Serious The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the money!!

[Papsmearer]

I figured it must be bad at STomachsick Holdings by now, but I never figured it to be this bad. It must be bleeding red from all losses from its assets in China. This sorry excuse to transfer assets from SMRT to LTA is just a pathetic ploy to get a $1 billion cash infusion into the Temasek coffers. Once this one goes through, i expect Temasek to tap the taxpayers for more money in the future. It already received money from the sale of NOL, and now it will gut SMRT for $1 billion.

We know that LTA orginally was set up with MOT money to run MRT. They incorporated SMRT whihch they later transferred to Temasek at a nominal price very much below market value. Some of these assets are the same ones proposed to be sold back to LTA now. This was the first asset infusion to Temasek and created much wealth for them while they did nothing to earn it.

Temasek then sold of 46% of SMRT to public shareholders and pocketed the money. essentially, Temasek monetarized these assets it received cheaply from MOT/LTA. This was the second asset infusion, the cash received from this public sales of shares.

Fast Forward to 2016 now. Temasek is in so much trouble, i am going to guess its from its poor performing China assets, that it has to resort to this desperate measure to squeeze another $1 billion out of the SIngapore taxpayers. They trot out the king of morons to bluff and threaten Singaporeans that it costs SMRT too much money to operate its infrastructure that it was gifted, and that the future unprofitability will result in lower quality service provided to riders. He conveniently forgets to mention that his inexperience and incompetence might be the very cause of this future unprofitability. In any case, he has been instructed by his boss WHore Jinx to make the announcement.

So they want LTA to pay $1 billion for assets that to begin with were owned by LTA. What a joke. Its like a son forcing the father to buy back the house that the father owned and gifted him originally. You see how sick and unscrupulous the PAP really is. At this rate, they will run out of assets to sell pretty soon. Who is next? NOL and SMRT have already been tapped for money. SIA and Changi Airport next?

Its really time for voters to see that the only thing the PAP is exceptional in is deceit and creative accounting. There is no real talent at work here, no real improvements or returns are being generated.

 

[Papsmearer]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

SINGAPORE - After more than four years of intense negotiations, the Government and rail operator SMRT Corp have reached an agreement to switch to a dramatically different arrangement that is designed to improve service.
The Transport Ministry announced on Friday (July 15) that the Land Transport Authority will take over all operating assets of the North-South, East-West and Circle lines as well as the Bukit Panjang LRT Line, from SMRT for $1.06 billion. This is the the net book value – or current value – of the assets, plus GST.
In turn, SMRT will run the trains on these lines and retain a share of the earnings. But it will have to pay a licence charge to LTA annually. The fee, which varies according to SMRT’s profitability, will go into a sinking fund for asset replacement.

 

[Papsmearer]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

Its note worthy to re-examine these articles by Chris Balding, and see how this scam really works.


[h=1]Temasek and the Case of the Undervalued Assets[/h]Posted on April 22, 2013
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I am amused and intrigued by people who have no understanding of the implications of their own arguments or do not carefully read what I have written. In his “rebuttal of a rebuttal”, Mrs. Snook further attempts to convince myself and others about the correctness of her position that Temasek undervalued assets when it received them from the Singapore government therefore allowing Temasek to earn 17%. Let us take a minute and explore his position and its importance.
Let me begin by clearly stating: the analysis of Temasek receiving undervalued assets to boost their claimed returns is entirely true. Read my previous rebuttal (and related posts about Temasek accounting here and here) on the matter and you will clearly see that I never disagree with her or rebut her facts. (Expecting her to respond as she did, I was kind of saving this part in reserve. My apologies if that means I played a little dirty). The only thing that I do is warn her about the implications of what her argument means. Now let’s explore the facts and additional implications of what Temasek receiving undervalued assets means.
A basic argument is made about the original legacy holdings of Temasek with a simple illustration. If the owner of a $1 million in financial assets transfers them to a holding company that they own at a nominal value of $100, nothing has changed. The original owner of the assets, owns them, which owns the assets so there has been no change in the wealth of the owner. The same argument is made about Temasek companies transferred from the government. As is written “it was just an administrative exercise with no implications for the tax payer or citizen….I now own a company which owns $1 million in shares. I have lost nothing. I am still a freaking millionaire.” As elegantly freaking stated as that is, let’s examine this claim closer.
First, this poorly constructed analogy overlooks the implications of how returns are claimed. Let’s assume the owner of $1 million in unlisted financial assets, as the Singapore government was in 1974, transfers its ownership to a company she owns for a nominal value of $100. There is no change in wealth. However, one year later, the owner cannot go out and claim that his company has an annual return of 999,900%! This would be considered absurd by everyone who knew how that return was calculated. Yet this is exactly what is claimed. When Temasek receives assets at a “zero or nominal value” which are worth significantly more and then claims high returns, this is not a true or accurate picture of its actual performance.
Second, the reason I agree so strongly with the theory that Temasek is receiving undervalued assets is that purchasing or receiving undervalued assets is one of the best ways to cover up investment losses. Let’s take a hypothetical situation. The owner of the $1 million in unlisted assets transfers it to her new investment company at a nominal value of $100 and convinces her grandmother to give her some money to invest in the stock market. Let’s assume, hypothetically of course, this new investment mogul guarantees Grandma a return of say 2.5% on her investment of $10,000. This talented CEO takes this $10,100 into the stock market and let’s assume she buys some bank stock. Then assume that the bank stock bought by this investment genius declines in value to say $5,000 a loss of 50.5% at which point it is sold. Rather than going and telling Grandma she lost a lot of money, this talented investment guru revalues the unlisted assets from $100 to $6,010. The official capital is only $5,000 but after revaluing the unlisted assets, the firm value is $11,010 allowing the new firm to declare a 10% return. Grandma is impressed and keeps investing with her talented offspring. This firm with the enormously undervalued assets as a cushion, can endure a lot of investment losses before encountering problems.
The question then becomes has this undervaluation of assets acquired or received by Temasek actually taken place and has the tax payer been hurt by this practice?
Due to the lack of data and their refusal to release the data, we cannot analyze in great detail the value of the assets transferred from the Singapore government at Temasek’s inception. However, given the number of companies that were transferred, the aggregate value they were transferred at, and their size, it is quite probable they were significantly under valued when transferred to Temasek. This would be a good start to many years of over stating returns and covering up losses.
Worryingly, this pattern of the Singapore government providing or selling Temasek significantly undervalued assets continues to this day. There are two recent and obvious examples of how this behavior which is used to pad Temasek returns and harm the tax payer. First, the Singapore government is paying $1.1 billion SGD to purchase buses for the SMRT. The problem with this arrangement is that SMRT is a publicly listed, private company owned by Temasek that declared a $120 million SGD annual profit for the year ending March 31, 2012. The government of Singapore is obviously subsidizing the profits of a Temasek company by transferring public assets to a private company incurring a tax payer loss. To put this arrangement in perspective, if SMRT had to pay a 10 year bond with annual payment at a 4% interest rate on the $1.1 billion SGD in buses: it would pay $136 million SGD in principal and interest costs making its yearly profit disappear. Given this information, it seems highly unlikely SMRT would have a $2 billion SGD market capitalization if the Singapore government was not subsidizing Temasek profits by billing the taxpayer for the capital used by a private company.
Second, as was pointed out by Steve Wu, Temasek with the help of a $3.2 billion SGD capital injection from the Singapore Ministry of Finance paid $3.2 SGD billion to acquire Changi airport. This transaction is notable for a few reasons. For instance, according to one document from Changi Airport, the government since the late 1970’s has invested approximately $5.68 billion SGD. This implies that in pure dollar terms, the Singapore taxpayer lost approximately $2.5 billion SGD. If we however assume, a purely hypothetical return on these airport investments by the government of 5% or 17%, the Singapore tax payer would have had an asset worth $13.3 billion or $202 billion respectively. If the airport “investment” by the government earned a low yielding 5%, the Singapore taxpayer would have lost $10.1 billion SGD and if it earned the Temasek rate of return an astounding $198.8 billion loss.
Furthermore, by numerous valuation methods, it appears that the Changi Airport was significantly undervalued. For instance, in its first full year of operation, the Changi Airport group earned $337 million SGD. That is a 10.5% rate of return an incredible return for an airport. Its profits ending 2012 was $553 million a 17% cash flow rate of return while the tax payer incurred a $2.5 billion SGD loss. Temasek obviously received a sweetheart deal in acquiring Changi Airport at the expense of the tax payer.
To briefly recap the implications of receiving assets at “zero or nominal cost”. First, Singapore tax payers are suffering losses by subsidizing Temasek profits. Second, Singapore and Temasek are engaging in Mickey Mouse accounting. Third, Temasek returns are inflated by the “zero or nominal cost” assets it received. Fourth, Temasek accounting does not consider the cost of capital.
I completely agree that Temasek and its subsidiaries are receiving capital and companies at “zero or nominal cost”. Unfortunately, this has disastrous and chilling implications for Singapore and Temasek.

 

[Papsmearer]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

Another article by Chris Balding that explains alot. [h=1]Subsidizing Profits, SMRT, and Temasek[/h]Posted on May 6, 2014
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In 2008 during the global financial crisis, United States politicians debated whether bailing out failing banks would set the precedent of ‘privatizing profits and socializing losses’. Economists call this problem “moral hazard” when companies are not forced to recognize their risks and consequently accept higher risks knowing a third party will absorb their losses. While the debate rages about whether major US and international banks privatized the profits and socialized the losses, this is standard practice with many Singaporean and specifically Temasek owned companies.
SMRT is probably the best example of this practice within Singapore. As I have noted elsewhere, SMRT and other Temasek firms enjoy tremendous privileges that other foreign or even other Singapore firms simply do not enjoy. For many year, the Singaporean government has paid for the capital that that SMRT uses everyday. The tunnels, the rail lines, the subway cars, and buses that SMRT uses everyday have been purchased by the Singaporean tax payer.
The financial effect is simple. SMRT as a publicly listed company and a portfolio company owned by Temasek makes money only because of the generosity of the government and the Singapore tax payer. Despite having recently declared a $62 million SGD net profit for the year, SMRT depends heavily on the gifts of the Singapore tax payer through gifted buses and other infrastructure. If SMRT had to make principal and interest payments on the buses alone, it would require yearly payments of $150 million SGD. The financial effect is this: SMRT profit is entirely attributable to subsidies given to it by the Singaporean tax payer and not high quality management at Temasek. Put another way, Temasek and its senior executive are only able to declare a profit for SMRT because the Singapore government gives it money.
There are three more philosophical reasons this matter. First, most people appreciate and respect the success of other when gained through skill, talent, and hard work but resent unfairly gained benefits. This is why few people complain about companies like Apple or Google, they make a good product and compete with others. SMRT has not achieved its profitability due to providing a top quality product against fair competition, but through political manipulation and public bailouts.
Second, SMRT is socializing the risk and privatizing the profits. When losses are incurred it is the Singapore tax payer that suffers but when profits received, it is the executive of Temasek that enjoys the benefit. SMRT is placing the risk on the tax payer but capturing the benefit for itself. While individuals or firms taking individual or corporate risk should be allowed to keep those profits private or socialize risk and profits, it is truly objectionable to socialize the risk but privatize the profits.
Third, the true financial and economic cost of SMRT and related infrastructure is not being recognized. As one economist noted, if something cannot go on forever it will stop. Singapore, SMRT, and Temasek cannot maintain a loss making firm dependent on regular bail outs to report profits or eventually it will stop. By hiding the true cost of ownership, maintenance, and investment, the government is attempting to protect its Temasek owned asset rather than the tax payer.
Mass and public transport is a notoriously difficult and generally loss making industry. It is however, morally reprehensible to pretend that a company is making money and use tax payer money to create profits for the investments of family members. The people of Singapore are being defrauded by bearing the risk of investment but seeing none of the profits.

 

[mojito]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

It a simpleton's explaination. If a government owns a private company, does that make it private?

 

[dr.wailing]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

@ Papsmearer

What can Sinkies do even if they know the truth?

The husband is Chief Natural Aristocrat and chairman of GIC while his wife is controlling Teamasick.

Maybe this is the type of democracy with Asian values--as opposed to Western democracy--that Old Fart kept harping on.

 

[Narong Wongwan]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

70% voters: lu kong simi lanjiaowei? we are the smartest lah! we voted pap in pap we trust. I still got my coolie rice to eat. me happy leh, you no happy pls migrate to angmo county lor!

 

[McDonaldsKid]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

Quick thoughts on Temasek considering taking SMRT private?

 

[Papsmearer]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

@ Papsmearer

What can Sinkies do even if they know the truth?

The husband is Chief Natural Aristocrat and chairman of GIC while his wife is controlling Teamasick.

Maybe this is the type of democracy with Asian values--as opposed to Western democracy--that Old Fart kept harping on.

There is something very powerful that sinkies can do, and that is to vote against the PAP. it doesn't matter who, but just not the PAP. 30% have done that and 6 years ago, it was 40%. If it becomes 50% who vote against the PAP, they have no choice but to sit up and listen. Sometimes, the public sentiment can make a change that the PAP does not want. Do you think they wanted to axe Lui Tuck Yew? What about the relative known as WOng Cunt Stink. You think the PAP want to retire these 2 yahoos? They became so unpopular due their numerous fuckups, the PAP had no choice but to jettison them. SOmetimes, pressure, eveb if its from 30% and the alternative websites does help.

So, my answer to you is yes, they can do sonething.

 

[Papsmearer]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

Quick thoughts on Temasek considering taking SMRT private?

Yes, they might be doing that. There is an article on it.

 

[frenchbriefs]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

It a simpleton's explaination. If a government owns a private company, does that make it private?

of course its a private company,the company has been made public and the shares floated on the stock market no?it now answers to its shareholders.what does it matter if the controlling share interest happens to be temasek holdings or another entity?the government doesnt own smrt,temasek holdings owns smrt,temasek holdings is a sovereign wealth fund,it is perfectly natural for SWFs to buy up stakes in private companies and foreign companies in order to invest and grow the nation's wealth.now the only problem is that the government which is PAP is starting to get lost and confused in the illusion that they were trying to create.they now truly believe SMRT is a private corporation and yet seems to be clinging on to the past that SMRT is still a government owned entity and the trains and infrastructure are public managed assets,while forgetting that MRT's original purpose was to serve the public and transport the nation,ultimately all these is pointless and irelevant and detrimental to the sg public.they are trying to morph and twist the balance sheet into some bizzare monstrosity in order to suit SMRT's multiple personalities and schizophrenic roles.all these countless checkmating within the government agencies and SMRT and loop de looping will create a endless loop in the fabric of space and time and the mass of SMRT collapsing on itself creating a black hole or gestaltzerfall.

 

[soikee]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

Thia kong Temasek will announce within this week to take SMRT private.

 

[FangSinGuek]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

datz rite............ if mgmt of assets is so cumbersome, can always hv a new div to take care of it................... fundamentals of Mgmt!!

 

[FangSinGuek]

Re: The real Reason why SMRT wants to Transfer assets to LTA - Temasek Needs the mone

@ Papsmearer

What can Sinkies do even if they know the truth?

The husband is Chief Natural Aristocrat and chairman of GIC while his wife is controlling Teamasick.

Maybe this is the type of democracy with Asian values--as opposed to Western democracy--that Old Fart kept harping on.

VTO or wound them........ reduce them to marginal party