Inphyy Corner

SingTel Overcharging Customers In Australia?

By Motley Fool Staff - November 22, 2013

Singapore’s telecommunications giant SingTel’s (SGX: Z74) wholly-owned Australian subsidiary Optus recently admitted that it has been overcharging mobile customers in the country for years.

At an end of year media party, Fairfax Media quoted Kevin Russell, chief executive of Optus, as saying:

“Let’s be crystal clear. As an industry, we know how people use their phones, we know young people will get their first smartphone and go bananas on it, we know people are going to get hit with a A$500 or A$600 bill, and we know that if they don’t complain we’ll get an extra whooping bit of revenue.”

Russell also criticised data roaming plans, saying, “The idea that you’re on holiday and you get a $5,000 bill is a shocker.”

But he said that Optus had taken steps to address what has become known as ‘bill shock’. In October, he said the telco industry in Australia needed to tackle the problem of bill shock, and give customers certainty over how much their end of month bill will be.

Optus has steadily introduced more generous mobile phone plans that can limit the amount of overcharging, by giving customers higher allowances for data and call usage.

An enquiry by the Australian Communications and Media Authority (ACMA) estimated that Australians spent A$1.5b more than they need to every year, simply because they picked the wrong mobile plan.

Telcos in Australia, including Telstra Corporation, Optus, and Vodafone – the number one, two, and three telco operator in the country respectively – spent A$108m resolving complaints, and wrote off an additional A$113m annually in bad debts incurred through bill shock.

Complaints to the telecommunications ombudsman recently hit a five-year low, coinciding with the introduction of a tough new consumer code, designed to improve telecommunication services, and act as a guide for telcos to act in concert with their customers to eliminate bill shock.

A telecommunications consumer group, the Australian Communications Consumer Action Network, says there remains significant scope for telcos to cut complaints.

While Optus says it has taken steps to reduce bill shock, eliminating the problem across the industry in the country should be a high-priority goal. It’s not clear whether Russell’s admission opens up Optus to legal claims, but we may yet hear more about the issue over the coming days.

SingTel’s smaller local competitors in Singapore, Starhub (SGX: CC3) and M1 (SGX: B2F), have been turning up the heat: both have done much better than SingTel over the past 9 years in terms of earnings growth.

Under such a backdrop, the importance of Optus’s performance to SingTel’s overall corporate results increases with each passing year and whatever is happening in Australia’s telecommunications industry would be of big importance to Singapore’s telecommunications giant.


Courtesy of The Motley Fool

Keppel Land Gears Up in China

By Ser Jing Chong - November 22, 2013

Property developer and fund manager Keppel Land (SGX: K17) recently shared some great insights about its plans in China.

44% of the company’s assets are in the country and so future developments there will be of great importance to Keppel Land’s investors. Let’s dig in to find out more.

1) Great experience and a proven track record in China

Keppel Land has been doing business in China for more than 20 years and it was actually the leader of a Singapore-consortium that helped to develop the Suzhou Industrial Park in the 1990s. So, that’s some great experience there.

In addition, Keppel Land has completed over 20,000 homes and sold more than 22,000 homes to date in the country.

There should be more to come, as the company has a land bank of more than 5.6 million square metres (sqm) where 40,000 homes can be constructed.

2) Strategy in China

Since the end of 2010, Keppel Land’s assets in China have more than tripled from S$1.7b to S$5.8b as of Sep 2013 with more growth likely on the way.

Going forward, Keppel Land would be focused on five cities in the country: Shanghai; Beijing; Tianjin; Chengdu; and Wuxi. In addition, the company’s aiming to grow its commercial presence in the Tier 1 cities.

According to the company’s presentation, China’s population has been increasing at around 0.48% per year since 1953 and reached 1.34 billion back in 2010. Rising affluence amongst China’s urban dwellers is not shocking news either, but some figures are really worth noting.

For example, urban disposable income per capital has shot up by more than 50% within five years from RMB15,781 in 2008 to RMB24,565 in 2012.

With Keppel Land’s presence in the Tier 1 cities, it seems that they’ll be in position to capture a nice slice of the rising-affluence-pie.

3) A strong focus on Shanghai

There are a lot of good things happening in Shanghai right now, and Keppel Land has no intention of being left out.

One of the big developments in the city would have to be the newly set-up Shanghai Free Trade Zone in Pudong which will “promote trade and encourage foreign investments”. It’s very likely that the Free Trade Zone would bode well for the city in terms of economic development.

In addition, there’ll be a Disney theme park opening in 2015 to give another boost to the tourism, retail, and services sectors in the city.

Finally, the rising population and growing-affluence trend happening throughout the country is also evident in Shanghai.

The city, with a population of 23 million in 2012, is already one of the largest in China by population numbers. But, the momentum there isn’t stopping as the 23 million figure is targeted to hit 30 million by 2020.

On top of that, urban disposable income per capita, though growing slower in Shanghai as compared to the rest of the country, has also increased by 8.5% in total since 2008 to RMB40,188 last year.

To capitalise on Shanghai’s growth, Keppel Land has a number of projects in play, such as: a retail-cum-office development in the precinct of Park Avenue, a high-rise condominium for middle and upper-middle income buyers; The Springdale, a series of low, mid, and high-rise condominiums for middle-income buyers; and the Sheshan development in the prestigious landed enclave in Sheshan, Songjiang district in Puxi that consists of landed homes for upper-income buyers.

4) Outlook in China

Keppel Land sees the commitment of the Chinese government, through long-term measures such as property tax and land reform, in ensuring the healthy development of the residential property market to support sustained economic growth.

In the office market, rental growth is expected to remain stable, buoyed by China’s strong economy.

Finally, with the retail property market, the company expects the market “to remain buoyant” despite a slowdown in retailers’ expansion plans.

Foolish Bottom Line

Keppel Land’s businesses in China are also of great importance to Keppel Corporation (SGX: BN4), given that the former is a vital cog in the latter’s property division.

The property developer and fund manager’s also not the only local real-estate related company with a strong focus on China. CapitaLand (SGX: C31), one of Asia’s largest real estate companies, has 39% of its assets – worth some S$14.2b – located in the country.

That might give some strong credence to justify the amount of attention that Keppel Land’s paying to the Asian giant, China.

But regardless of what happens to the country eventually, investors should understand how important its future is to Keppel Land’s corporate results in the long run.

It’ll be worthwhile for the company’s investors to keep a close watch on China’s property markets.


Courtesy of The Motley Fool

Rex investing $20m in oil well stimulation tech

Promises to drastically boost oil production.

Rex has revealed that it will be investing US$20m for a 67% stake in Rexonic, which will own a proprietary environmentally-friendly, high-power ultrasound technology for commercial oil well stimulation developed by Swiss partner Ogsonic AG, reports DBS Group Research.

DBS said Rex management explained that the technology is intended to replace traditional chemical methods and has been shown to increase oil production from 30% to 380%, both onshore and offshore.

The JV will target the oil & gas production phase, and being complementary to Rex’s existing offerings in the exploration phase, offers cross-sell opportunities.

Rexonic has already signed contracts with three major NOCs and could contribute a recurrent earnings stream within the next few years.

Aside from the promise of boosted earnings in the future, DBS said Rex will be basking in brisk drilling activity and new licence interest.

"Drill results from the first well in Oman can be expected around end-December 2013, and the second well around 40 days later.

While the developments in Oman are likely to be of much interest to the market, Rex is also aiming to drill another 5-7 offshore wells in various areas in 2014, and looking to grow its portfolio from the current 15 licences to 30 licences over the next 18-24 months, potentially providing a constant stream of newsflow and catalysts," said DBS.

Should I Buy Blue Chips At 52-Week Highs?

By David Kuo - November 23, 2013

Something quite exciting is happening in the Singapore market. Despite all the talk of doom and gloom in the global economy, a preponderance of shares has recently been hitting 52-week highs.

A quick trawl of the Singapore market reveals a plethora of shares that are within 10% of their 52-week highs. In fact, the Straits Times Index (SGX: ^STI) is just 9% from its 52-week high. But what does this mean, if anything, to simple souls like you and me?

For a start, it can provide a quick snapshot of what’s been happening in the market. Right now, Singapore banks are flirting with their 52-week highs.

If I have said it once, I have said it a thousand times before. When the economy is on the back foot, banks get hammered. That’s because they tend to be more exposed to what is going on and they feel the pain more than other industries.

But when the economy is on the front foot, banks can make lots of money. That’s because, you guessed it, they tend to be more exposed to what is going on. It’s the way things have been since banks were created.

Currently, shares in Singapore’s largest bank, DBS Group (SGX: D05), are just 5% shy of their 52-week high of S17.90. Meanwhile, United Overseas Bank (SGX: U11) is also just 5% off its 52-week high and Oversea-Chinese Banking Corporation (SGX: O39) is a mere 7% away from its 52-week high.

Industrial conglomerates also appear to be on the crest of a wave. Sembcorp Industries (SGX: U96) and Keppel Corporation are both within touching distance of their 52-week highs.

Whether a share is at a 52-week high or, indeed, if it is at a 52-week low, is irrelevant without looking at valuations. What’s more, just because a share is at a 52-week high doesn’t mean that it can’t go higher.

Simply relying 52-week highs and lows to make investing decisions in isolation can not only be dangerous but also pointless. However, understanding why a share has reached these levels within can tell us lots.

Consequently, by picking shares in company whose underlying business is stable and predictable may mean that it could be hitting 52-week highs time and time again.


Courtesy of The Motley Fool

Aussino halves after it gets SGX delisting notice

12:46 AM

SHARES in Aussino Group plunged 50 per cent to a new low of 3.6 cents yesterday, after the Singapore Exchange (SGX) issued a delisting notification to the bedlinen retailer and rejected its application for a time extension to meet certain listing requirements.