The Straits Times Index (SGX: ^STI) slid by 1.4% to 3,041 points today to continue its losing streak, which currently stands at nine days. According to Reuters, this particular losing streak is the longest the index has seen in 11 years. The STI is also now down by 5% from its closing level at the start of the year and is some 12% lower than its 52-weeek high of 3,465 points on 22 May 2013. While it was mostly a sea of red for the 30 components in the index – only three companies in the STI did not…
The Straits Times Index (SGX: ^STI) slid by 1.4% to 3,041 points today to continue its losing streak, which currently stands at nine days. According to Reuters, this particular losing streak is the longest the index has seen in 11 years.
The STI is also now down by 5% from its closing level at the start of the year and is some 12% lower than its 52-weeek high of 3,465 points on 22 May 2013.
While it was mostly a sea of red for the 30 components in the index – only three companies in the STI did not experience declines – there were shares that managed to post some strong gains to buck the losing-trend. Let’s look at some of them.
Ocean Sky International (SGX: O05) climbed 14.6% to S$0.315. The integrated apparel service provider had requested for a trading halt this morning at 10:40am pending the release of an announcement, before asking for the halt to be lifted at 3:30pm.
Prior to the trading halt, the company’s shares had already jumped by 16% to S$0.32 at its highest, which prompted the Singapore Exchange to issue a query regarding the price increase. Ocean Sky later replied, commenting that it is “in discussions with parties in relation to a proposed acquisition of business and a proposed fundraising exercise involving [its] securities.”
The company added that it would be releasing further updates on the aforementioned matters if there are new developments. At the time of writing (5:30pm, 27 August 2013) there was no appearance of the ‘pending announcement’ Ocean Sky alluded to in its reply to SGX’s query save for the comments regarding the proposed acquisition and fundraising.
Sakae Holdings (SGX: 5DO) is up 6.1% toady to S$0.525. The company operates food & beverage retail outlets, mostly serving various forms of Japanese cuisine under different brands like Sakae Sushi and Sakae Teppanyaki, among others.
It released its half-year results two weeks ago and posted an 8% year-on-year increase in sales to S$51.7m for the first six months of 2013. Meanwhile, profits jumped 38% to S$3.15m. Sakae also declared an interim dividend of 0.5 Singapore cents per share for the first half of the year. It did not pay a dividend in the corresponding period a year ago.
While the earnings release seemed to portend good news, given the growth in sales and earnings in addition to the presence of a dividend, there are areas of concern for investors. The company has bank loans worth S$18.4m that will be due in the next 12 months, which is the main reason why the company has a negative working capital position of S$8.7m.
Sakae currently holds only S$9.4m in cash and only managed to bring in S$3.1m in cash from its operations for the first half of 2013. Investors will have to pay attention to how the company intends to pay down those loans, given a possible shortfall in cash even after factoring in the money that it can bring in through its operations for the next 12 months in addition to its cash-on-hand recorded on its balance sheet.
In most scenarios, companies undertake (either solely or in any kind of combination) these actions to pay down loans: take on new loans to repay old ones; issue new shares through private placements, new offerings, or rights issues to obtain capital; or use cash-on-hand in addition to cash flow from operations to pay down loans. Investors will have to note if Sakae has recourse to any of these actions when the loans come due.
Rounding up the trio, we have commodities trader Olam International (SGX: O32). Its shares gained 2% to $1.53, making it one of the rare few within the STI’s 30 components to have logged gains for the day.
The company is set to release its full-year results this Thursday after the market closes. Olam brought in S$14.4b in sales for the nine months ended March 2013, a 20% increase over sales of S$12b it received for the corresponding period in the previous year. Meanwhile, profits were up 17% year-on-year to S$305.8m.
Though the company had healthy growth in its top and bottom-line, its cash flow situation still had plenty of room for improvement – for the nine months ended March 2013, the company’s cash flow from operations was a negative S$580m. Though it’s better than the negative operating cash flow of S$1.05b the company saw in the nine months ended March 2012, investors would likely be looking out for more improvements in Olam’s cash flow situation in the future.
Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo , Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.
The Motley Fool’s purpose is to help the world invest, better. Like us on Facebook to keep up-to-date with our latest news and articles.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.