Sunday, 9 August 2020

CapitaLand Retail China Trust (CRCT) – Why it is a Dividend and Growth Gem & Why It Is Greatly Undervalued Compared to the Rest of SGX REITs and Trusts?

CapitaLand Retail China Trust (CRCT) – Stock Code: AU8U

CRCT just posted their quarterly result recently with a DPU of 3.02 Singapore cents for half year ended 30 June. Due to Covid-19, the DPU for the first half of the year reported is down ~40 per cent from a year ago -DPU of 5.13 cents (after divestment gain) and 5.03 cents (before divestment gain). Revenue fell 7.8 per cent in 1H 2020 compared to last year. The decline is due mostly to a rental relief that was extended to tenants due to Covid-19 situation, and the absence of contribution from CapitaMall Erqi, following the pre-termination of lease from its anchor tenant in Q4 2019 and the completion of divestment in May 2020.


CRCT’s share price is currently at all-time low of SGD1.14. Previous lows recorded are only during the 2009 GFC and March Covid-19 Crash. The 52 weeks high is SGD1.7, and the low is SGD0.92 during March.

In my opinion, CRCT current share price greatly under-valued. The explanation as follow.  


Thanks to blogger, Vince of REIT-TIREMENT blog, who created a dashboard (click here) for SG REITs or Trusts, I have a much easier time finding and comparing CRCT’s financial metric to others.

CRCT’s Price to Book value is very attractive at 0.7.

Many will argue that there are also many REITs or Trusts in SGX that is trading at a lower P/BV. Ok, let’s take a look at all of them.

Those with lower P/BV are:
  • Hospitality – ARAHT 0.45, ART 0.7, CDLHT 0.65, EHT 0.16, FEHT 0.58, FHT 0.61, OUECT 0.61
  • Healthcare, mainly Indonesia and Singapore – FIRST 0.6
  • Commercial or Industrial, mainly Singapore – OUECT 0.61, SBREIT 0.68
  • Commercial, mainly Japan - MNACT 0.62
  • Retail Indonesia – LMIRT 0.43
  • Retail, China mainly – DRT 0.56
  • Retail, mainly Singapore and Australia – SGREIT 0.56, SUNTEC REIT 0.64

It is evident that the REITs or Trusts with much attractive P/BV compare to CRCT are mostly from Hospitality (Hotel) sector. If you think travel will return to pre-Covid level in a very short time, then go ahead with your bet. Personally, I think it will take a few years to return to pre-Covid levels.

Next, Lippo and FIRST are with businesses concentrated in Indonesia. The country is struggling to contain the Covid pandemic and I doubt businesses in Indonesia will return to usual in a short time.

Then there are REITs or Trusts of Retail, Commercial and Industrial with assets mainly concentrated in Singapore, Australia, Japan etc.  Comparing to China, I feel that Singapore, Australia and Japan will see slower growth potential due to the developed status of these three countries. Furthermore, I feel that Covid-19 crisis is handing a longer-lasting harsher punishment to the economies of Singapore, Australia and Japan, as compared to China.

Lastly, there is DRT, or Dasin Retail REIT. If you have more trust in Zhongshan Dasin as a sponsor compared to CapitaLand, then you can go ahead to buy DRT over CRCT.


Based on 1H 2020 DPU of 3.02 cents, dividend is 5.3 per cent (i.e. [ (3.02 x 2) / 114 ] * 100 per cent)
2019 FY DPU is 9.8 cents, giving a dividend of 8.6 per cent.

China has been greatest hit by Covid-19 in the 1Q of 2020. Since then, traffic and sales in the China retail space has improved, thanks to the vigilant handling of the pandemic by the Chinese government to curb the spread of the virus.   Nonetheless, I doubt business will return to pre-Covid levels in the short time. That said, I am very optimistic that 2H2020 results will definitely better 1H2020.

For instance, if we consider a 20 per cent DPU drop in 2H20 yoy, rather than the 40 per cent in 1H20, then yield is forecasted to be approx. 7 per cent i.e. [ (8 / 114 ] * 100 per cent.

Hence, I am very confident that CRCT will see a yield of 6-7 per cent at SGD1.14 in 2H2020 and beyond, unless there is a major second wave outbreak in China.

Furthermore, CRCT in their latest announcement, had committed to distribute at least 90% of distributable income in financial year, barring unforeseen circumstances. This is unlike many other SG REITs or Trusts who had already decided to cut their distribution.


Every now and then, I will always try to keep up to speed with my China friends. Most of them claimed that China is now the one of the safest countries as far as Covid spread is concerned. See also my earlier blog.

Last month, there is a sudden outbreak at Beijing Xinfadi wholesale market, but the Chinese government reacted quickly and the possible second-wave outbreak soon abated. It is evident that the citizens hold high level of satisfaction and trust to their government. And this will definitely make tackling the second-wave (if there is) much easier, because mutual trust enhances citizen-government co-operation.

On the contrary, I seriously doubt the economies of Singapore, Indonesia or Japan will return to pre-Covid growth faster than China.

The low share price now is probably due to the US-China trade tension. I agree that US-China tension is a concern. However, CRCT business are all local retail malls with local consumption as the greatest source of revenue. The assets are also strategically located in in densely populated areas with good connectivity to public transport i.e. >90% of our assets are in Tier 1 and 2 cites.

Hence, I am convinced that business will return to normal, faster than other sectors such as Hospitality, Commercial and Industrial.

In addition, CRCT also has low leverage of 35.8 per cent (as of End 2019), giving it headroom to take on more debts (i.e. up to 50%) for growth. Portfolio occupancy is resilient at 95.4 per cent as of End of 1Q 2020 and WALE is 3.7 years NLA, on the basis of committed leases as at 31 Mar 2020 and excludes CapitaMall Saihan as the mall will be divested in 2H 2020, and CapitaMall Erqi as the anchor tenant has exited. CRCT also have access to strong pipeline of high quality assets held under CapitaLand Group.

I see CRCT as both a growth and dividend gem. With the current price, I will definitely add more of the stocks to what I already own.

Saturday, 8 August 2020

What is the Repair OPEX for My COE Car?

My current car is 11 years old Toyota Estima registered in May 2009. I purchased the second-hand car in Mid 2017 with a mileage of ~100K. It was decent, since yearly mileage is less than 15K which is considered low. Last year, I extended 10-year COE, which I also shared a post.


Since 2016, I have spent relatively little CAPEX compare to years before that, where I owned two brand new BMWs from PML. I drove a BMW-320 from 2008 for 3 years and BMW-523 from 2011 for 5 over years. The OPEX is really low aside from normal regular services and tyres change. This is because of their brand-new condition and the warranty given by dealer.


On the contrary, I have incurred significant OPEX for my current Estima, which I own for slightly more than 4 years now. Since the purchase, and aside from regular service, I had been going to the workshop regularly for repairs. It is not just the money, but also the hassle of not having a car for days is quite a big headache for me. My office is really far, and I do need a car for my work.


Shortly after the purchase, the aircon broke down, but luckily it was repaired as warranty. Two front speakers of the car were also faulty and I changed it together with the car audio system costing SGD630. I also went for normal car service costing SGD225.

After driving for a few months, I keep hearing that funny “crack crack” sound near the steering area of my car. I also felt hard “suspensions”!  

Stupidly, I went to a rather expensive repair shop called Autobacs. The mechanics are also great salesmen. Nonetheless, the service is great and the workshop is big, neat and tidy. Autobacs is owned by Japan company, and it did exhibit Japan quality aside from the huge price tag.

To resolve the “crack” sound, I was recommended to change the full suspension system including springs, stabilizer bars etc, otherwise there is no guarantee of correction of problem. And they only sell original Toyota parts. Since my intent is to extend COE, I “heart-painfully” said yes. At the same time, I also installed front and back car cameras, which I felt is essential.

·    Suspension shock absorbers, mounting and stoppers, stabilizer links, bearings, cover, wheel  alignment, disc brakes, all original parts, labour - SGD4,400
·     HD camera and installation Front and back - SGD460

2017 OPEX – SGD4,400 + Normal Car service SGD225 + Audio SGD630 + Cameras SGD460


More problems surfaced the next year. I started feeling vibration when I drove and hear “clunking” sound. My passenger automatic sliding doors also did not just automatic open, but it also “auto closed” after it was opened half-way.

During the visit to workshop, the mechanic also told me, my battery is going to be flat soon, and radiator need to change. I also rotated and balanced my steering. Luckily the motor of my auto slide doors is still ok. Service is only SGD50, compared to perhaps thousands if the motor-gearbox of slide door is spoilt.

·      Radiator fan motors 640, Engine mounting sets 735, Tyre rotate and balance 40, Labour 560, Battery Bosch 239, Coolant 98
·      Automatic sliding door service - SGD50
·      After discount and points rebate - SGD2,160

Several months later, the car started leaking during rainy days. At the same time, the car is also due for service. I went to Autobacs workshop again, and I asked them to check once and for all the entire car, and help me changed whatever I need to change. I hate coming to workshop again and again. Below is damage to my purse.

·      Moon roof leak 740
·      Spark plugs 120, Valve cover gasket 135, vacuum hoses 90, Timing tensioner 280, Engine oil cap 40, Labour 180, Aircon filter 20, Air filter 39, Battery Terminal 79
·      After discount - SGD1,600

The same year, I also go for another regular service and Vicom inspection.

·      Normal Car Service, 103 + 118 - SGD221
·      Vicom inspection - SGD66

2018 OPEX – SGD3,643 + Normal Car Service SGD221 + Vicom SGD66


Next, one side of the wing mirror auto-fold system malfunction. Upon recommendation of Autobacs, I changed the whole wing mirror with original Toyota parts. My HID lights also started to have flicking problems.

·      Repair entire wing mirror and painting (original) - SGD680
·      Coolant and driveshaft seal leak - SGD423
·      HID Lights change - SGD142
·      Headlight covers polishing - SGD98
·      Normal Car service - SGD118

During one service, it was also discovered that my driveshaft is leaking. At the same time, the mechanic of Autobacs also discovered that my Gearbox is leaking as well. The quotation for Gearbox overhaul is SGD2,800 from Autobacs.

I started to wonder did I pay too much to Autobacs over the years. I approached a long-time friend who is a car dealer and also own a car workshop. My friend’s workshop quoted SGD2,100 for the gearbox overhaul.

·      Gearbox full overhaul - SGD2,100 (non-Autobacs)

Since then, I never go back to Autobacs anymore and started patronizing my friend’s workshop instead.  

2019 OPEX – SGD3,443 + Normal Car Service SGD118


Early this year, I started to hear “growling” sound from my rear wheels. I changed the Tyre bearings and did wheel alignment.

During circuit breaker, my car battery also ran flat. After the circuit breaker, I started seeing “battery warning light” while driving and heard whining sound. I am sure it is alternator problem and indeed it is.

·      Tyre bearings - SGD470
·      Wheel alignment - SGD50
·      Battery replacement at home carpark - SGD180
·      Alternator change and labour - SGD425
·      Normal Car Service - SGD108
·      Vicom – SGD66

2020 (to date) OPEX – SGD1,125 + Normal Car Service SGD108 + Vicom SGD66


During the four years, I changed 8 tyres and do patching once.

·      2017 : 17in Tyres x 2 Front - SGD540  (Autobacs)
·      2018 : Tyre patching - SGD10
·      2019 : 17in Tyres x 2 Rear SGD700 (Autobacs) ; Tyres punctured. Change x 2 Front, SGD390 (non-Autobacs) – SGD1,090
·      2020: 17in Tyres x 2 Rear - SGD360 (non-Autobacs)

Car Tyres OPEX in four years - SGD2,000


It was a very unlucky year in 2018 when me and wife both have one accident each, resulting in major body works repair. Fortunately, the accidents were not involving any moving cars and no injury whatsoever for anyone.

·      2018 : Accidents. Major Body Work Repairs SGD1300 (me) + SGD1750 (wife) – SGD3,050
·      2020 : Car panel repair - SGD700

Accident Damage in four years – SSGD3,750


·      Audio – SGD630
·      Cameras – SGD460
Total ~ SGD1.1K

OPEX for Inspection, Normal Wear and Tear
·      Car Service – SGD672
·      Vicom – SGD132
·      Tyres – SGD2,000
·      Repairs – SGD12,611 (Annual SGD3.2K)
Total ~ SGD15.4K
Annual ~ SGD3.9K

Total Accident repairs ~ SGD3.8K

TOTAL OPEX for 4 years ~SGD20K.  Annually ~ SGD5K excluding insurance and road tax.
Excluding the accident repair charge, the annual OPEX is ~SGD4K. 
If we also exclude tyres replacement and regular service charges, the annual OPEX is SGD3.2K.


Overall, this is definitely not one of the luckiest cars I have owned, financially-wise. In my opinion, SGD5K of annual OPEX is quite high, excluding insurance and road tax. 

Of course, it. is partly due to our negligence of accidents. Furthermore, my car is a 2.4L MPV which in general incur higher charges than non-continental saloon cars. Nonetheless, no one is injured while driving this car. This is very important.

In my opinion, SGD3-4K per annum of OPEX is pretty common for an old car of more than 7 years. The previous owner probably also did not take too good care of the car. 

One thing that I can take comfort of is that the car engine is still very smooth and quiet. Toyota engine is really known for its longevity. After talking to a friend who also previously owned older cars, the repairs which I have done are mostly normal and wear. No major problem from the car thus-far.  

Anyway, I intend to drive the car for at least until the first 5 years of the COE expired i.e. 1Q2024. Hopefully I had already repair most of the things that is needed for repair, and OPEX will fall in years to come. 

To conclude, if you want to save on CAPEX to buy second-hand older or COE cars, be prepared to enter the workshop often, unless you are very lucky that the previous owners maintain the car really well. 

How about your car?

Tuesday, 4 August 2020

Rolf’s Thoughts: Keppel (the son), Hoping for Temasek (the father) 's Partial Offer?

Keppel posted quarterly loss of a staggering SGD 697 million. This is mainly due to impairments of SGD 919 million from O&M segment.

Excluding impairments, the company still reported quarterly net profit of SGD 222 million, boosted by other segment of the business such as property, infrastructure and investments.

Last year Temasek proposed offer of SGD7.35 a share (including SGD0.15 dividend declared after the proposal date) of SGD4 billion to raise stake to 51 percent.

This partial offer has a condition called Material Adverse Change (MAC) clause, stating that Keppel profit after tax must not fall more than 20% or below SGD557 million over the combined of four quarters from 3Q2019.

Keppel current cumulative PAT until End Jun2020 is minus SGD165 million. This mean that to meet this condition, 3Q 2020 result must be at least SGD887 million. This is highly unlikely considering Keppel past years average quarterly profit hovered around SGD200 million.

This means that Keppel will not meet the MAC clause and Temasek can either:
·       cancel its offer?
·       waived off the clause?
·       Re-offer a lower price?
·       Or?


Will Temasek offer of SGD7.35 a share goes on?

The decision will be made known by end of August?

Share price of Keppel is SGD5.18 (at time of writing) with a P/BV of 0.9. During early 2016 oil crisis, Keppel PB dropped to 0.82 or SGD4.88. Covid March low is SGD4.82.


In my opinion, Temasek will continue with the offer amid a lower price. I may be wrong! Just my feel.

Eventually, I feel that Temasek will want to repeat the proposal for Sembcorp to Keppel, i.e. to de-merge O&M businesses.

Question is when?

I always picture that Temasek is liken to be our “Father” and SG Government is like our “Grand Father”!

Anyway, Temasek will always have or want control over the main companies in Singapore which forms the pillars of the country’s business. For e.g. Temasek has major shares in Financial institution (DBS), Transport (Comfort Delgro, SBS, SIA, SATS), Tele-communication (Singtel, Starhub, M1), Media (SPH), Properties (Capitaland, Ascendas, Mapletree) Technology (ST), O&M, Infrastructure (Keppel and Sembcorp) etc.

And then in bad times, Temasek will always come to the rescue of his son, just like Singapore government coming to rescue of Singaporeans during the Covid crisis. Sounds good huh… Blessed huh…

Good? (or maybe Bad?)

There is always someone to depend on, be it Singaporeans depending on the country, or major important businesses in Singapore depending on Temasek. In the short term, it seems great to have someone always protecting you behind the scene.

In the long run, or perhaps one day, what if the Father or the Grandfather will not be around, or they themselves also become weak. Then how…?

Sometimes I felt that we Singaporeans are like under-aged kids that will never grow and never be independent. We are always under our Grandfather or Father’s safety shelter net. No matter how old the child is, he/she will always be under the father’s monitoring and supervision at all times.

The child will never be able to go on his/her own adventure to seek for what he/she really want. Creativity and independence and survivor of the fittest seems a distant reality. Comfort zone sets in. The child rarely dares to voice out his/her own opinion, since the father’s opinion always overwrites his/hers.

The child’s role is just to be obedient and please the father. Failure is deemed incompetent, while elsewhere, failure is the opportunity to learn and grow.

The Grandfather or father will be forever be controlled in the child’s financial well-being. The child will always depend on the father for direction, guidance and advices. He/she will always be deemed incapable of looking after himself/herself and always seem incompetent of making informed decisions for his/her own well-being.

When child gets into trouble, the father will always come to the rescue!

Within the country, the child will think highly about himself/herself. But in the real outside world, he/she will be lost in the jungle, if, without his/her “Grandfather” or “Father” ‘s safety shelter net.

Ok … maybe I am over-exaggerating…

Bad (but maybe Good?)

In the past, I use to be very upset about my family being so poor, seeing my friend having their own bed and their own room, while all of us sleep on the floor and we do not even have a proper table to do my homework. Luckily we always have good neighbours and relatives who will support us for our school textbooks and uniforms, and our Chinese New Year new clothes. 

We were without a HDB of own, as we stayed in no-living-room rental flat followed by one bedroom rental flat. My mum always have financial difficulties even to buy food from market as our household income is less than SGD800 even until late 1990s. Minus the gambling advance pay from boss, my Dad was only left with SGD500-600 a month. Yes, no CPF at all. 

I am always out in the streets and like to stay whole night up in a "mess-room" playing snooker and street fighters or sleep over at friend's house. 

Looking back now, it does seem to be a blessing in disguise. And that is really how I learn to be street smart. On the flip side, it can also mean ending up in jail, like many of childhood friends.

As a Father myself

I will never want my children to follow my childhood footsteps. At the same time, I will be careful not to let them be over-dependent on me. I wouldn't want to control their life forever. I will want them to be creative, be themselves and speak up for what they believe in. However, I will make sure that when they are young, they will be properly guided by the good fundamental principles of life. 

When you learn from mistakes and become stronger, it is great. But as children at younger age, there is also possibility that they are learning the wrong things and take the wrong path and never recover again!

I come out with the "Door Analogy". 

Sometimes your child will only see one door which is straight ahead and walk through it. They may fall right through into the shit hole! As parents, I will tell them to look broader and let them understand that there are actually two more doors beside the one they had seen. Which one to choose is up to them, but at least, we widen their perspective! If they still decide to take the shit hole door, then they must be responsible for their action.  

Sunday, 2 August 2020

Amazon, NOT Just An E-Commerce Company. Growth is Boundary-less?

Tech giants like Apple, Amazon, Alphabet and Facebook have all reported quarterly figures end last week and there is a big Tech rally due to the higher than expected earnings.

Amazon reported net income USD5.2B, compared to USD2.6B in the last quarter. This is on the back of 40% revenue increase to USD88.9B compare to last quarter. Operational CashFlow increased 42% to USD51.2B for the ttm compared to USD36.0B ended June 30, 2019.

At the time of writing this post, Amazon is the second largest company in the world by market capitalization (i.e. USD1.58T) behind Apple (i.e. USD1.84T). For more about Amazon’s financials, refer to Yahoo finance here.

In this article, I am not going to focus on the financial analysis of Amazon, but instead tell you more about Amazon’s business aside from E-commerce. Frankly, if we are to go in depth into all of Amazon’s businesses, it will be an extremely long article. Therefore, in this article I will try to optimise writings (to below 2500 words) and yet cover most of Amazon’s businesses.  

Disclaimer: Most of the information reported here is gathered from Amazon’s annual reports, websites, Wikipedia, news articles such as Yahoo News, CNBC news, Forbes news etc. The author cannot guarantee the accuracy of the information contained herein the blog and its contents. You should independently research and verify, any information that you find on this website.


Recently, I have asked many people about how much they know about the business of Amazon? Most answered that it is an E-commerce company. When I asked further, what else? The answers will be Errr….logistics? What else? Then there is a silence…

Amazon is founded in 1994, 5 July by Jeff Bezos, and named after the largest river of the world. The logo, “a” arrow to “z” means that the company wanted to cover everything from A to Z. Amazon started as an online book seller. Most people will also remember Kindle E-book.

Today, it has the world's largest online marketplace, AI assistant provider, live-streaming platform and cloud computing platform as measured by revenue and market capitalisation.

Products and Services
·    Customer offerings via website:  Mobile apps, Alexa, devices, streaming and physical shops.
·     Manufacture and sell electronic products: Kindle, Fire Table, Fire TV, Echo, Ring
·    Produce Media Content: Amazon Prime: a membership program with free shipping, unlimited access to thousands of movies, TV, etc
·     Offers sellers to sell in Amazon platform with fees.
·     Amazon Web Services (AWS) offers global computing, storage, database etc
·     Content creator : Kindle Direct Publishing, allows author, musicians, film-makers, skills, app developers to create, publish and sell.
·     Acquisition: Ring, Twitch, Whole Foods Market, and IMDb etc


AWS is one of the unstoppable growth businesses of Amazon. It is just so powerful and will create an incredible big impact to how business is conducted in the world in the future.

AWS has the largest public cloud infrastructure platform, comprising 41.5% of application workloads in the public cloud. Microsoft Azure follows behind with 29.4% of the installed base, measured by application workloads. Google Cloud Platform trails with 3.0% of application workloads followed by IBM SoftLayer 2.6%, Rackspace 2.9%, and a long tail of providers that comprise another 20.7% of the market. The scope of long tail provider usage is surprising and may indicate the market is still at an early stage of maturity.

You might not know, but Netflix is the top client of AWS. According to Amazon, Netflix uses more than 100,000 server instances on AWS for nearly all its computing and storage needs, including databases, analytics, recommendation engines, video transcoding, and more—hundreds of functions that in total use more than 100,000 server instances on AWS.

According to Intricately, the top ten AWS users based on EC2 monthly spend are: Netflix: $19 million, Twitch: $15 million, LinkedIn: $13 million, Facebook: $11 million, Turner Broadcasting: $10 million, BBC: $9 million.

The All AWS Case Studies is the best place to get some idea as to who its big customers are. Below are partial list of AWS’s customers.
Adobe Systems, Airbnb, Alcatel-Lucent, Aon, Autodesk, BMW, Bristol-Myers Squibb, Canon,  Capital One, Comcast, Docker, Disney, Expedia, GE, Hearst Corporation, Hitachi, HTC, Intuit, Johnson & Johnson, Kellogg Company -SAP ERP Migration, Lafarge, Lyft, NASA, Netflix, News Corp, Nokia, Nordstrom, Novartis, NTT Docomo, Pfizer, Philips, Pitney Bowes, Qantas, Qlik, Ricoh Company, Ltd., Samsung, SAP, Schneider Electric, Scholastic, Siemens, Slack, Spotify, Tata Motors, The Kellogg Company, Time Inc., Unilever, Vodafone, Xiaomi, Yelp, Zillow, Zynga, etc


Amazon also owned or leased data centres.

Source: Wikipedia AWS: As of 2019, AWS operates in 22 geographical "regions": 7 in North America, 1 in South America, 6 in Europe, 1 in the Middle-East, 1 in Africa and 8 in Asia Pacific. Each region is wholly contained within a single country and all of its data and services stay within the designated region. Each region has multiple "Availability Zones",  which consist of one or more discrete data centers, each with redundant power, networking and connectivity, housed in separate facilities. As of Dec 2014, AWS operated ~1.4 million servers across 28 availability zones.

Source: Annual Report 2019 Amazon: AWS is also inherently more efficient than the traditional in-house data center, using a more efficient evaporative cooling in certain data centers instead of traditional air conditioning. A study by 451 Research found that AWS’s infrastructure is 3.6 times more energy efficient than the median U.S. enterprise data center surveyed.


Transport and Logisitics, Warehousing - Amazon Maritime, Inc. holds a license to operate as a non-vessel-owning common carrier (NVOCC), which enables the company to manage its own shipments from China into the United States.

Amazon is also building out its logistics in trucking and air freight to potentially compete with UPS and FedEx. By 2021, Amazon Air (airplane logistics) will have at least 70 cargo aircraft operating out of over 20 air gateways in the United States. This is bigger than many national airlines of developing countries.

Prime Air which is Amazon drone delivery services will also be soon become operational. Amazon also runs more than 60,000 of its own delivery trucks, not to count the more than 100,000 on order. In a Forbes report Sep last year, Amazon now delivers 60 percent of its own packages through its own drivers.

Across the globe, Amazon also own or lease warehouses called fulfilment centres with high technology robotics (i.e. Amazon Robotics), and automation technology. From its website, it states that it has more than 175 operating fulfilment centres and more than 150 million sqft of space.

Supermarket - Whole Foods Market, a physical retailer acquired in 2017 for USD13.4B. It is an American supermarket chain exclusively featuring foods without artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.

Media – TV, Music Radios - Amazon Studios is a film and television studio. Prime Video: Amazon distributes downloads and streaming of video, music, and audiobooks through its Prime Video, Amazon Music, Twitch, and Audible subsidiaries. sells digital audiobooks, radio and TV programs and audio versions of magazines and newspapers. Brilliance Audio, an audiobook publisher founded in 1984 was purchased by Amazon in 2007 for an undisclosed amount.

Healthcare - Health Navigator develops APIs (application program interface)  for online health services. It forms part of Amazon Care, which is the company's employee healthcare service. In 2018, Amazon acquired PillPack, an online pharmacy, for $750 million. PillPack has an in-network pharmacy with all major pharmacy benefit managers, including CVS Caremark, Express Scripts, Optum Rx, Prime Therapeutics, Humana Pharmacy Solutions, Cigna, Aetna, MedImpact, EnvisionRx, and CastiaRX. It is estimated that U.S. prescription sales totaled $476.2 billion in 2018.

Alexa (virtual AI assistant) health team built an experience that lets U.S. customers check their risk level for COVID-19 at home. Customers can ask, “Alexa, what do I do if I think I have COVID-19?” or “Alexa, what do I do if I think I have coronavirus?” Alexa then asks a series of questions about the person’s symptoms and possible exposure. Based on those responses, Alexa then provides CDC-sourced guidance. Amazon also have similar health service in Japan. The UK government awarded Amazon a contract that gives the company free access to information about healthcare published by the UK's National Health Service, so that Alexa can answer medical questions.

Aside from Medical, Alexa is also used in speakers, music playback, making to-do lists, set alarms, streaming podcasts, play audiobooks, provide weather and traffic info, and other real-time news. Alexa can also control several smart devices using home automation system. As of November 2018, Amazon had more than 10,000 employees working on Alexa and related products. In January 2019, Amazon's devices team announced that they had sold over 100 million Alexa-enabled devices.

Education - Academic institutions around the world are transitioning from in-person to virtual classrooms and are running on AWS to help ensure continuity of learning. And governments are leveraging AWS as a secure platform to build out new capabilities in their efforts to end this pandemic.

E-Books - Shelfari - a social cataloging website for books that allows users to build virtual bookshelves of the titles which they owned or had read and they could rate, review, tag and discuss their books. Goodreads, founded in Dec 2006 allows individuals to freely search it’s database of books, annotations, and reviews. CreateSpace offers self-publishing services for independent content creators, publishers, film studios, and music labels, became a subsidiary in 2009.


E-Comics - ComiXology, a cloud-based digital comics platform with over 200 million comic downloads as of September 2013. Amazon bought the company in April 2014.

Gaming - Twitch is a live streaming platform for video, primarily oriented towards video gaming content. In August 2014, Twitch was acquired by Amazon for $970 million. Through Twitch, Amazon also owns Curse, Inc., an operator of video gaming communities and a provider of VoIP services for gaming. Since the acquisition, Twitch began to sell games directly through the platform, and began offering special features for Amazon Prime subscribers.

Consumer Electronics - Amazon produces consumer electronics including Kindle e-readers, Fire tablets, Fire TV, and Echo devices. Lab126, developers of integrated consumer electronics such as the Kindle, became a subsidiary in 2004. Annapurna Labs - In January 2015, Amazon Web Services acquired Annapurna Labs, an Israel-based microelectronics company reputedly for US$350–370M. Eero - manufactures mesh-capable routers. The company was founded in 2015 and is based in San Francisco. Amazon announced it would buy Eero in 2019.

Automation – Ring Inc is a home automation company founded by Jamie Siminoff in 2013. It is primarily known for its WiFi powered smart doorbells, but manufactures other devices such as security cameras. Amazon bought Ring for US$1 billion in 2018.

Robots - Amazon Robotics, formerly Kiva Systems, is a company that manufactures mobile robotic fulfilment systems. Its automated storage and retrieval systems were previously used by companies including: The Gap, Walgreens, Staples, Gilt Groupe, Office Depot, Crate & Barrel, and Saks 5th Avenue. After those contracts ran out, Amazon did not renew them and Kiva's assets now work only for Amazon's warehouse.

Satellites - Kuiper Systems. Amazon announced in April 2019 that they would fund and deploy a large broadband satellite internet constellation called "Project Kuiper". It is expected to take up to a decade to fully deploy all 3,236 satellites planned for the full constellation in order to provide internet to "tens of millions of people who lack basic access to broadband internet. "Amazon has not announced if they intend to sell broadband service directly to consumers, but they will "offer broadband service through partnerships with other companies."

R & D - A9.coma company focused on researching and building innovative technology, since 2003.


From Annual Report,



Based on 2019 Annual report, North Americas’ business comprise of USD170B out of company total revenue of 280B i.e. 60%. 

International’s net sales is only 27% of the overall business net sales. Hence,  there is big room to grow, especially in India where online sales only account for 1.6% of the total country’s retail sales. Retail sales in China is 15% and globally is 14%.

AWS’s sales still only comprises of 13% of the business. After Covid crisis, the importance of online or digital services is unquestionable. Cloud usage all over the world will only see far-reaching increase in future.

Of course, like any other business, there are also risks. Aside from many competition catching up, the laws of countries may change affecting adversely Amazon’s businesses. For example, Tax changes, data collected by the company under close regulator surveillance, EU anti-trust charges etc can adversely affect Amazon’s businesses. There is also possibility that acquisition is not integrated properly. 

Still, in my opinion, Amazon’s growth has no boundary. And the company is constantly innovating and spend a whole lot of its earnings on R&D. The “Day One” manifesto (refer here 1998 letter to shareholder) means that Amazon will always act like a startup. To act like a startup, Bezos requires Amazon employees to do these four things:

·       Be obsessed with the customer
·       Focus on results over process
·       Make high quality decisions quickly
·       Embrace external trends quickly

Furthermore, Bezos believes that "Day Two" is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day One at Amazon." 

Below is a video of Amazon city of the future.