Singapore's Population Statistics - The Rise of Foreign Talent

Singapore adopts an open immigration policy with a strong belief in attracting “foreign talent” to drive the country's economic growth. As shown below, this has contributed to a consistent growth in the number of non-residents in Singapore since 2003, rising from 748 million to about 1,005 million in 2007, for an annual growth rate of about 7.7%.


The % of the Singapore Population who are non-residents has also been on the rise, recently breaking through the 20% mark in 2007 to 21.48%.

At the current rate, the % of foreigners in Singapore looks set to rise significantly, as the country continues to import "foreign talent" - both cheap foreign labour and senior executives - to boost the population and to drive the country towards a knowledge-based economy, and target wealthy foreigners to grow its tourism, private banking and premium real estate businesses.

The % of foreigners in the country could easily rise to 25%, and even 30-35% in the coming years.

All statistics are publicly available from SingStat.

Two Videos on Private Equity

World Economic Forum Davos: The Globalization of Private Equity


Berkeley China Initiative: Private Equity in China

Two Videos on Oil

Recently I wrote two posts on companies operating in China's Oil industry, China Oilfield Technology and RH Energy.

For those who are interested in this sector, below are two lengthy videos on the global oil industry: its business, economics, politics.

China vs US: The Battle for Oil (50mins)


Securing the International Oil Supply - Conference at Univ. of Chicago (1.5hrs)

Even Central Americans Want to Learn Mandarin

I previously blogged about the increasing importance of the Mandarin language, due to China's economic ascension. Now, even the people of Panama are considering making it compulsory for their children to learn Mandarin as a 3rd language.

Mandatory Mandarin lessons for Panama kids?

PANAMA CITY - LEARNING Mandarin could soon be compulsory for schoolchildren in Panama, in a bid to prepare the Spanish-speaking nation for China's growing importance as a trading partner.

Panama's National Assembly will next week debate a Bill to make Mandarin lessons obligatory in all government-run primary schools in the trade-dependent nation.

Mandarin is the official language of both China and Taiwan, and though Panama has no diplomatic relations with Beijing, China has major interests in its transport and shipping sectors.

Congressman Arturo Arauz, who drafted the proposal, said it would help prepare Panama for a 'new linguistic order' prompted by spectacular economic growth in China.

'We cannot ignore that a lot of our trade is with Asia,' he said. 'In 20 years' time, the world is going to be a very different place.'

Under the proposal, children aged between six and 11 would learn Mandarin for a trial period of 10 years.

English would continue to be taught in schools as a second language.

REUTERS

If you are Singaporean Chinese and you don't speak fluent Mandarin, you better start working on it!

Temasek Watch: Indonesia Accuses Temasek Of Monopoly

Indonesia Accuses Temasek Of Monopoly

(RTTNews) - Singapore investment company Temasek Holdings has been accused of violating Indonesia's anti-monopoly laws through its subsidiaries' shareholdings in two of Indonesia's largest mobile telecommunication operators, according to the Singapore News.

Following a 120-day probe, Indonesia's Anti-Monopoly Commission (KPPU) issued a 109-page report that stated that Temasek subsidiaries Indosat and Telkomsel, which dominate Indonesia's mobile sector, represent a conflict of interest.

Temasek subsidiaries own a 42 percent stake in Indosat and a 35 percent stake in Telkomsel. A total of 10 companies compete for shares of the Indonesian market worth US$5 billion.

Temasek has denied the charges, replying that Indosat and Telkomsel both have their own boards and function independently.

The charges have been submitted to an independent council that will deliver a verdict next month.

Original source is here

Business Times - 10 Oct 2007

Temasek to defend against Indonesia's ruling

SINGAPORE - Singapore's state investment firm Temasek Holdings said on Wednesday that it would defend itself against the findings by Indonesia's anti-trust body KPPU that it had violated the country's anti-monopoly laws.

'Temasek Holdings will vigorously defend its legal rights at all opportunities and in all available legal forums. As legal counsel for Temasek Holdings, I will be seeking clarification from KPPU on this matter,' Temasek said in a statement to Reuters, quoting its lawyer Todung Mulya Lubis.

'The claims against Temasek Holdings are baseless and without merit,' the email said.

Singapore's state TV reported late on Tuesday that Indonesia's anti-monopoly body KPPU had found that Singapore's Temasek violated the country's anti-monopoly laws through its stakes in two Indonesian telecommunications firms.

For rest of story, click here (subscription may be required)

Intangible Asset Valuation: The Value of Female Beauty

I found the article below on one of my readers' blogs.

I think it is a very funny post that properly applies the principles of intangible asset valuation, including accelerating depreciation and present value.

It also discusses how to properly finance a rapidly depreciating intangible asset - leasing might be better than an outright acquisition.

Enjoy :)

----------------------------------------

THE QUESTION

What am I doing wrong?

Okay, I'm tired of beating around the bush. I'm a beautiful (spectacularly beautiful) 25 year old girl. I'm articulate and classy. I'm not from New York. I'm looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don't think I'm overreaching at all.

Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But that's where I seem to hit a roadblock. 250,000 won't get me to central park west. I know a woman in my yoga class who was married to an investment banker and lives in Tribeca, and she's not as pretty as I am, nor is she a great genius. So what is she doing right? How do I get to her level?

Here are my questions specifically:

- Where do you single rich men hang out? Give me specifics- bars, restaurants, gyms

- What are you looking for in a mate? Be honest guys, you won't hurt my feelings

-Is there an age range I should be targeting (I'm 25)?

- Why are some of the women living lavish lifestyles on the upper east side so plain? I've seen really 'plain jane' boring types who have nothing to offer married to incredibly wealthy guys. I've seen drop
dead gorgeous girls in singles bars in the east village. What's the story there?

- Jobs I should look out for? Everyone knows - lawyer, investment banker, doctor. How much do those guys really make? And where do they hang out? Where do the hedge fund guys hang out?

- How you decide marriage vs. just a girlfriend? I am looking for MARRIAGE ONLY

Please hold your insults - I'm putting myself out there in an honest way. Most beautiful women are superficial; at least I'm being up front about it. I wouldn't be searching for these kind of guys if I wasn't able to match them - in looks, culture, sophistication, and keeping a nice home and hearth.

it's NOT ok to contact this poster with services or other commercial interests
PostingID: 432279810

-----------------

THE ANSWER
Dear Pers-431649184:

I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament. Firstly, I'm not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here's how I see it.

Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here's why. Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here's the rub, your looks will fade and my money will likely continue into perpetuity...in fact, it is very likely that my income increases but it is an absolute certainty that you won't be getting any more beautiful!

So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you're 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!

So in Wall Street terms, we would call you a trading position, not a buy and hold...hence the rub...marriage. It doesn't make good business sense to "buy you" (which is what you're asking) so I'd rather lease. In case you think I'm being cruel, I would say the following. If my money were to go away, so would you, so when your beauty fades I need an out. It's as simple as that. So a deal that makes sense is dating, not marriage.

Separately, I was taught early in my career about efficient markets. So, I wonder why a girl as "articulate, classy and spectacularly beautiful" as you has been unable to find your sugar daddy. I find it hard to believe that if you are as gorgeous as you say you are that the $500K hasn't found you, if not only for a tryout.

By the way, you could always find a way to make your own money and then we wouldn't need to have this difficult conversation.

With all that said, I must say you're going about it the right way. Classic "pump and dump." I hope this is helpful, and if you want to enter into some sort of lease, let me know.

Update: This article has made the world news on the BBC, and on the New York Times.

Mermaid Maritime: IPO Summary and Valuation

Business Overview

Mermaid Maritime (MM) is a leading provider of drilling and sub-sea engineering services for the oil and gas industry in South East Asia. Over the last five years, MM has grown significantly in the areas of sub-sea engineering, and, more recently, drilling services for the offshore oil and gas industry as well as in training and technical services. MM has established ourselves as a company recognized by the industry for high quality services, delivered safely and efficiently. MM has developed a strong blue chip client base that includes some of the world’s largest oil and gas-related companies. Clients such as Chevron, CUEL and PTT Exploration and Production PCL each accounted for 5.0% or more of MM’s sales in any one of the periods under review. Some of MM’s other clients include BP, Shell, ExxonMobil, Saipem, Transocean, Petronas and Amerada Hess. MM operates throughout South East Asia, primarily in Thailand, Indonesia, Malaysia and Vietnam.
MM provides drilling services through its majority-owned (95.0%) subsidiary, Mermaid Drilling Ltd. (“MDL”), which currently has two tender rigs. MM provides sub-sea engineering services through its wholly owned subsidiary, Mermaid Offshore Services Ltd. (“MOS”). MOS provides sub-sea inspection, repair and maintenance services, light construction services and emergency repair and call out services in South East Asia. MOS’ fleet consists of four vessels which it owns, in addition to one DP construction vessel and one ROV/air dive support vessel, both of which it charters. The flagship vessel in its fleet is the DP DSV Mermaid Commander, which has an in-built saturation diving system and rough weather capabilities. In addition, MOS owns one portable saturation diving system, seven air diving systems and seven ROVs.

MM has built and now operate a world class facility at our operational base in Chonburi, Thailand. This facility allows MM to control its own maintenance and refurbishment requirements of equipment and, more importantly, the facility’s geographical location allows us to mobilize expeditiously and efficiently to MM clients’ locations. MM has also established shore base support functions in (i) Kuala Lumpur, Malaysia; (ii) Songkhla, Thailand; and (iii) Jakarta, Indonesia to support our geographical expansion. To support MM’s mobile operations, these shore base support functions can be moved at short notice.

Major Risk – Tiny Fleet

MM only has two tender rigs, and downtime of one or both of these rigs could adversely affect MM’s results of operations. For example, MTR-2 is experiencing a period of downtime that commenced in July 2007 as a result of an agreement with Chevron Thailand Exploration and Production Ltd (“Chevron Thailand”) to meet certain technical specifications upon the transfer of MTR-2 from its previous client. To meet these specifications, MM relocated MTR-2 to inland facilities in July 2007. In addition to completing these specifications, MM also decided to commence the dry-docking and SPS for MTR-2. MTR-2 is expected to resume operations in November 2007. Further, MM’s tender rigs may experience downtime for other reasons, such as the crane boom incident on MTR-1 in September 2006 and the fire on MTR-1 in June 2007

Competition

The market segments and region in which MM operates are highly competitive. Pricing is often the primary factor in determining which contractor is awarded a contract. Some of MM’s competitors are larger than it is, have more diverse fleets or fleets with generally higher specifications, have greater resources, have greater brand recognition and greater geographic reach and/or lower capital costs than MM has. This allows them to withstand industry downturns better, compete on the basis of price or relocate, build and/or acquire additional assets, all of which may affect MM’s sales or profitability. If other companies in MM’s industry relocate or acquire vessels for operations in South East Asia, levels of competition in South East Asia may increase and MM’s business could be adversely affected. Local oil and gas services competitors in each country MM operates in may have more domestic experience and better relationships with clients.

Industry

MM’s business is dependent upon the conditions of the oil and gas industry, in particular the level of activity in oil and gas exploration, development and production and sub-sea inspection and maintenance programs in South East Asia where we are active. The level of capital expenditures for oil and gas exploration, development and production largely depends on prevailing oil and gas prices and our clients’ expectations of prices in the future, each of which is influenced by a variety of factors, including the actual and anticipated production, supply and demand for oil and gas, and worldwide economic conditions. Oil and gas prices are volatile, which have historically led to significant fluctuations in expenditures by clients for oil and gas drilling and related services. A sustained period of low drilling and production activity or the return of lower oil and gas prices could impact the level of oil and gas exploration, development and production, as well as result in the cancellation of current and planned projects and impact MM's business and results of operations.

The niche market in which MM operates is less sensitive to slowdowns in the industry as compared to oil and gas exploration activities. Even in the event of a slowdown in oil and gas exploration activities, MM clients’ planned projects may not be curtailed. Further, our sub-sea engineering services also perform inspection and maintenance services. MM anticipates that there would be a continued demand for such services even during periods of low drilling and production activity as many of MM’s clients would have to continue to meet their committed production levels under their supply contracts as well as comply with subsea infrastructure inspections requirements.

Accordingly, demand for services is subject to fluctuations that generally affect the oil and gas industry, with periods of high demand, short supply and high rates often followed by periods of low demand, excess supply and low rates. Further, the entry into the market of newly constructed, upgraded or reactivated tender rigs or vessels would increase market supply and may curtail the strengthening of rates or reduce them. Periods of low demand intensify the competition in the industry and often result in assets being idle for periods of time or being utilized at low rates. In addition, in depressed market conditions, a client may no longer need a tender rig or vessel that is currently under long-term contract or may be able to obtain a comparable service at a lower rate. Clients may then seek to renegotiate the terms of their contracts or avoid their obligations under those contracts.

Financials

The following information is extracted from the very detailed information provided in the prospectus, with the exception of FY2007E. Assuming the IPO priced at its maximum of $1.56:

(click for full image)

The projection and IPO pricing gives a pre-IPO trailing P/E pf 45.01 and P/B of 9.06. The extrapolation of HY07 results to FY07 gives the IPO a pricing a forward P/E of 18.52 and P/B of 8.18.

It should be noted that the 2H07 projection seems quite aggressive. This gives an ROE of about 44% and ROA of about 24%. I am not sure that this is sustainable in the long run. Even with this aggressive projection, the IPO pricing is not cheap at 18.5x forward earnings. The company's investment bankers seem to be extremely confident that Mermaid will continue to grow rapidly in the future.

To be sure, Mermaid is still a small company and has plenty of room for growth. The IPO valuation may come to look conservative in the future. However, significant risks abound for a company with only two drilling rigs.

This looks like a high risk/high reward IPO.