague the other day, when the topic turned to Singapore Technologies Engineering Ltd (SGX: S63) (“STE”).  My ex-colleague remarked that STE still relies mainly on government awarded contracts to survive.  I was intrigued by his words and I decided to do a little sleuthing through STE’s filings to validate his observation.  I found some interesting information, but before I get to that, a little history lesson is in order.

Origin of Singapore Technologies Engineering

The birth of STE traces back fifty years ago when pioneer companies were founded out of necessity to support Singapore’s national defence. [1]

  • In 1968, the Singapore Shipbuilding and Engineering (precursor of ST Marine) was formed to build and repair naval vessels.  
  • In 1969, the Singapore Electronic & Engineering (precursor of ST Electronics) was formed to provide electronic and electrical services for the Singapore Armed Forces.  
  • In 1971, the Singapore Automotive Engineering (precursor of ST Kinetics) was formed to provide military vehicle maintenance.  
  • In 1975, the Singapore Aerospace Maintenance Co. (precursor of ST Aerospace) was formed to provide military aircraft maintenance.  
  • Fast forward to 1997, the four companies were merged to form ST Engineering, as it is known today.

Revenue Breakdown between Commercial and Defence

STE first diversified into the commercial sector in 1990 with the set-up of airframe maintenance, repair and operations (MRO) facilities in Singapore and Alabama, U.S. [1]  Since then, STE has expanded their commercial offerings which include freighter conversions and satellite communications.  The question on my mind was the extent of contribution made by the commercial segment to STE’s current revenue.

When I pored through STE’s financial statements, I could not find the answer.  While STE provides segmental revenue data based on location of customers, the company does not reveal in detail the revenue earned on commercial projects versus defence projects.

Ironically, I chanced upon the answer in an unlikely place – the Letter to Shareholders in STE’s Annual Reports.  Within the letter, STE’s management provided an approximate revenue breakdown between their commercial and defence segments.  For FY2016, STE earned 35% of their revenue through defence projects and a significant 65% of their revenue through commercial projects. [2]  (My ex-colleague would have been surprised.)

Figure 1. STE's revenue breakdown by customer type.  Source: STE AR 2016.

I extracted the same information from past fiscal years’ Annual Reports.  Sadly, there was no similar information available prior to FY2012.  I worked out the revenue contribution from each segment and compiled a stack chart for clarity.  Refer to Figure 2 below.

Figure 2.  STE's revenue breakdown from FY2011 to FY2016,

STE’s commercial revenue has been increasing incrementally on an annual basis.  Unfortunately, the growth in defence revenue has not matched in tandem, resulting in STE’s total revenue stagnating over the past few years.  With the pending two per cent cut in MINDEF’s budget, STE’s defence revenue is likely to be impacted further. [3]

Future Growth Areas

So which industries does STE see potential in?  A sliver of this information was provided in the same section.  In their FY2016 Letter to Shareholders, STE’s management wrote, “We will continue to invest in them (STE’s core businesses) and at the same time, devote additional resources to other new high growth areas such as robotics and cyber security (emphasis mine).” [2]

During the closing of STE’s Q1 2017 Earnings Call, Chief Executive Officer Vincent Chong reiterated STE’s investment in the “fibre optic back-haul infrastructure to support Smart City, Smart Nation, ICT solution”. [4]  (Chong was referring to STE’s recent 51% acquisition of SP Telecommunications, a network infrastructure provider in Singapore.) [5]

The CEO also emphasized STE’s investment in autonomous vehicles.  Earlier in the call, Chong elaborated that STE had chosen to focus on the development of autonomous buses – not autonomous cars – to address the “unique challenges which Singapore faces in land and labour constraints”.  [4]  In April 2017, STE had announced their plans to roll out such autonomous buses for trial on Singapore roads by 2020.  The company also revealed their intention to roll out Mobility-on-Demand-Vehicles (MODV) for trial in Sentosa by 2019.  [6]


STE has come a long way from being a Singapore Armed Forces contractor to developing a multi-prong approach of growing their business.  The bulk of STE’s revenue now comes from the commercial sector, contrary to the impression some folks may have.  The company intends to venture into new niche areas such as autonomous vehicles and cyber security, while continuing to invest in their core expertise.

The Eleutherian Odyssey

Quick Facts


1. ST Engineering Ltd, “Our Story and Key Milestones”

2. ST Engineering Ltd, “Letter to Shareholders”, FY2016 Annual Report, Page 7.

3. Channel NewsAsia, “Budget 2017: Singapore cuts ministries’ spending to stay ‘prudent, effective’”, 20 Feb 2017.

4. Seeking Alpha, “ST Engineering's (SGGKF) CEO Vincent Chong on Q1 2017 Results - Earnings Call Transcript”, 12 May 2017.

5. ST Engineering Ltd, “ST Engineering’s Electronics Arm Acquires 51% equity stake in SP Telecommunications Pte Ltd”, 18 Jan 2017, Singapore Exchange filing.

6. Singapore Business Review, “ST Engineering to deploy autonomous buses, driverless shuttles”, 10 Apr 2017.

Monday, 10 July 2017

Is Starhub’s Ballooning Debt a Cause for Concern?


Starhub Ltd (SGX: CC3) is Singapore’s number two telecommunication service provider, with a 27.4 per cent share of the mobile subscription market. [1]  The company also holds a sizable, albeit declining, share of the pay television market. [2]  While the recurring revenue model looks attractive, the company is notorious among financial bloggers for its high level of leverage. (You can read here, here and here.)  This may raise a cause of concern for investors.  Exactly how risky is Starhub’s debt situation?  Should another credit crisis occur, will Starhub survive, or go the way of the dodo?  I dived into the number crunching to find my answer.

Starhub’s Debt Amount

Figure 1 below shows Starhub’s total debt over the past decade.  The data is derived from the sum of short-term and long-term borrowings on Starhub’s Balance Sheet.

Figure 1.  Starhub’s total debt by fiscal year.

The total debt has shrunk over the years.  One exception is FY2016, when the total debt spiked to just shy of $1 billion.  This is attributed to the $300 million 3.55% medium term note issuance in June 2016.

Starhub’s Debt-to-Assets Ratio

Vast capital is needed by telecommunication (“telco”) operators to build and maintain the voice and data networks. [3]  It is unlikely that shareholder equity alone will suffice.  As such, significant borrowing is not unusual.  To analyse the degree of leverage, I calculated Starhub’s debt-to-assets ratio over the same period.  The data is derived by taking the total debt, divided by the total assets on Starhub’s Balance Sheet.  Refer to Figure 2 below.

Figure 2.  Starhub’s debt-to-assets ratio by fiscal year.

Starhub’s debt-to-assets ratio has steadily declined from a high of 0.56 in FY2007 to a low of 0.35 in FY2014.  For the latest fiscal year however, it has climbed back up to 0.45.  This means for every dollar of asset, 45 cents is being financed through debt.

Is Starhub’s debt-to-assets ratio representative of the industry? To put things in perspective, I also calculated the debt-to-assets ratio for Starhub’s competitors Singtel and M1 for their latest fiscal year. Refer to Table 1 below.
Table 1.  Debt-to-assets ratio of Singapore’s telco operators.

Among the three telco operators in Singapore, Starhub has the highest debt-to-assets ratio.  This begs the next question whether Starhub’s leverage is sustainable.  To solve for the answer, I first took a look at Starhub’s debt maturity profile.

Starhub’s Debt Maturity Profile

Figure 3 below shows the distribution of Starhub’s debt by maturity year.  The different colours represent the various debt instruments employed.

Figure 3.  Starhub’s debt maturity profile.

At FY2016 end, Starhub holds $467.5 million bank loans.  These loans have interest rates between 1.67% and 2.98% and are due to mature within the next five years.  In September 2012, Starhub issued a $220.0 million 3.08% 10-year medium term note (MTN).  In June 2016, Starhub issued a $300.0 million 3.55% 10-year medium term note.  Last month, Starhub issued a $200.0 million subordinated perpetual security with a coupon of 3.95%.

Notice the coupon rate on the second MTN is higher by nearly 50 basis points from the first MTN.  With the normalization of global interest rates, any future MTN issuance is likely to incur an even larger coupon (i.e. higher financing cost).

Starhub’s Debt Servicing Capability

To measure a company’s capability to service its debt, we can calculate its interest coverage ratio.  This ratio is derived by taking Earnings before Interest & Taxes (EBIT), and divide by the interest expense.  Figure 4 shows Starhub’s interest coverage ratio over the same period.

Figure 4. Starhub’s interest coverage ratio by fiscal year.

Starhub’s interest coverage ratio swings between a low of 12.8x and a high of 24.7. Nonetheless, the double-digit ratio gives some assurance that Starhub should be able to cover its financing costs adequately.

A comparison versus its peers shows that Starhub’s interest coverage ratio is in the mid range. Refer to Table 2 below.

Table 2.  Interest coverage ratio of Singapore’s telco operators.

Starhub’s Debt Repayment Capability

At FY2016 end, Starhub holds cash & cash equivalents amount of $285.2 million.  The company does not have sufficient cash to retire all of its debt.  It is also unlikely to do so.  Starhub will probably refinance its borrowings when they are due.


Starhub has been tapping the market lately to raise capital.  The company issued a $300.0 million medium term note in June 2016, followed by a $200.0 million subordinated perpetual security issuance in June this year.

The money is likely meant to pay for the 60MHz of 4G mobile spectrum which Starhub won in April 2017. [4]  Part of the proceeds may also go into growing their Enterprise business.  This was hinted in Starhub’s FY2016 Audited Results, which the management wrote, “our investment in big analytics capabilities and cyber security will position us more competitively in this (Enterprise business) segment.” [5]

On 26 May 2017, Starhub announced the acquisition of Accel Systems & Technologies Pte. Ltd, a cyber security consultancy company.  The purpose was to “strengthen StarHub’s cyber security portfolio, giving it the in-house capabilities to be an end-to-end provider of cyber security solutions and services.” [6]  I believe Starhub may still be on the prowl for another suitable acquisition, so as to enhance their Enterprise offerings.

Despite the newly saddled debt, Starhub’s interest coverage is expected to remain above a comfortable 10x, barring any sharp drop in revenue.  Starhub’s current dividend payout ratio is slightly above 1, which indicates the company is retaining little or no cash in their coffers.

In their FY2016 Audited Results, Starhub’s management announced their intention to pay a lower dividend of 4 cents per share for FY2017, compared to 5 cents in previous years. [5]  This dividend cut has cast a pall on investors’ view of the stock.  Is this an omen of the company being cash strapped?

Be it out of necessity, or for business expansion, Starhub’s management has chosen to take on even more debt.  Whether this is a far-sighted move, or a foolish manoeuvre remains to be seen. 

The Eleutherian Odyssey

Quick Facts


1. Singapore Business Review, “Singapore doesn't need a fourth mobile telco operator: Singtel”, 8 Dec 2016.

2. Straits Times, “TV cuts the cord: More ditching cable for Internet platforms”, 22 Jan 2017.

3. Market Realist, “What are the key costs for wireless and wired telecom?”, 16 Jan 2015.

4. Straits Times, “4G spectrum auction nets Singapore Government $1.14b”, 4 Apr 2017

5. Starhub Ltd, “Announcement of Audited Results for the Full Year ended 31 December 2016”, 3 Feb 2017, Singapore Exchange filing.

6. Starhub Ltd, “StarHub to Acquire 51% Stake in Accel Systems & Technologies”, 26 May 2017, Singapore Exchange filing.

Thursday, 6 July 2017

Singtel has pay-for-performance philosophy: Straits Times

Straits Times published a reply by the Chairman of Singtel, Mr. Simon Israel in response to a reader's letter. You can read the full reply here. You can read the original reader's letter here.

Broadly, Mr. Israel listed the method which the CEO's compensation is calculated.  It is categorized into short-, mid- and long-term performance of the company. In his words,

"Short-term performance is measured through a balanced scorecard approach which rates individuals against key financial and non-financial performance indicators. Mid-term performance is rewarded by a value-sharing bonus, which is dependent on the overall economic profit of the group, that is, excess return over risk-adjusted cost of capital... Lastly, there is a long-term incentive scheme in the form of performance shares to reinforce the delivery of long-term growth, measured by total shareholder returns in relative and absolute terms."

Mr. Israel also compared Singtel's total return over the past five years (9.4 per cent) versus the MSCI Asia Pacific Telecommunications Index (9.3 per cent) and the Straits Times Index (4.4 per cent).

After Thoughts:
Conflict of interest between shareholders and management is an age-old issue.  As a small-time investor, we can make much noise about it, but until the big boys (read: Temasek) give a hoot, things will likely remain status quo.  It will be interesting to know Singtel's wage ratio though, and how it compares to its peers (M1 and Starhub) in the industry.  (For more information on the wage ratio, you can refer to the Wikipedia article here.)

This is Me

Contrary to what you may think, The Eleutherian Odyssey is a guy.  I'm in my late thirties.  I work as a salaryman in the I.T. sector.  I'm married with two children.  I stay in a five-room HDB flat.

Why do I write?  I write for many reasons.  Writing is therapeutic.  It clears my mind of the mental notes I have been making.  This blog journals my daily thoughts, observations and ramblings.  I write for the record.  This blog chronicles my trials and triumphs on an adventure to gain the coveted trophy of "financial freedom".  I write for self-improvment.  I'd like a better command of the language, and a prose style that suits my character.

The Eleutherian Odyssey (a.k.a "TEO" for short - by the way, that's not my surname) has neither any specific genre nor theme.  Mostly, it will be about stocks - my favourite asset class.  Occasionally, I may share articles that I deem insightful.  This blog will adhere to facts and publicly available information.  Any opinion is my own.  You are to seek professional advice when it comes to any investment recommendation.  There is no deadline on blog publication.  It is, after all, my own literary playground.  I write for the fun of it.  When work and family beckons, I may disappear for the moment, but never gone.

Over the years, I've started several blogs.  All died a natural death.  Either I simply lost interest, or I found it a struggle to maintain the blog.  Hopefully, this will be my last, and a lasting one at that.