Corning (NYSE:GLW) – Is it worth buying at current price (A Valuation)

I had mentioned before Corning (NYSE:GLW), a stock I owned. 

The reason why I own this stock is because my evaluation of its valuation shows that it is under-valued. 

The valuation method I normally use is the “Discounted Free Cash Flow” (DCF) modelling method, which I believe works well. 

The last traded price of GLW is US$23.85. 

The latest Earnings per share (EPS) of GLW is US$1.34, and dividend per share (DPS) is US$0.34. 

At a glance, the various ratios are as follow:

Price / Book = 1.57.

Price / Sales = 3.30.

Price / Earnings = 17.8.

Based on Analysts estimate of average EPS growth over next few years (I assume 10% for next 10 years), and a discount rate of 10%, and assuming growth rate dropped to inflation rate of about 2% after 10 years, I obtained an intrinsic value of US$30.49, which implies a margin of safety of 21.8% based on last traded price. 

I tried to double-check with Benjamin Graham’s valuation method, which gives me an intrinsic valuation of US$36.14, or a margin of safety of 34%. 

Given the above, I believe current price of US$23.85 is still a good deal.  

Why Singapore stocks listed on SGX is in dire situation with cooling interest…

It has been quite long since that there is not much interest in transactions in stocks listed on Singapore stock exchange SGX. 

Why?

I suspect it may have to do with poor corporate governance regulation and enforcement.  It was like not too long ago that there are strings of companies being reported to have committed accounting fraud, financial scandals, cash purported to be deposited in the banks are actually not there, receivables and inventory that don’t really exist etc!  Despite of all that, the worst is that none of those responsible has been brought to task and before the Court in Singapore!  So basically, these people are getting away with committing all those frauds! 

Furthermore, for those stocks that have since been suspended since problems have been discovered, there does not seem to be much effort shown by SGX to get these stocks removed from suspension and being traded again. 

All the above are probably reasons why retail investors are now cool to stocks listed on SGX!  For me, for quite some time now, I have invested in stocks listed in US, UK, Germany, HK etc but not in Singapore as well.  No serious investor will want to buy/sell stocks listed on Exchanges where there are little transaction volumes and where even the locals are not even interested to participate.......…  

How useful is a CFA certificate to your investment return?

I had prepared and taken CFA Exams before, and having scrutinized all that covered in CFA from Level 1 to 3, I would say that CFA materials are useful but will not guarantee you good investment returns!  Those useful topics covered in CFA, you can read from any investment books, don't need to take CFA.  

In summary, CFA is quite useless if you think by just taking CFA, you would become a good investor and make good money from your investments!  In investment, experience and knowledge accumulated over the years is much more important than a piece of paper like CFA certificate! 

If CFA is so useful, anybody who have passed all 3 levels of CFA would be successful investors and become RICH quickly!  They can basically management their own money (just like I do) and don't have to work for other people!

How many % of Singaporeans are “POOR” in Singapore?

Recently, I saw a piece of news titled “GOVT SLAMS PROF KOH'S 30% POVERTY REVELATION BUT PROF KOH ASKS GOVT TO STOP DENYING”. 

You can read the details at this URL...

So, are there really 30% of Singaporeans who are really “POOR” and living in poverty in Singapore? 

The news said the government denied this. 

Also, recently, I saw news about this “Community Health Assist Scheme (CHAS)” being expanded and you can apply for this card to get additional subsidy for medical services/medicine etc if you are “poor” enough.  Obviously, if you are NOT POOR then you should NOT be eligible for subsidy!  After all, the subsidy is paid using tax-payers money and the government should not be providing subsidy to people who are not poor, not the middle-income families as well right? 

So, I checked what is the eligibility for obtaining this CHAS additional subsidy, and this accordingto this URL... 

“Singapore Citizens of all ages are eligible for CHAS if they meet the following criterion:

§ Household monthly income per person of $1,800 and below; OR

§ Annual Value (AV) of residence as reflected on the NRICs of $21,000 and below for households with no income.

Members of the public who are on Public Assistance (PA) scheme do not need to apply as they are already eligible for CHAS.”

Ok, so to be eligible for CHAS card, you must have household monthly income per person of $1800 and below.  Assuming the average of 4 people in a family, that means household monthly income of $7200 per month.  Wow!  $7200 per month household income is still considered “poor” enough to be eligible for additional medical subsidies from the government! 

So how many percentage of the households in Singapore are earning $7200 per month and below? 

I did a search and found at this URL... which says that:

“According to a release by the Department of Statistics, among resident employed households, median monthly household income from work increased from $7,570 in 2012 to $7,870 in 2013…”.

So, 40% or more of Singapore households are earning below $7200 per month and they are eligible for CHAS medical subsidies!  That is even more than the 30% poverty rate mentioned in the news article!  If these people are not “poor” (according to Singapore’s living costs’ standard), why should they be eligible for more subsidies?  Isn’t that a waste of tax-payers money on people who don’t deserve it? 

I leave it to all of you to think about the 2 scenarios that are contradictory:

(a) Either 40% or more of the Singaporeans are really “POOR” in Singapore that the Singapore Government deemed it necessary to provide more subsidies to them via CHAS subsidy scheme using tax-payers’ money OR:

(b) The Government is providing UNNECESSARY subsidy to people who don’t deserve such subsidy and wasting tax-payers’ money? 

Which is true? 

How to become a Millionaire at 55 years old!

 This post is on: How to become a Millionaire at 55 years old! 

It may looks like an unachievable task to many, but really, if you look at the long term of 30 years, it is really not difficult!

Yes, the recipe here is the “30 years”! 

Imagine if you could save at least $300 per month every year starting from 25 years old and invest them immediately at a compounded annual return of 12%, when you reach 55 years old (30 years later), you would have accumulated a total of $1 MILLION!

Some people would question whether a compounded annual return of 12% is realistic? 

Well, the truth is, it is realistic based on history – S&P 500 index has grown by a compounded annual return of about 12% over the past 3-4 decades.

Now, some other people will again remark that 12% is history, future return may be much lower? 

Ok, that is a valid question, so it would be good to see how much per month you need to save over 30 years for different assumed returns to achieve $1 Million, so I make a tabulation of this data as below:

Return Assumed (%)	Amount you need to save per month ($)
12%	$300
10%	$445
8%	$680
6%	$1000

Ok, it is clear that even at a very low return of 6% (which is easily achievable), you only need to save $1000 per month to achieve $1 Million in 30 years time! 

So, how difficult is it to save $1000 per month for the general population in Singapore?