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“Falling Knife” of the Week: Hu An Cable Holdings

knife Hu An Cable Holdings Limited (SGX: KI3) has taken a 14.7% haircut so far this week, stealing the top spot for “Falling Knife” of the Week. At the time of writing, the shares closed at $0.099.

According to the company’s website, it is among the top 10 wire and cable manufacturers in China. It boasts state-owned enterprises such as State Grid Corporation of China, China Petroleum & Chemical Corporation and China Railway Group as its clients.

On 25th September 2013 after market close, Hu An Cable announced that company is considering undertaking a third Taiwan Depository Receipts (TDR) programme to issue 151,735,470 new ordinary shares in the company to underlie 121,388,376 TDRs to be listed on the Taiwan Stock Exchange.

The rationale is that the company is facing slower debt collection due to economic slowdown in China, affecting the additional working capital needs for a new plant under the company’s wholly-owned subsidiary, Shenhuan Cable Technology Co., Ltd.

The proposal is subject to approvals from the relevant authorities in both Singapore and Taiwan.

The company released its 2nd Quarter of Financial Year 2013 results on 13th August 2013. It saw a revenue drop of 5.6% over the previous year. However, its trade and other receivables increased by 16.7%, signaling a probable red flag.

Hu An Cable is currently trading at a PE ratio of 6.6 and does not pay out any dividends. Its last dividend payout was in 2011.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.