The SMRT Secret

WARNING: Wall-Of-Text post
 
I have a yet another dark secret to reveal. 
 
I'm a owner of 1000 shares in SMRT. That makes me a shareholder of SMRT.
 
What's 1000 shares though? It's peanuts! Not that kind of peanut of course. I paid $1.6k for it. Nothing noteworthy enough to haolian in a public blog I know but I'll like to share a short tale behind this.
 
I would never forget a short debate with my best buddy a few years back about this investment decision. His stand was that it was unethical for me to be part of the shareholders of the SMRT, a corporation that strived to serve their stake and shareholders instead of, rightfully, their customers.
 
My sin
 
By being a shareholder of the SMRT, I was indirectly guilty of causing the discomfort and miseries of commuters everyday. I couldn't rebut his point because he was right and I agreed with him. But I offered the reason behind my decision. 
 
My justification
 
As a customer of the SMRT myself, I was subjected to unreasonable price hikes and I could not do a single thing about it. No one in the government seemed to be interested to stop these crap. The only thing I could do to protect myself against these hikes was to become one of the assholes holding their shares.
 
SMRT dividend history
If you look at the dividend history of SMRT, I received $85.00 for my trouble in 2010 as dividends. Using these dividends I collected from the SMRT would, I reckon, be somewhat a hedge against these price hikes. This suck, but I had to do it. I'm just a man and I have only 1 vote in every General Election.
 
As a shareholder of any company, I'll check their annual report every year. Since I bought their shares, SMRT has broken their net profit record year after year after year. From an investor point of view, it's ok to hold the shares, the company is doing well. From a consumer point of view, it is infuriating. 
 
I'm sure my buddy finds me hypocritical complaining about the year-on-year record profits but my heart is true. I'm with the consumers instead of shareholders. I know it doesn't sound convincing but hey, somebody else worked for the Japs as a translator didn't he? If he gets worshipped like a god I should get some empathy at the very least no?
 
My action:
 
When a CEO of a company that you invested in leaves the company, you have to sit up and take note. Something is happening and you have to make a decision to sell up or not. That's the investment basic. We know what happened a couple of days ago, Mr Saw resigned. Thus it is time for me as an investor to make a decision.
 
I'm not trained in technical analysis yet, I may try picking it up in future. But I have some useful insider info in the form of a farewell letter from Mr Saw as fundamental analysis information. Let's examine this:
 
 
Dear Colleagues,
 
In December 2011, I celebrated my 9th anniversary with the Company, which I have grown to love and am very proud of.  It has been my privilege and joy to serve with you and I am humbled by your dedication and commitment despite the challenging environment in which we operate. It moves me to see how you put your heart into your work; serving our customers to the best of your abilities. 
 
And it is with a heavy heart that I write this letter to you.  I have tendered my resignation and while my executive responsibilities will conclude on 6 January, I will remain with the Company to assist(appointing the cause to investigate the cause. World class government!) the relevant investigation teams and the Committee of Inquiry (COI) in their review of the causes of, and responses to, the disruptions to train operations in December, and with the transition to new executive leadership.
 
I believe the foundation for continuous success in SMRT has been firmly laid and I take pride in our collective achievements since 2002 up to now.(Self praise and forgot about collective failures) The Company has remained strong operationally and financially with solid performances in Trains and Commercial Divisions. Buses, Taxis and Automotive Services have continued to improve in a difficult operating environment.
 
The success of a leader is measured by the performance of the organisation he or she leaves behind and I feel the management of SMRT is in good hands.(Shameless self-praise again) We have an outstanding team led by Khoo Hean Siang in Trains and Teo Chew Hoon in Roads, both of whom are delivering continuous growth through exemplary management in what many consider to be unexciting businesses. The only regret I have is that I will not be here to see through the realisation of all of SMRT’s business potential in the coming years.(She didn't regret  dismissing valued staff during her tenure?)
 
The recent MRT disruptions have put our company under close public scrutiny, and we are subjected to on-going investigations and a public inquiry. Despite the negative attention on the Company, almost on a daily basis, you continued to serve with a heart. Unfortunately, amidst all the focus on the recent lapses, the outstanding work that is being achieved by you and your teams has gone largely unnoticed and unrecognised. I wish to take this opportunity to thank you for your dedication, perseverance and professionalism. 
 
As promised, although I have resigned, I will fully participate in all the investigations.I will also work with our teams to make improvements and necessary changes that will allow us to better serve our customers.(What?! Wtfkena sacked resigned still can make improvements and changes?) I am confident that together, we will come out stronger.
 
With my departure, the Board has appointed Mr Tan Ek Kia, a seasoned professional, as Executive Director and interim CEO to oversee the company until a new CEO is found. This ensures SMRT continues to be in good hands.
 
Lastly, I would like to offer my heartfelt appreciation to each and every one of you, the Board of Directors and Management Committee, whom I’ve worked closely with, for your generous support.  There is no doubt in my mind that the best of SMRT will be in the years ahead of us.(I've heard this before. "Confidence for the future", "More good years ahead!" I'm uncomfortable..) 
 
Phaik Hwa
 
My analogy
 
My thoughts after reading this farewell letter: This guy has no shame. He insisted that consumers do not appreciate SMRT's good work.
 
"the outstanding work that is being achieved by you and your teams has gone largely unnoticed and unrecognised."
 
Stop and think for a moment. How does customers give a company recognition? By being returning customers. Haven't we been returning customers? Well, If he wasn't referring the consumers, it must be the Land Transport Authority. Screw the damn LTA! Either way, making the customer happy isn't her priority - right to the last second of her ... service, if any.
 
"The recent MRT disruptions have put our company under close public scrutiny"
 
Saw is dead wrong. It wasn't the recent MRT disruptions. The close public scrutiny started way before trains started breaking down. There were a spate of complains about overcrowding for years. He refused to acknowledge it and refute the claims with his statements such as "This isn't crush load," and "People can board the train, it is whether they choose to." If anything, Saw was the intrinsic reason behind public anger towards SMRT.
 
My conclusion
 
Consider this: 
 
1. There was no salary revision or adjustment for staff within Saw's stint in SMRT
 
2. Only 8% of the profit are budgeted for maintenance at her decision. Much of this came from the retrenchment of staff from the maintenance team.
 
3. The retrenchment sparked a mini riot in Bishan deport which went unreported. Staff obviously were unconvinced of her leadership.
 
4. Staff medical benefit for whole family remained unchanged at $350/year for 2 decades.
 
5. Price hikes for services over the years - you can't count them with a hand.
 
6. Prior to his stint, staff could buy SMRT shares between 1-5 lots at a discount, subjected to appraisal. This benefit was axed with only management staff allocated with shares. The ugly face of elitism.
 
7. The 3rd rail that caused the 'first major disruption in 25 years' was discovered to be unstable 2-3 years ago. It required upgrading or replacement yet nothing has been done to it because no budget was set for it. Until the claws gave way. Then they used famous invincible cable ties to do the stuff.
 
8. Buggies in 3 SMRT depots are so worn out but the management refused to change them. If these junk requires COE, they would be running down their 2nd COE in no time.
 
Amidst all these cost cutting at the expense of staff and customers, where did all the money go to? Shareholders like me? Balls! If you buy the stock at recent prices ($1.75 or so), the dividend yield is a mere 4%+. Is that a lot? My savings in my Australian bank account gives me 6% per annum.
 
So where did all the money goes to? Besides his $1.86 million per year salary and who knows how many months bonuses, where else? I didn't dig. I'm just a mere amateur investor. As an investor and consumer, I'm displeased with my findings.
 
My decision:
 
Priceless monopoly, but dodgy management. I have no faith in the next CEO, probably yet another relative or friend of the ruling family. Sell!


So be it, good riddance
*Edit: Yeah I know she is a woman now, on closer look. Stop telling me already

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