Did I really not pay a single cent for my bill? *Cont'd

I last wrote about it here about how my insurance helped me pay for my day surgery and I didn't need to pay a single cent for it.

I was re-reading what I wrote and felt the need to clarify my position.

I had Integrated Shield Plan with a rider that allowed me to have all my medical expenses paid for by the policy.

Insurance used to be a very foreign subject for me. I deemed it too complex, not very applicable to me and not too concerned about it.

Integrated Shield Plan
This is basically Private insurance plans for Hospitalisation. Such plans are "integrated" because it consists of the public portion (MediShield/MediShield Life) and the private portion (AIA/Aviva/GE/NTUC/Prudential).

Then what?
The MediShield portion is payable via our CPF Medisave account. Those who bought the ISP will have the top up the private portion using cash.

1 November 2015 is where MediShield Life comes to play. It's time to decide if you should keep or terminate your ISP

Type of wards
ISP can cover up to B1 and A wards in public hospitals. MediShield Life covers up to B2 wards in public hospitals

ISP covers private hospital stay. MediShield Life only covers public hospitals.

The more expensive (there's a range of them) ISP covers all amounts of hospitalisation charges. MediShield Life covers the charges up to a cap.

What if there's no C or B2 wards and I'm claiming under MediShield Life?
No worries, because of the lack of suitable wards, they'll put you in A/B2 wards and you'll not be charged for the difference.

What if I want to stay in Class A/2B2 wards out of choice, and I'm claiming under MediShield Life?
You just pay the difference in cash (the rest claimable).

Choice of doctors
MediShield Life doesn't allow you to choose your doctors (if you decide to do so). ISP allows.

Coverage
MediShield Life covers all conditions (including pre-existing ones). ISP excludes pre-existing conditions.

Payout
ISP gives you the option to pay extra and obtain a "Rider", where you are covered from the first cent of the bill. MediShield Life doesn't have a rider option, so co-payment applies.

ISP allows claims for pre and post hospitalisation charges. MediShield Life doesn't.

Loss of Income option?
The Loss of Income type of plans is not tagged to ISP. You can buy Loss of Income policies from Private insurers, while enjoying MediShield life only.

Only Rider is tagged on the ISP.

Last words
The decision is whether to keep your Rider plan, and also keep your ISP.

I've made my decision after calculating the additional premiums and how much I want to be insured.

So, did I really not fork out a single dime for my bill? One could say I've already pre-paid my bills by paying my premiums beforehand. But let's not forget the benefit of ISP that covers pre and post hospitalisation fees. I think that's the attractiveness of ISP, at the moment. Rider, is good to have, but not essential.

Decide if you need the ISP and/or Rider option.

The little things that SATS do to entrench its presence

Just recently, SATS announced its intent to acquire BAC; a dominant caterer in Malaysia. In my Sleeping Dragon post, I mentioned that SATS has an excellent reach and market share in the industry. 

In-flight caterer/Ground Services - Market Share

(*New) Malaysia - 95% of In-flight catering
Singapore - 80%

Vietnam - 75%

Maldives - 70%

India - 67%

China - 60% 

Japan - 50% in Narita, 40% in Haneda

Hong Kong and Taiwan - 30%

Macau - 100% (only in-flight caterer)

With that, SATS further strengthened its footing in the region. BAC's major customers includes Malaysian Airlines, Air Asia and Cathay Pacific.

Risks
However, there's also risks to think of.
1. Currency risk
2. Malaysian Airlines ailing business
3. Malaysia's air traffic growth

However, I'm not overly concerned with those, bearing in mind that the profits of BAC would constitute less than 2% of SATS' total profits. The financial risks are immaterial.

What's important to me is that act of "capturing" new regions and being the market leader in them. The qualitative step is what interests me.

Q2 results peek!
Singapore's aviation data was released:

SATS' main profit drivers is the Food Solutions segment. 

Q1 saw the Meals produced increased by 2.5%. Q2's result doubled.
Q1's profits soared 14.5% despite a drop in revenue (due to cost savings).

I expect the cost savings to continue due to productivity gain, coupled with the excellent set of Food Solutions and Gateway services (Q1 registered a drop in Gateway), Q2 should be an excellent quarter for SATS.

Didn't pay a cent for my bill

Health is important. This is an understatement. I've recently undergone a minor day surgery and only realised the importance until now. Back then I knew the importance of health, I just didn't feel the impact of it until something happen to me.

If you're wondering, yes I'm fine :)
I'm also very glad that the government has given immense subsidy for us. From what could be a $500+ bill became $200 after subsidy.

I'm even more glad that I had the option to pay via my Medisave account.

But I'm even even more glad that my Hospitalisation plan paid for my bill, right from the first cent. 

I'm also even even even more glad that they also paid me get well and income benefit.

Yes the sums may not be a few thousands. But I didn't pay a single cent for my medical bill (less the insurance premiums). And I got an additional cheque for a get well benefit.

I could view that cheque as an offset against my premiums. Yup, premiums with an "s".

You don't know until you meet it
I now realised the importance and significance of having a rider plan. Back then I always ponder if I really needed a rider plan and if I needed a "get well plan". I guess I didn't know how much I'll want it until I got it.

Of course, this type of things, the less I claim the better la. Choy choy choy! haha!

And of course, to all fellow readers out there, but ensure you have your insurance covered sufficiently before you commit to other stuff like investing or what not.

Get insured adequately. Different people have different needs. Cater to yourself, do not under or over insure yourself.

Health is paramount!!!

Lacklustre M1 Q3 results

M1 released its Q3 result after trading hours today. I wasn't too pleased.

Q3 Y-O-Y
Net Profit up 0.8%
Diluted EPS up 0.7%

Q2 Y-O-Y
Net Profit up 1.0%
Diluted EPS up 0.5%

Q1 Y-O-Y
Net Profit up 6.6%
Diluted EPS up 5.0%

9M Y-O-Y
Net Profit up 2.8%
Diluted EPS up 2.3%

Q2 and Q3 results were disappointing, showing a clear trend of declining QoQ slow down in increment. Contrast Q1's profit of 6.6% increment with 1H of 3.8% and now 9M of 2.8%.

Service revenue (what I deemed as core, recurring revenue) dipped slightly from $207m to $205m QoQ. Although Handset sale surged, the cost of sales increased accordingly. It seems that sale of handset doesn't do much to the bottomline of telcos. Its good that the telcos are slowing moving away from handset subsidies (bad for consumers like us though).

While management guided moderate growth during Q1 and Q2, they've changed their tune and now forecast a low single digit growth for the financial year.

Dividend forecast
I remember attempting to forecast the dividend payout earlier this year.

Let's try that again:

	FY2014 actual	FY2015 forecast
EPS Cents	18.8	19.4
Growth	8%	3%
Scenario 1 (80% payout)
Regular payout/share(cents)	18.9	15.5
Dividend yield @$2.90		5.35%
Scenario 2 (85% payout)
Regular payout/share(cents)	18.9	16.49
Dividend yield @$2.90		5.69%
Scenario 3 (90% payout)
Regular payout/share(cents)	18.9	17.5
Dividend yield @$2.90		6.02%
Scenario 4 (95% payout)
Regular payout/share(cents)	18.9	18.43
Dividend yield @$2.90		6.36%

More intriguing 
What's more intriguing is how M1 managed to grow from 8% last year and fall to 2-3% this year.

While EBITDA margins is one of the highest at Q3 2015 (42.3%), profits have been sluggish.

Both postpaid and prepaid marketshared declined YOY. Other interesting statistics are that talktime minutes are on a 10% fall for postpaid and 3% fall in prepaid.

This fall in both international roaming and talktime doesn't seemed to be sufficiently negated by the growth of the data contribution (for all telcos).

I find it pertinent that the telcos maintain their mobile revenue by stimulating demand (more data usage) or adjusting tariffs.

Still holding on 
But life goes on. Dividends still get paid. Profits are still chugging along. I'll hold on for now :)

Just wished for a turnaround during their Q4 though. The iPhone 6s and 6s Plus should hopefully give a push :P

So, what is passive?

After my last post on "My Investing Mantra", I've attracted a few comments from readers.

One of them got me thinking: 

Not really passive lah. You have done your homework before any dividend can go into your pocket.Having said, why WB's way also work for some people?But not for people like us, i think.

There can be many ways to look at "passive". Each of us have to come to their own conclusion.

Is it passive because most of the work is done by someone else while we share the fruits?

Is it active because I've to do my homework before making my investing decision?

Am I going to do my homework regularly (3 times a week) to ensure my investing decision is sound?

Do we not all make decisions in life by doing some form of homework or another? When we decide which Fixed Deposits/Bond to purchase, do we not find out which is the most suitable deal out there?

I guess you get my drift. Passive may mean differently to different people. But generally, as long as I don't have to actively put in effort on a regular basis to reap returns (like how a trader works tirelessly to hit the jackpot in the stock market), that's passive for me.

Sure I've to do some initial analysis, and later some regular maintenance work, but the bulk of the job is done by someone else (the management of the business). Of course, that's my thinking, and people can disagree.

But why do Warren Buffet way works for some people? Berkshire Hathaway, one of the most successful business in the US doesn't pay a single dime out as dividend.

Yes, the stock value sky-rocketed throughout the decades. The growth is amazing and awe-dropping. I would love to have that type of returns. But it's all paper gains. Gains that cannot pay for my bills, cannot pay for medical expenses, cannot pay for education. Don't get me wrong, I love WB, I even own a small share of BH. But I cherish realised gains more than unrealised ones.

I would akin this amazing growth to our dearest CPF. It's a paper-gain until we draw down the money (or get paid monthly upon draw-down age). What's the use of CPF if we don't get to receive the monthly payments right? Even the CPF returns my capital eventually, I don't prefer holding a pure capital gained stock than one that shares its profit.

I guess we all own stocks with an end in mind. You can choose to hold one that gives no dividend, and liquidated it when you think its enough. Or you choose a dividend stock and live off the income distributed.

One is a fish that grows to adult and get caught for its meat. The other is a cow that keeps producing milk day in day out. 

I heard drinking milk is good for growth. I should drink more. But those lactose intolerant should not attempt. Consume what is suitable for your own body.

My Investing Mantra

I've realised I have never written a post to explain my investing mantra. So what is it?

Invest in companies with good balance sheet
I like companies with little to no debt.
I like companies that can generate hoards of cash from its operations.

Tagged: Sheng Siong, Design Studio, Raffles Medical Group, SATS

Stable and strong companies
I like companies that have stable results (not fluctuating).
And so due to that, I like companies that have resilient businesses.
I like companies that are so big and strong, that they've proven that they can ride out a great financial crisis barely unscathed.

Tagged: Telcos, Vicom, Sheng Siong

Returns to shareholders
I like companies gives consistent and stable dividends from its profits. Companies that pay dividends as a way to give back some returns to the shareholders.

And yes, cash is king to me. Dividends is important, and I'd only like that the company pays a sustainable dividend.

If it fulfils this requirement, then yes, dividend will become my passive income.

Why is this a passive income?

Isn't it left pocket right pocket? A zero sum game?

Let's make is easy: When I decide to invest in a company, I lay out my capital for the management of the company to make money for me.

It goes on to sell its products or provides its services and makes money. 

That's passive for me because they're the one running the company. All I did was to contribute my capital to own a tiny stake in the company.

And they'll help me make money. Out of which, part of the profits made on my behalf is returned to me in cash (dividends).

What's passive is the act of capital contribution with money being made on my behalf. Dividends are just the act of returning some of those profits.

So, Cash is King. Why do I say that?

Dividends are realised gains. Realised gains that cannot be changed by "market mood". My dividends received wouldn't suddenly diminish in value because of a suddenly "accounting irregularity allegation".

Because the market mood can affect all share prices, whether or not it actually affects the underlying business. But sensible dividends paid reflects the underlying numbers that are cold, hard and actual.

Example

==CREDIT CARD REWARD POINTS vs CASH BACK==

Dividends are like cash back earned. They're given monthly, and they'll never going to change once received.

Rate: 5%

Period: 1 year

Total spending: $100k

At the end of Year 1, I've spent $100k and received 5k in cash rebate (offset and earned).

Capital gains are like reward points. They act like promises that are perpetually changing and mean nothing until fulfilled.

Rate: 5%

Period: 1 year

Total spending: $100k

At the end of Year 1, I've decided to redeem my points.

Alas, the credit card company decided to revise their redemption catalogue and the rate is now 2.5% instead of 5%.

My points are expiring. I've no choice but to redeem my points at 2.5% instead.

You're lucky if they've merely revised the rate. How many times have we wanted to redeem our points, only to find the reward catalogue EMPTY?

Aiyoyo!

Maybe that's why I've always chosen credit cards with cash back. That gels perfectly with my investing mantra as well.

LGRT Sep 15 Report Card - Steady Dividends

	Name	Portfolio %	Average price ($)	Div Yield on cost
1	Singtel	15.26%	3.69	4.74%
2	M1	15.56%	3.63	5.20%
3	Raffles Medical	9.11%	4.13	1.09%
4	SATS	8.57%	3.11	4.50%
5	Parkway Life	6.45%	2.34	4.83%
6	Sembcorp Industries	6.28%	4.56	3.51%
7	Colex	5.83%	0.321	1.56%
8	StarHub	5.58%	4.05	4.94%
9	Design Studio	5.44%	0.54	12.01%
10	CapitaMall Trust	5.36%	1.95	5.59%
11	Vicom	4.16%	6.04	4.35%
12	Sheng Siong	3.56%	0.68	4.48%
13	UOB	3.18%	23.05	3.90%
14	DBS	2.45%	23.06	3.38%
15	Old Chang Kee	2.39%	0.87	1.73%
16	SIIC Environment	1.38%	0.20	0%


Expected Annual Dividends: $3,667 ($266/month)

Dividend Yield: 4.40%

Actions:

Sold off Thai Beverage to lock in gains (it was taking less than 5% of my portfolio anyway) and freed it for other investments.

Bought Singtel at $3.50 as I thought it was still a solid business.

Dividends increased:

Monthly dividend increased to $266/month from $254/month due to the purchase of Singtel and selling of Thai Beverage which is a low yielding stock.

Focus:

In this volatile period, I'll be continuing to focus on good businesses (3 local banks) with considerable dividend yield, and Telcos. I'll also pick up Sheng Siong should it fall to the 60 cents range (though I doubt so). 

Looking to offload OCK and SIIC (both low yields) when prices are right. But since they hold some portion of my portfolio, I've no qualms about holding them.