MoolahSense investing Thread

[RMCWMR]

Agree on the automation part if not all credit analysts will be out of jobs, though I think MoolahSense is driving it from the marketing angle to put in as many buzzwords as they can.

Moneylenders don't lend at 10% p.a. They lend at 4% per month (>50% EIR)
https://www.valuechampion.sg/average-interest-rates-licensed-money-lenders-singapore

Hence crowdfunding platforms are lending more cheaply at below 20% p.a. Here you may argue that MoolahSense underprice the risk for the profile of borrowers they are onboarding relative to other platforms.

4% per month bordering on loan shark liao. 12 x 4% = 48%??? More expensive than loan shark. Anyway the more sane ones like Singapura finance charges ard 8% p.a.

 

[ericpro96]

I can see you did a lot of work to assess the companies but very difficult to look through everything. What's your percentage of loans in default?

about 2/13 of my loan has defaulted so far,i only invested in 13 companies and the rest are still paying back,ater this saga,i realise the sg sme some really cmi despite using financial ratio to gauge whther to invest or not

 

[ericpro96]

The blog maybe a bit wrong in my opinion. In the blog he mentions he uses current ratio, quick ratio and total liabilities/equity.

While current ratio roughly tells you the liquidity position of the company, it is too general. It just means assets are more than liability if the ratio is above 1.0x. But it maybe that the company are heavy in inventory (stocking up too much) or receivables ( problems in collection). Current ratio does not tell you that.

Quick ratio is slightly better as it takes out inventory from the equation but won't tell you about quality of debtors.

Total liabilities / total equity or leverage ratio may also be skewed coz equity may not have factored in things like goodwill.

If you ask me, the better ratio to look at is:
1. Debt Service Coverage Ratio.
This is your EBITDA /All short term debts + current portion of long term debts + interest. This ratio shows you if the company can generate enough cashflow to cover its debts.

2. Cash Conversion Cycle.
This is your average days receivables turnover + average days inventory turnover - average days creditors turnover. This is to measure how fast $1 of asset can produce $1 of revenue. The longer the days, the more worried you should be as the company may run into cashflow problems.

3. Gearing. Or debt/Tangible networth. This is to measure if the debts taken up is much more than the company is really worth. If the gearing is 10x means that the debt they borrow is more than 10x what the company is worth and flight risk increase tremendously.

woah,thats really interesting,thank for pointing that out,will take note into account of your suggested ratio for future investment plan,thank you very much!

 

[RMCWMR]

about 2/13 of my loan has defaulted so far,i only invested in 13 companies and the rest are still paying back,ater this saga,i realise the sg sme some really cmi despite using financial ratio to gauge whther to invest or not

Tbh financial statement are all past data. E.g. the audited results you see today are usually for year ago i.e. 2018. Same for management accounts. It has no bearing to the current state of business the borrower is in. For e.g. the company may report profits in 2018 but external events such as trade wars could affect their performance and they may have been making huge losses today. But you won't know about the losses today until next year when the audited results are out, assuming they don't run road or bankrupt tomorrow!

 

[wonghw12]

about 2/13 of my loan has defaulted so far,i only invested in 13 companies and the rest are still paying back,ater this saga,i realise the sg sme some really cmi despite using financial ratio to gauge whther to invest or not

I think you are doing well actually, with a default rate less than half of the average investor at MoolahSense. So your analysis and strategy is working, but the platform is the issue.

 

[LexusIS]

A lot of borrowers are definitely not creditworthy enough to borrow more from banks. But this is not the main concern - pawnshops and moneylenders lend to people who are sidelined by the banks.

Beyond theory crafting, MoolahSense has a significant worse default rate (in excess of 30%) than the peer platforms (below 5%). It makes the entire investment unprofitable, no matter how you diversify it. That's what a lot of concerns are about.

P2P lending platform model are very dangerous for investors due to their different business model vs banks.

Banks aggregate these SME loans through their credit programs/stringent lending where profitability is measured by interest/fee income minus away cost of fund/loan losses etc.

However P2P lenders, they make money (fee income/interest etc) by successfully obtaining funding for these SMEs. So who can blame these lenders for trying to get as many loans out as possible (even those other banks reject). Anyway investors are the one that bear the loan losses ..,, not them.

In today’s tough environment and with trade war looming, how many businesses can make good profits to cover the 14 to >35%p.a. interest, not to mention the admin fees charged by lenders on funds raised.

Caveat emptor is Latin for "Let the buyer beware".

 

[ericpro96]

I think you are doing well actually, with a default rate less than half of the average investor at MoolahSense. So your analysis and strategy is working, but the platform is the issue.

totally true,just stick to stock to invest is way better,as much as we would like to see SME in singapore to grow,they are largely too reliant on gov grants

 

[ericpro96]

Tbh financial statement are all past data. E.g. the audited results you see today are usually for year ago i.e. 2018. Same for management accounts. It has no bearing to the current state of business the borrower is in. For e.g. the company may report profits in 2018 but external events such as trade wars could affect their performance and they may have been making huge losses today. But you won't know about the losses today until next year when the audited results are out, assuming they don't run road or bankrupt tomorrow!

totally agree,will probably only stick to stocks for now,financial statement and all that are readily available online,just waiting for my loan to finish paying and transferring the money back to my bank

 

[wonghw12]

P2P lending platform model are very dangerous for investors due to their different business model vs banks.

Banks aggregate these SME loans through their credit programs/stringent lending where profitability is measured by interest/fee income minus away cost of fund/loan losses etc.

However P2P lenders, they make money (fee income/interest etc) by successfully obtaining funding for these SMEs. So who can blame these lenders for trying to get as many loans out as possible (even those other banks reject). Anyway investors are the one that bear the loan losses ..,, not them.

In today’s tough environment and with trade war looming, how many businesses can make good profits to cover the 14 to >35%p.a. interest, not to mention the admin fees charged by lenders on funds raised.

Caveat emptor is Latin for "Let the buyer beware".

Quite correctly nailed down the problem at MoolahSense. They don't really care if things blow up (where's the follow up on all the defaults???) but seem more concerned about drawing in fresh blood.

However this problem (aka principal-agent problem) is quite widespread. Your insurance advisor is incentivised to sell you more than what you should buy. Management of companies you invest in have incentives to pay themselves fat salaries and bonuses at minorities expense. Property agents are more keen to close the deal than to get better prices for you. Examples do not end here. But it does not mean that you should avoid all of them but it'll be prudent to avoid the ones without a good track record.

 

[xxxjhxxx]

I am curious. theres alot of bad feedback on glassdoor.. especially on the management

 

[ericpro96]

I am curious. theres alot of bad feedback on glassdoor.. especially on the management

no surprise there

 

[myename]

1946 AA FOOSBALL STRIKERS PTE. LTD.
3/11/2019
The debt collector had conducted a site visit at the residence of the Guarantor(s). There was no one present on site. The Debt Collector had conducted a site visit at the Issuer's office. The address belongs to a corporate secretarial company. As part of our debt recovery strategy, we have appointed another debt collector to support us on our recovery effort.

READ: A paper company with a rented address. Did MS do their due diligence at all? No wonder it's yet another case of the issuer not even making the first payment (i.e. scammers)

https://www.statecourts.gov.sg/cws/CivilCase/Documents/Civil%20Hearing%20Lists/civil_os_exparte.pdf

1st page, S/N 2.

 

[kenplicity]

https://www.statecourts.gov.sg/cws/CivilCase/Documents/Civil%20Hearing%20Lists/civil_os_exparte.pdf

1st page, S/N 2.

Link not functioning

 

[LexusIS]

1946 AA FOOSBALL STRIKERS PTE. LTD.
3/11/2019
The debt collector had conducted a site visit at the residence of the Guarantor(s). There was no one present on site. The Debt Collector had conducted a site visit at the Issuer's office. The address belongs to a corporate secretarial company. As part of our debt recovery strategy, we have appointed another debt collector to support us on our recovery effort.

READ: A paper company with a rented address. Did MS do their due diligence at all? No wonder it's yet another case of the issuer not even making the first payment (i.e. scammers)

Aiyo.... just saw this through a pasted link and almost fainted.

One of the basic hygiene factor is to have an operating office. Most banks also won’t lend if you don’t have an operating office. Not sure how MS does its credit underwriting review on this client.

 

[bullshitregister]

Does anybody know if the guarantor person is bankrupt it means that the loan cannot be collected anymore? But the loan is with the business or with the gurantor?

Some of the notes say the guy bankrupt then no more collection. But if business still got money then can collect right?

Dunno if Moolahsense is pulling another fast one on investors. Should all write in and ask for more details

 

[wonghw12]

Does anybody know if the guarantor person is bankrupt it means that the loan cannot be collected anymore? But the loan is with the business or with the gurantor?

Some of the notes say the guy bankrupt then no more collection. But if business still got money then can collect right?

Dunno if Moolahsense is pulling another fast one on investors. Should all write in and ask for more details

I suspect the loans can be more or less written off for now - if the person is made a bankrupt, then MoolahSense can no longer make collections yet as bankers probably hold the priority in claims.

As for whether MoolahSense can be trusted - best is to talk to insiders of the company (e.g. employees). Anyone knows how to reach them? Take a look at the reviews of the company...

https://www.glassdoor.sg/Reviews/MoolahSense-Reviews-E1996532.htm?countryRedirect=true

 

[RMCWMR]

Aiyo.... just saw this through a pasted link and almost fainted.

One of the basic hygiene factor is to have an operating office. Most banks also won’t lend if you don’t have an operating office. Not sure how MS does its credit underwriting review on this client.

They don't. Because MS is trying to automate their lending process, they take the financial information from borrower and feed it into an algorithm system which will then decide to lend or not. Unfortunately lending is an art not a science. So things can go wrong. In a Banks case however, they can afford to do that as banks lend money without disclose so as long as the overall portfolio makes money they are fine as they would have already priced in the defaults. For MS unfortunately, it is the investor who lose money as they invest on a deal by deal basis.

 

[Simonlee1977]

Any update on this useless platform.
Seems like my notes going down the drain

 

[sp1980]

Any update on this useless platform.
Seems like my notes going down the drain

My Investments
Find out what these statuses mean.Click here
In Funding 0
Paid 50
Current 5
Late 1
Past Due 1
Doubtful 3
Loss 13
Restructured 0
Closed Off 7
Total Invested Amount : S$ 10,200.00

The real and latest statistics from me.

 

[ZacharyA]

Any update on this useless platform.
Seems like my notes going down the drain

what notes do you have and defaulted for how long?