Category Archives: SPH

SPH & Comfort Delgro

Since the heavy selling in the beginning of the last week following by a strong rebound towards the end of the week, SPH seemed to have stabilized and moved up a little in the last 5 trading days. It appeared to have attained a respite after dropping relentlessly in the past few months. In fact, it had gained about 5% from its low at the close yesterday. Perhaps, the worst had passed. Hopefully, this can last until at least the release of the quarter results in October. As the price of the stock fell, its value began to emerge. So it had enabled me to take a very small position after having sold down all my holdings more than1½ years ago. I did not purchase at the lowest point, but at this price, it should have discounted a lot of bad news. Fundamentally, nothing has changed. It is still a sunset industry and therefore my position should not be big. Have to trust the new management to stabilize the share price. I may consider buying more in future, but I am in no hurry to do so for now.


In fact, it appeared that the market attention has been shifted from SPH to Comfort-Delgro (CDG). In the last few days, CDG share price fell below $2 for the first time in 3 years. The fall was relentless especially in the first few days of the week, following the news that there could be an exodus of as many as 2,000 drivers from Comfort-Delgro to its aggressive competitor, Grab. Even the recent release of the tender results for operating the Thomson-East Coast Line (TEL) went to SMRT. It was one bad news after another. How long will the onslaught last? Nobody knows for sure. Hopefully it is near as well. 

Meanwhile CDG’s partner, Uber, is still grappling with several concurrent problems that happened in different parts of the world. It is unlikely that CDG and Uber are able to find solutions to arrest this price fall as yet. To date, the funding for Grab seemed endless, and this could remain a long-term threat for CDG. So, for round 1, it appeared that Grab is a clear winner for now.

SPH and CDG are both recession-proof stocks. Unfortunately, they are not technology-proof.

Brennen has been investing in the stock market for 27 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

SPH – At its lowest for now?

When a spring is hammered very hard, the spring back tends to be very sharp. This is probably the best description for SPH this week.

In the last few days, most of the news or discussions related to this stock appeared to be bad, or at best, neutral. Being a by-stander watching from the sideline, it appeared to me that nobody seemed to have anything good to say about this stock. Indeed, it was hammered very hard for the first 3 days of the week hitting a low of $2.54 per share on Tuesday and Wednesday. In the last two days, however, it seemed to have rebounded quite strongly to close at $2.68 by Friday, though it is still lower than the last week’s close at $2.74. Perhaps, these were some opportunistic purchases made by contrarians. After all, it SPH has never experienced this low except during the global financial crisis in 2008/2009.


For the last 5 quarters or so, most of the news related to the stock were generally not positive. Pessimism over this stock grew in every release of quarterly results. Perhaps, the sell down this week was in anticipation of the poor results for the coming quarter as well. So if the quarterly result is not as bad as expected, then maybe we can expect a small price re-bound. (I say small because SPH’s economic moat is not strong at this moment for a significant turnaround) Of course, the other way also holds true. If the result is worse than expected, then perhaps we should expect a further sell down.


(This was the abstract taken from a Facebook post in April 2016 for past students. At the time of writing the Facebook post, things were still not as bad. So the expectation was that it probably should stabilize at around $3.70. News turned out to be very bad for the next 5 quarters. Yesterday, the share price closed at $2.68.)

Here is the dilemma. It has been a happy situation to have unloaded all my SPH stocks in anticipation that SPH would face hard times ahead. It has been too heavily dependent on the print business. Since then, I was on a stand-by mode, waiting to buy them back at a lower price. It should not just centres itself around the print business. It has to lay out a sustaining business proposal on the table before the share price can turn up convincingly. Now, with the bad news already significantly discounted in the share price, it may be the time to re-consider buying some back as ‘insurance’ in case it really made a turnaround or at least stabilized after more than a year of battering. Hopefully, it is at least a breather for now. It had lost one-third its value from an average price of about $4. For all we know, the share price always lead the actual company performance. So buying back may be a good idea if we believe that something magical can happen in the future. Let us see what happens in the next few weeks.


Brennen has been investing in the stock market for 27 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.



Execution strategy: Sell & buy back

In the talk organized by InvestingNote a few weeks ago, we shared several guiding principles when we buy or sell our stocks. Ideally, when we buy into a stock we hope that the moment when we buy into it, the share price immediately rises and stays for a long time, better still, forever. This means that our stock has appreciated and provides us a good margin of safety. The other part of the return is the recurring income that comes in the form of dividends year after year. So basically, we enjoy both the capital appreciation and dividends. This is an ideal situation. It is akin to buying a bungalow that cost $50,000 in the 60s or 70s and the valuation is now at $25million. The recurring income comes in the form of rentals. This is known as the buy-and-hold-strategy, and was famously used by long-term investors like Warren Buffet and John Templeton.

There are, however, situations that are not viable to hold a stock any longer because the underlying fundamentals have eroded with no immediate solution in sight. A good example is the SPH. In the 90s and the start of the new millennium, SPH had been a good stock. It was a near-monopoly in the print business. Hence, it made sense to buy the stock at a reasonably good price and held it long term to take advantage of the dividends that were distributed year after year. But the inauguration of the internet changed the rules of the whole game. Customers now have a choice – either to continue to read the hard printed copy that comes one to two days late or to browse through the internet in search of immediate news. It is so powerful that many newspaper and magazine printers were pushed to the brink of bankruptcies. While we continue to like the stock, we probably have no choice but to change our tact to a sell-and-buy-back-later execution strategy.

By selling into strength and buying back later, it helps us lower of the average cost for the shares. Even if we decide not to buy back the stock any more, we are effectively enjoying a saving that would have otherwise eroded with time. Let me use an actual scenario of a person whom I know very, very, very well. He had 6,000 SPH shares mid-2016.

The share price was dropping very quickly by mid-2016. He was left with 6,000 shares at that time. Feeling that it no longer made sense to hold the shares any longer, he decided to let go of his holding over a period of three months. The proceeds after taking into account of the brokerage and other fees come to about $23,589.61. Hypothetically, if he were to buy back the same quantity of stock yesterday, the amount that he had to pay would be $17,949.73. Deducting further of the loss of dividends of $1,080 which he did not collect as he had sold the shares, he still can make a gain of $4,559.88. This is equivalent to a gain of at least 4 years of dividends without losing out the shareholding instead of losing out one year of dividends originally. In summary, we need to adapt the right buy/sell strategies for our stocks. Buy-and-hold strategy may not always work.



Brennen has been investing in the stock market for 27 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

Technology destroyed some traditional businesses (1): SPH

By now, many would have noted that SPH share price has been on a decline from $4, slightly more than a year ago.  It has not been this low since the global financial crisis when it touched $2.32 on 12 March 2009, which coincided with the low of the Straits Times lndex (STI). Following the crisis, it had been oscillating at around $4 for a long, long time before the recent decline to its current price at around $3.25. In fact, since the share split of 1:5 in 2004, the share price has not really enjoyed any strong upside although investors had been lavished with generally good dividends in the past.

In fact, SPH is not the only victim of the technology onslaught. Newsweek, Washington Post, Financial Times, Reader’s Digest and many national newspapers suffered declining sales volume as well.  Technology, in particular the internet, had swept across the globe at such a huge pace that it wiped out many traditional news and printed media businesses. Readers are no longer happy to receive news 1-2 days after it happened, not even hours. We are now talking about minutes or even seconds. Financial market for one is very unforgiving as far as the speed of news is concerned. The news that appeared in print today was already a history that had already moved the market. Certainly, the financial market players are too impatient to wait for the print to reach them before they reacted. Look at US presidency election, the BREXIT, British election, the market had already reacted even before the news were casted in print. By the time the news appeared on the dailies, many snippets would have already splashed all over the internet. Just a simple search through a search engine, one would be able to pick up at least 10 pieces of news stories on the first page of the engine search.

Personally, I think that the management saw it coming at that time, and that was why they decided to sell several properties into SPH REIT in mid-2013. By so doing, it hoped that it can earn a ‘passive income’ as a sponsor and a major shareholder of this REIT. Unfortunately, the rental income is not sufficient to offset the decline in the print business. And this could continue to be so for a long time to come. To be straight to the point, the internet is not going to go away any time soon. In fact, it will definitely not go away unless it is displaced by another faster and more convenient transmission means. That said, it is a long-term threat unless SPH is able to side-step it by finding another growth business.

To be fair, I would think that the management has been doing their best to maintain shareholder’s value. The share price could have declined even more steeply had it not been for the high dividends that were distributed in the last few years. Unfortunately, this is an encroaching external threat that is difficult to defend against, unless they do not want to be in the business at all or to lessen the blow by finding another lucrative business. The final consequence, unfortunately, is an ever-declining share prices, a deep cut in future dividends or both.


Brennen has been investing in the stock market for 27 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy. Analyses of some individual stocks can be found in Registration is free.




SPH: Does the merger between The New Paper and My Paper make sense?

The SPH’s FY2016 financial results came as no surprise. As expected, the media segment continued to disappoint and I do not expect to see improvements in the foreseeable future. In the restructuring effort, it appeared evident that there will be some lay-offs, and SPH confirmed that the plan to downsize about 10% of the workforce from the current workforce of 4,185 through attritions and retirements. That means about 418 will not replaced in the course over the next 2 years.

What appeared to be the bolder move is the plan to merge The New Paper (TNP) and My Paper (MP) and the merged newspaper will be provided free. According to The Straits Times and MP, the circulation for TNP and MP is 60,000 and 300,000 respectively. With the price of 70 cents per copy TNP and free for MP, this translates to a loss in daily sales of $42,000 or about $12.6 million annually. Can this loss in sales be covered by the cost savings through the lay-offs. Perhaps, although I personally believe it is insignificant. After all, perhaps only a portion of the 10% affected workforce is directly linked to the merger between the new newspaper products. By merging the two newspaper products, it may even reduce the revenue from the advertisers because advertisers need to advertise in the new combined newspaper instead of in two newspapers currently. The overall end results would be the readers are happy. However, it may not help boost the overall profitability of the company.

Perhaps, one may argue that the $12.6million in sales from TNP is insignificant compare to the overall sales revenue of $834 million and $902 million in 2016 and 2015 respectively, but still, unless the management had done their sums that the reduced workforce can more than off-set the loss in the sales.

Another possibility of the decision to merge the two newspapers is that the sales of TNP is dwindling so significantly that the management felt that the cost is eating too much into the profit attributable to TNP such that it is no longer viable to sell as a product. By merging the two newspapers, perhaps, the management hoped to increase the MP content/quality with higher circulation, thereby increasing the advertising revenue. However, this cannot be simply calculated given that changing reader taste to the internet. Given that the management is sacrificing the TNP sales in hope to increase the advertisement revenue, perhaps this also indirectly points to the fact that the revenue from advertisements is much higher than newspapers sales. In fact, the way it is, they are even willing to give away newspaper free to the advantage of the readers. Whatever it is, this is a business decision that the management decides to take after working out the sums. However, I believe these are ‘mickey-mouse’ changes to cause any significant overall results. What SPH needs is a game-changer product that may not even be related to media and printing business. Otherwise, it is quite difficult to offset the fast dwindling media business segment. In the meantime, I look forward to a thicker and hopefully, more packed contents, in the new merged MP.

Brennen has been investing in the stock market for 26 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.

Buy-and-hold strategy does not mean buy and don’t sell

For those who may not know, buy and hold strategy is a proven strategy and is used by long-term investors in hope to benefit from the capital appreciation of the component stocks in a portfolio. It is often associated with Warren Buffet (WB)’s style of investing, especially when he mentioned that the holding period for the Berkshire Hathaway portfolio is FOREVER. It is probably a sweeping statement, but many people had taken it to the extreme that when we buy a stock, we should not sell it. Of course, if we look at the ST index from its all-time high and compare it with today closing of 2869.74 as of 30 September 2016, one would have thought that by adopting the buy and hold strategy, one would have lost more than 25%. But does it really mean that buy-and hold strategy does not work anymore? Not quite. Otherwise, why would fund houses and insurance companies still continue to adopt such a strategy? Remember, these are big fund managers and when they hold a stock, they do not just own 2,000 shares. They probably own 200,000 shares or even 2,000,000 shares even if it means $20 per share. For the fact that they continue to use this strategy means that it is still relevant even with the advent of high-frequency trading computers. In my opinion, if it works for big funds, it should also work for individuals as well. And because big fund managers hold large quantity of stocks, we simply cannot expect them to empty their portfolio of, say 200,000 of OCBC in one day, and then buying it all back on another day on a short-term basis. In fact, most of the time, their portfolios do not change at all. In the way, they are practicing buy-and hold strategies. These fund managers have to think long-term in order to pay the clients and retirees, who are long-term stake-holders. The key here is to think long-term. (Sometimes, I am quite bemused by people who mentioned “Aiyo, must think long-term ah!”. Thinking long term does not mean that we do not sell a stock at all!)


Given the relevance of buy and hold strategies for large funds, can small retails players like us mimic the actions of these fund managers to make money? Certainly yes. The fact that we do not hold too many lots per stock, it is sometime easier for us to manoeuvre better than the fund managers.


Allow me to go back into my history. After falling and recovering from the bad experience in the Asian Financial Crisis (AFC). (Click here for the detailed history), my aim was to hold this great stock called DBS. On my record, I purchased 1000 shares at $14.80 in February 2004. (In fact, it was less than 10% below yesterday’s closing at $15.39 considering that they are more than 12 years apart.) My long term plan was to have at least 10,000 shares in 10 years. Based on this objective, my shortfall was 14,000 shares. The period between 2004 and 2007 was a fantastic time for stocks because the ST Index advanced all the way from below 2000 to its all-time high of 3,875.55 in October 2007. The global economy was doing so well that one very significant local political personnel was said to be saying “All the pistons are working at full force”, pointing to the perfect functioning of US, Europe and China. (Of course, we know in hindsight that Global Financial Crisis (GFC) came one year later and everything got imploded.) Needless to say, in between 2004 and 2007, if one were on the buy side and sold 1-2 months down the road, or simply buy and hold all the way, he should be able to make money. This is especially true for DBS, which is a good proxy to the stock market. Even though I have a long-term plan to continue to accumulate DBS in the long run, the speed of price advancement was so rapid that each time when I bought it, it became attractive to sell it off some months down the road. In fact, it was prudent to take money off the table because rapid advancements are very often met by rapid pull-backs. In such a situation, I could even say that I was trading, though not exactly short-term trading because each time my holding period was a few months. The share price of DBS in the period between 2004 and 2007 advanced from $14.80 when I bought it to a peak of $25.00. By the end of 2007, however, my shareholding in DBS did not increase at all because I had sold just as much as I had bought it. It was probably with some luck that the Global Financial Crisis (GFC) came along that I was able to pick up a lot more shares and subscribe more rights at $5.42. While I did lost some money on paper on the 1000 shares that I kept, it had been more than offset by the capital gains in the ‘trading’ that I made off from the DBS shares that I had bought and sold along the way. Furthermore, the GFC was probably a once in a lifetime chance to accumulate DBS. It came glistening right in front of my eyes. Such opportunities should not be missed at all cost. This was even truer for someone who had been bashed badly during the Asian Financial Crisis (AFC), and only to see opportunities slipped through the fingers from a low of 805 on the ST Index to more than 2000 within a matter of 15 months or so. (Click here to view my background).


Of course, one may argue why I did not even sell off my 1000 shares that I had been holding. The reason is simply that I am not GOD. (There is a Cantonese saying – 早知就没黑衣) I can’t predict the future. If I could predict the future, I would have even sold my 1000 shares and bought it back at the peak of the crisis. My long term plan, however, was clear that I needed to accumulate DBS shares in the long run, and the GFC provided me an opportunity to do so.


Then another opportunity came knocking again. After the GFC, DBS advanced again past $20 by late December 2014. Having come up from a relatively low base during the GFC, I managed to sell some shares at $18.50 in October 2014. At this share price, it would have translated to more than the market capitalisation of DBS before the GFC when it was at $25.00. (The reason was that DBS raised rights of 1-for-2 shares during the GFC.) I would have thought that the share price would not go beyond that point, but the general optimism pushed the share price further up to past $20. I sold again at $20.20 in December 2014. It finally reached $20.60 in early 2015. Of course, the crash in the oil price and a series of ‘scares’ in the last 18 months or so, made the share price of DBS came tumbling down again to less than $16, which now becomes a super strong resistance level. When it reached a level of around $13/$14, it allowed me to buy back those quantities and even more than I had sold.    


In a similar way, I have been reducing my SPH shares for the past 1-2 years because I felt that the fundamentals of SPH are weakening. It is not because of bad management or SPH was making wrong investments. In fact, I believe that the management has been quite good, peppering shareholders with good dividends. That was why the share price has been quite well-cushioned enabling me to sell a bulk of my stocks off at above $4.00, except for the last 2,000 shares which I sold recently.  The fact is that media and publishing business is under a huge threat from the internet, which is highly accessible locally. The threat is beyond their control and that is why the profit from the print business is dwindling. The only thing that probably helped them along is the SPH REIT, which probably had already hit a plateau. Of course, SPH is not sleeping and is on a look out for fantastic investments that may pop out along the way, but until today, it is still not there yet. Of course, when the price becomes attractive again, Perhaps, I may be back in again.  

So in summary, buy-and-hold does not mean buy and don’t sell. Sometime, it is prudent to sell and take money off the table even if the stock has not reached its full potential. Very often, there is a need for stocks to digest a bit before they can climb further. In fact, as it is DBS is now hovering for the past six months or so below $16. If I had not sold anything and stood only on the buy side from 2004 till now, I probably would have made only from my dividends and not too much from the capital gains. It is the long-term strategy and, of course, some luck that counts. It does not mean buy and don’t sell.

Good Luck!


Disclaimer – This post is not a recommendation or an advice to buy or sell the stocks mentioned here-in. These are past performances. They do not reflect future performances. 


Brennen has been investing in the stock market for 26 years. He trains occasionally and is a managing partner for BP Wealth Learning Centre. He is also the author of the book – “Building Wealth Together Through Stocks” which is available in both soft and hardcopy.