The Straits Times Index (SGX: ^STI) remained essentially flat today at 3,209. Singapore?s favourite stock market barometer is comprised of 30 of our nation?s largest publicly-listed companies. Out of those, 13 shares had ended the day with gains while the same number ? 13 – made losses.
Let?s take a look at some unfortunate companies that closed the trading session in the red.
AsiaPhos Limited (SGX: 5WV) dropped 15.7% to S$0.215. The phosphate-rock miner was listed on the Catalist stock exchange on 7 Oct at an offering price of S$0.25. It…
The Straits Times Index (SGX: ^STI) remained essentially flat today at 3,209. Singapore’s favourite stock market barometer is comprised of 30 of our nation’s largest publicly-listed companies. Out of those, 13 shares had ended the day with gains while the same number – 13 – made losses.
Let’s take a look at some unfortunate companies that closed the trading session in the red.
AsiaPhos Limited (SGX: 5WV) dropped 15.7% to S$0.215. The phosphate-rock miner was listed on the Catalist stock exchange on 7 Oct at an offering price of S$0.25. It closed at S$0.395 on its debut for a stunning 58% gain, making it one of the best opening-day performers for initial public offerings this year.
But in an equally stunning reversal, it has fallen by 46% from S$0.395 to its current price in three short weeks. At S$0.215, it’s also a fair bit lower – 14% to be exact – than its listing price.
If we assume that AsiaPhos was reasonably priced during its IPO (despite its sky-high valuation), what could possibly have changed in its business conditions in the three weeks since to warrant a 14% haircut in its market value? Turns out, nothing has changed.
What all this goes to show is that, over the short-term, share prices of companies go all over the place. It would be futile for individual investors to try and profit over short-term price swings that often bear no relation to AsiaPhos’ underlying business fundamentals.
On the other hand, share prices do converge to a business’s intrinsic value over the long-term.
And for investors who have the intention to stick with AsiaPhos through the years, it might be a good idea to start keeping up with the global phosphate market and the company’s business-execution capabilities in that market for an estimate of its intrinsic value. Doing so would likely give investors a better grasp on AsiaPhos’ attractiveness (or lack thereof) as a long-term investment in relation to its current share price.
Marine engineering firm SembCorp Marine Limited (SGX: S51) dipped by 0.9% to S$4.51. It is slated to release third quarter earnings on 5 Nov.
In the third quarter last year, Sembcorp Marine’s quarterly revenue fell 32% year-on-year to S$892m while profits got slashed by 48% to S$116m. Investors are likely to be hoping for a much better performance this around but signs aren’t that promising with the company reporting a fall in profits for the second quarter of this year.
Hi-P International Limited (SGX: H17) fell 5.9% to S$0.635 after dialling back expectations for growth in its upcoming third quarter results that’s pencilled for release on this coming Thursday.
During its second quarter earnings release back in August, the integrated contract manufacturer, with 14 manufacturing plants around the globe, had initially forecasted higher revenues and profits for the third quarter of 2013 as compared to the third quarter last year.
Turns out, Hi-P International’s management had been a tad too optimistic and announced last Friday that though revenue is expected to be higher for the third quarter earnings, profits would be “similar.”
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