Thursday, October 31, 2019

Why I Think OCBC Q3FY19 Profit Results Are Going To Fall Double-Digit Percentage YoY

UOB announced its Q3 results this morning which gives a big hint of what is to come for the other two banks.

The drop in NIM and increase in NPA is worst than expected, and if not for the loan growth segment in the Singapore that helps, it might look like a worsen Q3.

OCBC is scheduled to announced its results on the 5th Nov (Tuesday morning) before the start of market trading.

This is 5 reasons why I think OCBC Q3 FY19 profit results are going to fall double-digit in terms of percentage year on year.



1.) Net Interest Margin Compressed QoQ and YoY


In FY18, OCBC's Net Interest Income contributes 60% to their total revenue while Non-Interest Income contributes the rest of the other 40%, so we'll approximately use that as a gauge.

Q2FY19 Net Interest Income came in at $1,588m while Q3FY18 Net Interest Income came in at $1,505m.

This was when Net Interest Margin at 1.79% (Q2FY19) and 1.72% (Q3FY18) respectively.

Given UOB's earlier results today which Net Interest Margin has dropped by 4 basis points in Q3FY19, I expect OCBC to do the same in Q3FY19 for the NIM to drop to around the 1.75% range.

The only saving grace is a higher loan growth, if they can replicate what UOB does, but from the Q2FY19 results, loan growth seems to already slowed down to low single digit.

2.) Non-Interest Income to fall YoY

OCBC's Wealth Management segment is the likely savings grace as they continued to expand in this area and it contributes half the revenue of the overall Non-Interest Income business.

Q3FY18 Wealth Management fees came from a low base of $217m, so it is likely that the revenue from this segment will contribute positively when comparing year on year because of the increase in AUM. However, it will be difficult to match against the higher base of Q2FY19, which stands at $261m and a higher fee base.

3.) Great Eastern Insurance Business to fall YoY

The Group's insurance subsidiary, Great Eastern announced its Q3FY19 results earlier last week.

Profit attributable to shareholders for Q3FY19 is at $205m as compared to $213m, which is a drop of about 4% year on year.

The lower profit in Q3 is due to higher valuation of insurance contract liabilities as a result of decline in discount rate.

4.) Higher Allowances and NPA Due to Higher Credit Costs

Based on UOB's latest results, we know that total credit costs on loans for Q3FY19 ticked up to 23 basis points from a low of 8 basis points in Q2FY19. That is a variance of 15 basis points in one quarter.

OCBC's Total allowances for loans for Q3FY18 came from a low base of $49m while in Q2FY19 it ticked up to $111m.

I'm expecting allowances to further deteriorate and increase in Q3FY19 to around $150m minimally.

5.) Cost-to-Income (CIR) to Increase


UOB's CIR has unexpectedly increase in Q3FY19 to 44.2%, which is up from 43.4% YoY and 43.7% QoQ.

The increase is due to more staff headcount hiring as they open more branches and going into personalized digital banking, and we might see the same happening too for OCBC and DBS as they are trying to increase their investment capex over time.

Final Thoughts

UOB should report the strongest result of the three banks due to their positioning in the regional but it didn't really materialize in Q3. In fact, the results are mostly up due to the decent loan growth segment in Singapore, especially in the construction and manufacturing sectors.

But you can see these loans growth slowing down, especially when you compare the loans in Sep 19 vs Jun 19, and that they didn't rise a lot.

With volume growth slowing down and NIM coming down, it will be a double whammy for the banks in what to be a challenging next few quarters, especially if allowances also start to tick up.



In this regard, I am expecting OCBC's Q3FY19 results to trend pretty similar to what they've been reporting for Q2FY19, which comes in at $1,249m but at higher operating expenses because of the higher allowances while muted growth in the loans and wealth management segment.

When comparing this with last year profit of $1,271m, we could yet see a surprise fall in profit in this Q3 for OCBC when comparing both YoY and QoQ.


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Tuesday, October 22, 2019

We Bought A New Home

After months of intensive research on the residential property sectors, my wife and I have decided to proceed with purchasing our second property here in Singapore.

Just yesterday, we've submitted the cheque, went to the lawyer and signed everything that we needed to settle.

We've never previously thought of the idea that we'd be buying a second home, especially in an expensive country like Singapore where private property was rated the second most expensive in the world according to a report from CBRE (source article here).




Why Buy Now?

But we were bounded by circumstances, in particular the fact that we rented out our bigger units a few months back and had to move in to our in-laws place in the interim. It was never the most ideal situation for the longer term because of many reasons and soon we were on the look out for a place of our own again.

The timing of our elder son primary one registration next year also means that we needed an ideal permanent place (at least 30 months worth of stay) in order to qualify him for the "Within 1km" proximity phase for the primary school that we were aiming for. 

The previously written article that I wrote on the unlocking of the equity portion is a financing option meant to fund this purchase. This is one of the strategic move we've decided to go with in order to avoid the absd rule for the second property. At the end, my wife and I had to split with one each to our name.

Why Not Rent First?

The idea of renting being an ideal situation is when you can get a decent long term contract as a tenant, and then use whatever excess capital fund you have and invest it at a better irr.

Personally, I don't like the idea of renting as a tenant for the longer term because first we know we'll be staying in Singapore for a much longer period and second the rental that we pay goes straight as an expense to us when we could have used that rent to pay down the loan and increase the equity portion over time.

Of course, this wins hands down than paying for an overvalued property which is sending your equity straight to hell.

Why Not HDB?

We've contemplated this option by selling our current unit and then move to a HDB now that we've become Singaporeans and are eligible for it.

Unfortunately, we were not able to find the right match after a few tries with the location plus value that we've overall considered.

New or Resale?

I've probably mentioned this in the last few articles I wrote but there's no way we could find value in most if not all the new private property development that were recently launched.

To put numbers into perspective, the two new integrated development - Woodleigh Residence was being marketed at approximately $1,850 psf while Sengkang Grand Residence was marketed at approximately $1,750 psf.

Pullman Residence @ Newton (former Dunearn Gardens) was launched at $3,000 psf. 

Meyer Mansion was launched at $2,715 psf. 

Avenue South Residence was launched at $1,780 psf.

Even the latest and only EC launched this year for Piermont Grand @ Sumang was marketed at $1,108 psf.

Given how heated the market is for these new development, it is very difficult for us to find good value and to be frank neither can we afford to pay such a hefty price.

We went for a resale development and found a few that was good hidden gems. 

Some of these units provide good value and pretty much fit into everything we were looking for.

What Are The Criterions We Were Looking For?

In my live radio air-show last month, I mentioned these 5 criterions that is important to us when looking for a home so we used the same checklist to find our ideal home.

Do note that these criterions are likely to differ for every individuals depending on the life stage cycle you are in.

1.) Location / District

We don't drive so proximity to public transport access such as MRT and direct buses is obviously going to be important to us.

Close proximity to malls, groceries shopping and nature would also have been big plus points for us.

I do also have a bias preference towards properties that are in "Prime" location, which includes the likes of District 1, 2, 4, 8, 9, 10, 11, 12, 15 by my extended definition.


2.) Investment

While we look into buying this as a home for our own stay, we also wanted to double up as an investment home for any future capital appreciation.

Like in all investment, the key here is not to overpay and the reason we choose not to purchase a new development is because the price in the market at the moment doesn't gel with us.

As part of our investment key checklist for not overpaying, we also wanted to make sure that the rental yield for the property we are buying in this development is above 3%, which I think serves as a pretty good gauge in this current climate of poor rental market.

For purpose of reference, the place we bought came with a tenancy lease with a 3.2% rental yield, which will last until somewhere early next year.



3.) Size / Floor

We wanted a good decent size of living room and bedroom and it's incredibly difficult to find in new developments where rooms are typically very small to cater to.

We also preferred units which have good squarish lay-outs, i.e minimal wastage of spaces, minimal bay windows, etc.

I also have a bias preference towards higher floor, which usually commands higher price.


Example of Good Floor Plan Layout

4.) Facilities / Interior Finishing

Most of the interior finishing and facilities you are getting is likely going to depend on the developer that is building the units.

Bigger names such as CapitaLand or UOL or City Development are likely to provide better facilities and finishing as compared to smaller names.

5.) Proximity to Good Primary School

The proximity to a good (not necessarily top 10) primary school ranks number one on my wife's list.

She has a peculiar preference towards some of the primary schools that we want our kids to go to so our search was narrowed to incorporate this criteria.

From an investment viewpoint, it can also double up as an unique selling point should one day we decide to rent out or sell this unit.




Added Bonus (Not Crucial But Important)

6.) Freehold vs 99 Years Lease

The freehold status is always going to be an added bonus point if we get it though we did not put this as a priority.

In this era of limited land space, it is likely more than not that a collective sales will happen in the future should the property is located at a unique/growing location.

7.) URA Master Plan (For Potential Enbloc in future)

I also like to refer to the latest master plan guide and changes to the land planning space at URA Space.

Some buildings are approved for an upgrade from 2.1 to 3.0 thus increasing the likelihood for an enbloc potential in the future.

Conclusion

We started the lists with about 8 different units after the first round filter.

After we visited all of them, we've managed to filter down to our final 3 units, out of which one became our choice.

I'd put this down as one of our important milestone that we managed to hit this year despite the setback we've had earlier in the year.

Never had we thought we'd be moving to a new home by this time last year but circumstances took us to a path that we didn't think of.

Thanks for reading.


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Thursday, October 17, 2019

6 Reasons Why DBS Is Prime For Shorting

DBS is scheduled to be the last bank among the 3 giants to announce its Q3FY19 results on the 11th November 2019.

The other two banks will report on 1st Nov (UOB) and 5th Nov (OCBC) respectively.

As some of you might know, I have a short-sell position for DBS in my earlier October Portfolio Update and have since more than tripled my position further in DBS in the past recent days.

Here are 6 reasons why I think DBS is prime for shorting, especially in the build up for the next few weeks / months.

1.) SIBOR Rates has peaked in Jun 2019 and are heading down


The 3m and 1m Sibor rates have peaked in Jun 2019 when they announced their 2nd quarter results.

Since then, the Federal Reserve has proceed cutting the interest rates by 25 basis points in each of the two occassions.

This has led the SIBOR rates to come down in the next few months based on what we see from Jul to Oct, which will evidently trickle down to the bank's NIM results.

A lot of people remember the part where banks have been reporting solid year on year growth, but this is because they start from a very low base where QE infinity has been evident almost in the last 10 years.

Party days are almost over, banks will start reporting slower growth in the next few quarterly results, starting from Q3.








2.) NIM is a lagging indicator and has likely peaked in Q2

Net Interest Margin (NIM) is essentially the main backbone earnings for the banks.

It takes up more than two-thirds (around 64% to 66%) of the overall revenue for the banks.

It is a profitability indicators showing how much the bank earns on the interest from its products which includes loans, mortgages, compared to the interests it pays out to consumers on the savings accounts.

NIM is usually a lagging indicator for the banks (usually between 3 to 6 months), as it tends to reprice their rates in relation to how the SIBOR moves in order to remain competitive.

DBS's NIM in the last 10 quarters

Based on the above graph that we see for DBS' NIM in the last 10 quarters, it appears that NIM has peaked in Q2 2019.

The declining SIBOR (see point 1) from Jul to Oct 2019 will likely mean that the banks' NIM rate is likely to decline in Q3, though likely they will still exhibit year on year growth.

If we start seeing NIM slowly going back to the 1.80ish% and 1.70%ish, it will likely show negative year on year growth for the banks.


3.) Mortgage & Construction Loans will continue to drag

Mortgage Housing & Construction loans took up the highest percentage of loans for DBS in terms of industries.

In third place, manufacturing sectors took the place.




As we all know, developers have a hard time selling their newly launched units on the primary market due to the cooling measures that was strictly imposed to home buyers.

As a result, what we have is excess baggage inventory of unsold units that will flood the markets with its "not-so-cheap" price tag.

With banks trying to win consumers on the refinancing segment, this will push rates down competitively, which will be a double hit since SIBOR is coming down.




4.) General Provision Allowances Have Increased

One good metrics to know if cracks in the economy are starting to show is to look at the general provision on the allowances that banks typically does (and also the NPL of course).

While NPL is still showing a healthy 1.5% compared to the 1.9% we see back in 2016, banks are starting to show some conservativeness by putting in more allowances in their books, in preparation of a tough 2020 year to come.

Some of the sectors that see an increase in provision is the manufacturing sectors (QoQ) while almost all the other sectors including construction and housing, e-commerce, transportation are exhibiting year on year increase in allowances.




5.) DBS' Rich Valuations only held up because of its $1.20 dividends

DBS' rich valuations of P/BV 1.4x is unlikely to be warranted at the current market if not for the fact that the Group decides to increase its payout ratio to above 50% from 2017 onwards.

Since then, the market has priced in valuations based on what they think is sustainable yields at 5%, which is attractive especially for yield-hungry investors.

Previously before the hike, banks are trading at sub-par 3%ish and markets are valuing the banks lower.




Having said that, I think the $1.20 dividends / year are sustainable for now because of the competitive CET-1 operating metrics that are above 13.5% (management has previously guided that for as long as CET-1 is above 13% dividends are safe), though we should continue to keep a lookout for any developing updates on this metrics.




6.) If Dragonfly Doji (candlestick) doesn't hold today......

On the 17th Oct, DBS exhibits a Dragonfly Doji candlestick pattern where they open higher, but was pushed on a sell-down during the mid day to $24.66, but managed to gap up strongly at the close.

While this signals a positive uptrend reversal, a confirmation is required on the 18th Oct (today) if demand can continue to push up and end the day strongly.




Likely the case is that we probably won't see that happening today due to the China GDP's info which disappoints this morning and pushed the whole market down.


Final Thoughts

The next two quarters results on high level will still look great for banks as they are likely to report high single digit earnings due to the lower base of 2018 earnings.

But the outlook will be very much tougher as we already see almost all operating metrics showing up to be what will be a difficult year for banks come 2020 when they start comparing against a strong 2019 peak earnings.

Until then, I think banks will continue to struggle and they are likely to be pushed further down from their current valuations that the market is still not realizing the impact.


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8 Key Takeaways From SPH FY2019 Results

SPH announced its' Full Year 2019 earnings this evening after market-hours.

Here are some of the key takeaways from the results:


1.) Print & Media Business Disappoints Again

Revenue for the traditional media business declined by $78.9m from $655.8m in FY2018 to $576.9m in FY2019, which translates into 12% down year on year.

Revenue contribution from print advertisement and circulation are down to $68m this year, which is approximately 12% down year on year.

The only saving grace is the digital advertisement revenue segment which shows growth year on year of $1.5m (6%), though not significant enough.

At $576.9m revenue for the media, it still takes up the bigger chunk of the revenue (59% of overall revenue) so it remains to be seen if we're continue to see a slow structural decline in the print business for the next FY.

2.) Media Segment To Cut 5% Headcount in FY2020 (Restructuring)

The Group has decided to undergo further restructuring to their media business by cutting 5% headcount in FY2020 due to the volume decline and the transformation of digital avenue.

At 5% reduction, the Group can approximately "save" about $17m worth in staff costs, though there will be a one-off retrenchment package costs they have to fork out.

3.) SPH's Property Segment Comes To The Rescue

The flying knight to save SPH result comes from their property segment, which sees a 22.3% growth in revenue from $242.4m in FY2018 to $296.5m in FY2019.

This increase nevertheless is mostly contributed by inorganic growth through the acquisition of UK PBSA, Figtree in Australia and contribution from the Rail Mall.

4.) Woodleigh Residence Unsold Units

Woodleigh residence is an integrated development that SpH has entered into a JV with Kajima Developer and was launched back in 2018.

It has a total number of 667 units and to date it has only sold 147 units, which means the rest of the 520 units are in the excess baggage territory.

While the integrated development is in the strategic place that is right in front of the mrt, it is a suicide to have it priced at above $1800 psf.

That is just obscenely way too expensive in my opinion.



5.) Gearing / Net Debt Has Increased 16% Year on Year


Net Debt (Total Borrowings less Cash Equivalent) have increased from $1.18b in 2017 to $1.25b in 2018 to $1.45b in 2019.

The Group has also issued Perpetual Securities of $150m in 2019, which is classified under equity in their balance sheet.

As the Group is trying to grow via more acquisitions, we will expect gearing to further increase in the years to come. 

6.) Free Cash Flow Once Again Goes Negative For The Second Consecutive Year

If you look into the cashflow statement, you can easily guess what they are doing by now.


Free cash flow has once again gone into negative position this year due to the overseas acquisitions of the UK PBSA portfolio ($603m) and increase stake in Figtree ($192m) earlier this year.

This is despite the divestment of ShareInvestor and Chinatown Point earlier this year.

It will be difficult for Sph to score a positive fcf in the next few years as they continue to try to mitigate the decline in the media business through more acquisitions in property and healthcare. 

7.) FY 2019 Dividends are Cut to 12 Cents

FY 2019 Dividends are down by 8% year on year as the management decides to cut from 13 cents the previous year to 12 cents this year.

12 cents dividends translates into roughly $193m.

Excluding the one-off, this translates to close to 100% payout based on their earnings. 

I think the next few years we'll probably continue to see a cut in dividends especially if the media business continues to decline structurally though it is unlikely that it will be drastic as the Group has a few recurring income in place. 

8.) Increased Strategic Stakes In Other Investments

SPH has made quite a few ventures outside their traditional media business this year, with the notable promising investment made in the UK PBSA accommodation.

They have also taken a 7.38% stake in the units of Prime US Reit launched earlier this year for recurring income and diversification purpose.

Recently, the Group also announced that they will put more investment in a stake in Japan for the nursing care business. 

Whether or not these strategic stakes will eventually play out in a few years time is probably anybody's guess. 

As investors, you just hope the management is a good capital allocator in this case. 

Final Thoughts

Overall, I thought the result was decent enough, given the expectations from everyone that it will be a slaughter. 

I actually think Singtel and Starhub are in a much precarious position than Sph, and I think structurally Sph will be a slower decline than the telco which has to cope with the faster changes and immediate demand in capex. 

At the current price, I think it's probably at a fair price if dividends could sustain at 12 cents while investors could continue to wait for more development next year. 


Saturday, October 12, 2019

Gathering of Financial Bloggers 2019

It's been quite a year for 2019 for most of the people I know, especially with my Dad's situation not too long ago and also Chris' unfortunate incident with his Dad too.

So with almost the end of 2019 fast approaching, we thought why not do a light gathering where we can catch up on things we have not been able to do so throughout the year.

Financial bloggers are a close community knit of people. 

While we don't have the size as big as some of the US bloggers out there, we probably are closer to one another than most people think.

There are many times that we also talk beyond just cpf and stock investment. We also discussed on things like baby fairs, education, lifestyle, retirement or just simply the latest gossip on the net.

There are also people that some of us has been talking to in the chat group for nearly a year but has not the chance to meet up face to face so we thought it'll be a good idea to put a face to whoever we've been talking and discussing all along.

So I decided to host a gathering for a bbq event at my place (well, technically my in-law place until we found ours) over some satays and beers, hoping to catch some folks for the recent catch-up.

And thanks to the folks who turned up for the evening and for being very sportif for the event.

Special thanks too to Bryan from The Smart LocalSim from STE Investing, Goh CK, Royston from The Motley FoolAlex from The Bear Prowl and Thomas from 15HWW for bringing extra dishes and desserts for the day!

Hanging Around and Waiting for People To Come

Financial Bloggers Struggling To Get The Fire Starter To Start

Chris with the Sotong and Sim with the fan

CK at his best pose of the day ;)

Look at Kyith!!!

Nasi Tumpeng

Myanmar Whiskey - Too bad only finish half of them






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Thursday, October 10, 2019

6 Reasons Why I Think DBS' Report On Singtel Is Overly Bearish

I am writing this in a response to an article from DBS which caught everyone's attention regarding the likelihood that Singtel may cut its dividend for the first time in 20 years from FY2021 onwards.

If you have not read the article, you can read it here.

In the article, the analyst drew from the thesis that Singtel might have to cut its "unsustainable" dividend payout to 13 ~ 15 cents/share mainly due to the increasing capex requirement from the 5G spectrum roll-out, the declining mobile users and deteriorating regional associates performances, which is mainly attributed to Bharti and Telkomsel (slowing growth).

While the general thesis may sound reasonable at glance, I think the dividend cut from the current 17.5 to 13 ~ 15 cents from FY2021 onwards may be overly bearish.

Here's 6 reasons why.


1.) The Group Can Technically Still Afford 17.5 cents Payout


We are talking here about a company that is one of the biggest market cap in Singapore and has never cut its dividends in the past 2 decades (~20 years).

In order to pay out 17.5 cents of dividends, Singtel would have to fork out a total amount of $2.85b, which if we use FY2019 as reference typically consists of a $1.11b (6.8 cents/share) interim dividend and $1.74b (10.7 cents/share) final dividend.

The Group gave a guidance that FY2020 Free Cash Flow to come in at $2.4b from their Singapore operations and another $1.2b from their regional associates, which adds up to $3.6b. However, this amount excludes the spectrum payments for the 5G roll-out which is only expected to be finalized in 2021, which the Group is forecasting at $2.2b.

Technically speaking, the Group has still the capability of paying out 17.5 cents/share to shareholders, cutting which will bring about spiral speculation about the company. 

2.) The 5G Network Capex Can Be Shared Among Mobile Operators


We can all agree that the 5G network is a huge capex commitment that the mobile operators cannot incur as a stand alone because it just doesn't make sense.

The likelihood will be a sharing model among the mobile operators and capex costs to be shared.

If we take reference from countries such as the US or Korea or China, they are already sharing the network even among competitors.

China Telecom, for instance, has announced that it is ready to build a 5G mobile network with its rivals in order to share the capex costs and to maintain their BAU capex guidance in the next 2 years.

3.) Singtel Has Trump Cards On Their Hands They Haven't Played Yet


The ICT business revenue model from the digitalisation technologies which include cyber, cloud, analytics, AI and IoT are one monetization platform which the Group can undertake a strategic review on the back of a smart nation concept.

The cyber security nation concept has recently gained traction news when Temasek decided to buy into the stake of security system D'Crypt, which Starhub previously bought back in 2017.

Another digital arms - Amobee and Videology, which are part of the digital life division are also another potential divestment opportunity that they can raise their funds from.

This will help to free up cashflow required to fund further network capex, if necessary.

4.) Telkomsel is Coming in from a Low 2018 Base


Telkomsel is one of Singtel's promising star of their regional associates that are still growing.

If you look at Telkomsel results more in depth, you'd see that their network users are up by 5.17m from the low base point of 2018 of 163.4m to 168.6m this year.

This helped to push their earnings higher despite a 6% drop in their call usage.

With revenue mix starting to shift towards the data service (now taking up 34% of total revenue) rather than call usage, there is still room for growth to increase the data service users.


5.) Singtel's Gearing Is At Reasonable Level


Singtel has a net debt of $11.8b in the group's book (including consol of all the subsidiaries), which translates into a 28.4% gearing or 2x their EBITDA + Share of Regional Associates EBIT Profits.

This is a very strong position for a telecom company not just in Singapore, but comparatively across the globe. 

Technically, they can gear up higher and yet still re-affirm their credit rating by assuring they have the cash flow that can cover the interest.

6.) Too Early For Singtel To Cut Dividend


If you notice the trend for Starhub, it took them close to 8 years before they realized that their dividends are unsustainable, mainly because their business fundamentals do not improve and they decide to cut thereafter.

What I am saying is there are many ways corporate actions can take place to raise funds and dividend cuts is probably one of the last option they will undertake just because it is so damn unpopular and likely market sentiments will spiral down from here (even if in the eyes of a prudent investor).

A company as big as Singtel is likely to be more prudent in their dividend policy. 

The higher likelihood in my opinion is another year of fixed dividend policy before transitioning them slowly to a variable policy like Starhub based on earnings. 

A variable policy pegged to earnings and cashflow is a nicer way to tell investors that the company is in the transitioning phase and is likely to conserve cash as part of the retained earnings for future capex needs.

With that said, this is not an inducement for investors to buy Singtel.

I think they'll be in a tough transition phase environment in the next few years but one that could come out strongly if the execution is done perfectly.

Thanks for reading.




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Wednesday, October 9, 2019

My Experience Using Redbrick Mortgage Advisory Service

As part of my property investing series research which I've been writing since last month, I am trying to reach out to as many groups of people involved in the end to end chain process of a property purchase.

This includes the likes of subject matter experts, agents, mortgage advisors and property portals such as 99.co and property guru.

Last week, I contacted one of the leading mortgage advisory brokers in Singapore, Redbrick Mortgage Advisory, as an anonymous to understand better the services and professional service level they provide.

But before that, let's first understand the role of a mortgage broker.




Why Do You Need Mortgage Brokers?

Property purchase is easily the biggest, if not one of the biggest financial commitments you will ever likely to make in your lifetime.

When purchasing a property either for your stay or investment, most people usually choose to service their purchase using financing options such as mortgage loans over the next 30 years or so.

Seeking an unbiased independent mortgage advisor such as Redbrick is therefore crucial because they have advisors on the ground who are subject matter experts who will recommend the best financing options available out there.

Not only that, but you also get personalized attention and flexibility to call them day or night to get their advice on the concerns you have.

For all the attention and guidance you will get, the best catch is there are no additional costs that you have to incur for their services.

This is in contrast to countries like Australia where the Hayne royal commissioner is proposing changes to the remuneration of brokers from a commission to a fixed fee for their subject matter advice.

If the abovementioned is true and it is that good then why aren't more people using their services?

Are Mortgage Brokers Better Than Approaching Banks Directly?

If you were to ask me, my guess is most people are still skeptical about the role of a mortgage broker in Singapore and struggle to understand how they can add value to the service.

For one, mortgage brokers are essentially middlemen between banks and borrowers, and since the commissions they get are standard across the industry, they are likely to be more independent and unbiased when providing advice to their clients.

That means a comparison across all the packages from the different banks and you can choose the best of the lots based on your specific requirement.

Mortgage brokerage such as Redbrick also provides one-stop shopping for all the services you might need.

This includes the likes of a residential or commercial property loan, bridging loan or even the options to evaluate the alternative of cash out equity financing loan which you can read about my story here.

In addition to that, they also provide a more personalized experience that can be customized according to your needs. They can carve out solutions to your problems or even provide better alternative options that you didn't originally think of that you can now consider.

While going directly to banks for loan packages sounds more straightforward, the bank loan officer serving is more likely to sell products that are favorable to the bank and might not go the extra mile to help you solve the problems you have on hand.

This can, of course, vary from experience, but that's just the general impression I get when I talked to both side of the parties (I've used them both from my personal experience).

Why Choose Redbrick?

Being the curious person I am, I tried to complete the relevant information that Redbrick provides on their website to check out and compare the loans across the different banks.

To my surprise, I received a call from one of their consultants within 5 minutes of completing the form (I wasn't expecting them to call me immediately) on my registered phone number.

I had previously studied some of the different home loan packages available across the different banks and had a good understanding of them myself but still wanted to use this opportunity to get a subject matter expert second opinion.

For instance, I had known beforehand that some of DBS home loan package uses FHR8 (Fixed Deposit Rate), while some of Maybank home loan package uses SRFR (Singapore Residential Financing Rate). Since these are board rates which the banks control, they are likely to be less favorable to borrowers in the event of a declining interest rate environment.

The consultant I called in was very patient in explaining all the different packages the banks are offering and the pros and cons of each of the package. She was knowledgeable in the products that she was handling.

I was rather impressed with the service level that she provided.

But I wasn't sure if every consultant was this competent or if I was mere lucky on that day.

Being the once again curious person that I am, I submitted a second request to them.

Similar to the first case, a different consultant gave me a call within 5 minutes. This time around, I arranged for a face to face visit at my home. She arrived at my location in less than an hour after the call.

Again, the service standard was very high and efficient. She was very knowledgeable about all the different packages and provided me with alternatives that I didn't manage to explore by myself previously.

Final Thoughts

I was impressed with Redbrick service standards that I contacted their Managing Director, Eugene Huang and we met over lunch where he generously shared his perspective on the property sectors and how his business model works.

During our meeting together, I was also briefed on how the company is training its consultants to maintain a high level of service standards consistently.

This explains why the two consultants I had was delivering consistent standards throughout the session.

It didn't occur to me in the past that using an independent mortgage advisory could give me favorable objectives and different perspective to look at things from another angle.

If you are thinking of taking a new home loan for your new home purchase or looking into refinancing your existing loan or even thinking about unlocking the equity value of your home loan, why not give them a try by visiting their website here.

It doesn't cost you a single cost extra to engage their services but who knows you may come out like a winner.

P.S: This post is a collaboration with Redbrick Mortgage Advisory and I'll get a cut out of the service commission if you engage but all stated opinions are based on my own experience using their services and are solely mine.  

Thanks for reading.



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Monday, October 7, 2019

Why I'm Joining The SG Active Trading Tournament 2019

It was around this time last year when the SGX Bull Charge Stock Challenge competition was held and I participated in the competition which lasts about 2.5 months.

It was heavily contested with more than 136 participants competing for the main prize.

I managed to lead the competition for most of the period until the very last day when another contestant Thebearprowl leaped over the first position and took the champion.

I wasn't upset (though felt a bit disappointed to give up the lead) about losing to another great competitor and was glad that I have a lot of takeaway I could learn from the competition itself.

Today, Thebearprowl and I are very close friends where we shared a private chatgroup to discuss on stocks and companies that have potentials to outperform.

2018 SGX Bull Charge Stock Challenge

SG Active Trading Tournament (2019)

InvestingNote is holding another competition this year, which is the upcoming SG Active Trading Tournament which will commence from 14 October to 29 November 2019.

Contestants are free to join the competition and stand a chance to win the grand prize of $4000 for the 1st prize. This time, there's also cash prizes to be won for the 2nd and 3rd place and already to date we have 1065 registered contestants so I am expecting the competition to be a blow-out contest.


The theme for this competition revolves around the use of Daily Leverage Certificates (DLCs), which are essentially exchange-traded financial products that enable investors to achieve a leveraged exposure to the key Asian benchmarks such as HK Exchange or individual stocks such as DBS, Wilmar or Venture.

Because DLCs are leveraged products, there are certain imminent risks that investors have to cater to when they buy.

Having said that, DLCs are different from the other leveraged products because they are listed on the cash market of SGX, hence there is no risk of a margin call.

This could work in favour of investors who would like to short the market yet do not want the risk associated with margin calls when they purchase via CFDs.

If you are unfamiliar with how DLCs work in the trading world, this competition will allow you to get exposure and learn about the product, without risking your own real money with it. Even better, you might walk out with a cash prize on your hand if you top the competition.

What stands out in particular for DLCs is that apart from magnifying the returns (or losses) based on the underlying asset that you buy, it also has a design feature of compounding effect which might impact the returns in the long run.

What this means is that if you buy and hold DLC for consecutive days, the returns will deviate because the base value of the returns that are tracked is reset on each day such that a new base is formed on each new trading day.

In other words, DLCs thrived in an environment where the general trending market is one way up or down because the new base will then magnify the returns.

For the full list of DLCs, you may refer to the link here.

I am pretty excited about pitting myself against some of the more respected traders out there and have signed up for the competition. Have you?

To register, please use the link here.

Thanks for reading.

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