Friday 28 December 2018

(Post 71/week 53)Investment project updates(Peer to peer lending):Moolahsense(My eleventh campaign)

Moolahsense(My tenth campaign with Moolahsense)

Note*the company name will not be revealed just like the previous post as my money are still inside moolahsense, haha(this is not a sponsored post by the way)

Issuer summary
Date of listing:Mar 2018
Tenor: 12 months
Note type: Callable

Quoting from the SGYoungInvestment
  • Callable: In a Callable note, an issuer has an option to early redeem the note on a quarterly basis. If the note is not early redeemed, the issuer pays a quarterly interest. The principal will be fully repaid on the quarter that the redemption is early called or at the maturity date.
Assume that you invested $10k in a campaign at a final note rate of 13.5% p.a. in a Callable note.(Below is a very useful illustration)

Repayment frequency: Quarterly
  • Repayment frequency: Every 3 months
Target interest rate:16%P.A

Quoting from Moolahsense website
  • Target interest rate: The maximum rate the issuer is willing to provide the interest on the principal subscription amount which the issuer wished to obtain, as notified in writing by the issue to Moolahsese
Purpose: Working capital

Quote from valuepenguin:
  • Working capital: It is a concept to describe a business ability to cover its short-term operating costs
  • E.g For this campaign, I have funded $100 into it
  • As the target interest rate is 16%, this means that at the end of the tenor, which is 12 month I will expect to receive $116
  • 100%=$100
  • 16%(Interest for 12 month/1 years)=$16.00
  • 116%(The Principal + the interest)=$100+ $16.00=$116.00
  • However, a callable note will only pay the interest and you can redeem (principal) anytime,or you can simply just wait until the end of the tenor to get back the (principal)
  • Do note that interest is automatically credit to your moolahsense account holdings
Summary company profile

  • The issue is a company incorporated in Singapore in 2007. 
  • The Issuer is in the engineering and manufacturing industry and has around 20 employees.
  • The Issuer specialises in the design, engineering and manufacturing of components and parts for the aerospace, semi-conductor, automobile and oil & gas industries.
Detail of purpose

  • The Issuer seeks funds to provide working capital to perform new sales orders which it has received. The total loan amount sought by the Issuer is SGD 200,000. In addition to this campaign of SGD 100,000, the Issuer may be launching additional campaigns.
Financial statement

Will only reveal a part of the financial statement due to confidentiality. As I have mentioned a few weeks ago in my post, that I only mainly use this three ratio: current ratio, quick ratio and debt to equity ratio to decide in investing in a campaign, hence I will be showing its ratio below

The ratio is as follow(left side of the column is for the year 2017/right side of the column is for the year 2016)

Year 2017/Year 2016
(Current ratio 2017:4.93),(Current ratio 2016:3.14)

  • A simple ratio of current asset divide by current liabilities
  • Current liabilities are debt that needs to clear in the short term(in a year)
  • If a company has a current ratio less then 1.0, do not invest in it
  • If a company has a current ratio more then 2.0, May consider investing in it
  • The higher the current ratio, the better
  • For the current ratio of 2016:4.93, it is higher than the recommended range(>2.0)
  • For the current ratio of 2017:3.14, it is higher than the recommended range(>2.0)
(Quick ratio 2017:4.93),(Quick ratio 2016:3.14)

  • The quick ratio is almost similar to current ratio except that it is assumed that the company does not sell its inventories(e.g Toyota inventory is its car) or stock, it is still able to fulfill its debt
  • If the company has a quick ratio of 0.75 and below, do not invest in it
  • If the company has a quick ratio of 1.25 and above, May consider investing in it
  • The higher the quick ratio the better
  • For the quick ratio of 2016:4.93, it is higher than the recommended range(>1.25)
  • For the quick ratio of 2017:3.14, it is higher than the recommended range(>1.25)

  • (Total liabilities/equity 2017:0.79),(Total liabilities/equity 2016:0.95)

  • The debt ratio is calculated by total liabilities divided by the equity
  • If the company has a debt ratio of 1.5 and above, do not invest in it
  • The company should essentially have a debt ratio of 1.0, if the debt ratio is below 0.75, do consider investing in it
  • The lower the debt to equity ratio the better
  • For the Total liabilities/equity of 2016:0.95 it is out of the recommended range(<0.75)
  • For the Total liabilities/equity of 2017:0.79, it is out of the recommended range(<0.75)

    Why did I invest in this loan?
    • The current ratio and quick ratio of 2016 and 2017 is higher than the recommended range, however, the total liabilities/equity of 2016 and 2017 are out of the recommended range/The total liabilities/equity are improving from 2016 to 2017, hence I believe it will continue to improve in 2018. And so, I have decided to invest in this campaign
    • As the moment of writing, this loan is still ongoing and there is no late payment so far
    Repayment schedule?

    link on how too read the effective interest rate for moolahsense:

    As this is a callable note, that is different from the usual equal installment, the company will pay out an interest every month and you can redraw your principal anytime, or you can simply just collect interest until the end of the campaign

    Total net payment=$102.96+$3.96+$3.96+$3.96=$114.84

    remember I stated at the top of the post that the amount to be returned to me is $116, well $114.84 seem pretty close as about $1.16 are used to pay the moolahsense servicing fee

    For callable campaign, you get exactly the amount stated in the campaign interest(no funny trick unlike equal installment campaign)

    that's all for this campaign, left a few more moolahsense campaign and we are done!

    1 comment: