Three Shares That Lost To the Market Today

The uneasy tension between the United States and Russia over the latter’s apparent aggression against Ukraine seems to not have spooked our local stock market here as the Straits Times Index (SGX: ^STI) managed to inch up by 0.6% to 3,105 points.

19 of the index’s 30 components had ended the day in the green while seven others had made losses. While majority of shares within the index had a rather good trading session, there were more than a handful of companies outside the index that did not have a good day. Let’s check out a few shares that lost badly to the index.

ES Group (SGX: 5RC) tanked by 11.9% to S$0.12. The offshore and marine outfit, which builds, converts, and repairs ocean-going vessels, had released its full-year results for 2013 last Thursday. It saw a 41.8% jump in annual revenue to S$67.8 million but its profits couldn’t keep up and actually slid by 39.4% to S$2.0 million. This led to a 39.4% drop in earnings per share to 1.41 Singapore cents.

Much of the top-line growth experienced by the company was due to the “sale and demise charter of two vessels”. Meanwhile, ES Group’s administrative and other operating expenses (which include staff costs, rental expenses, repair and maintenance costs etc.) had grown by only low single-digit percentage points.

The real culprit for the drop in ES Group’s bottom-line was the huge increase in profits that accrue to non-controlling interests within the company. In 2012, the non-controlling interests had made losses of S$1.23 million while in 2013, they earned S$83,000.

In the same day as its earnings were released, the company also revealed that it had won a S$15 million contract for three repeat orders for jack-up blocks. The construction for the pieces of hardware has already begun, and deliveries are expected to take place in the last quarter of 2014. The orders are also “expected to contribute to the [ES Group’s] financial performance” in 2014.

Oil palm producer Kencana Agri (SGX: F9M) fell 10.4% to S$0.215. The company’s latest full-year results were made known last Friday and saw a steep drop in profitability. While Kencana’s revenue for 2013 had shrunk by only 5.6% year-on-year to US$285 million, it ended up making a loss of US$10.7 million as compared to a profit of US$17.3 million in 2012.

The company’s losses were mainly due to falling crude palm oil (CPO) prices, a depreciation of the Indonesian rupiah against the US dollar, and an increase in finance costs.

Lower CPO prices have also been a bane in the latest results for other bigger palm oil producers like Indofood Agri Resources (SGX: 5JS) and Golden Agri-Resources (SGX: E5H).

JES International Holdings (SGX: EG0) rounds up the trio as it fell 6.1% to S$0.15. Shares of the company have been halted since 1:15pm last Friday with the halt lifted at 4:15pm today.

Before the halt was lifted, JES International had made two important announcements to shareholders. The first, done on Saturday, was for its financial results for 2013. It wasn’t pretty as revenue collapsed by 79% to RMB543 million while its losses widened from RMB122 million a year ago to RMB522 million.

The ship builder had seen much lower business activity and had to adjust its contract prices southwards. The company’s cost of sales alone has exceeded its revenue for the past 2 years and without being able to even make any gross profit, there’s just nothing much it can do to prop up its bottom-line.

Nonetheless, the company’s still attracting substantial investor interest. The second important announcement it made was that a group of four investors – Merlion Capital Pte Ltd, YA Global Master SPV, Mr Lee Loi Sing, and Mr Yin Xiangdong – would collectively purchase a total of 50 million newly issued shares of JES International at S$0.14463 each in a private placement.

The four investors would cough up S$7.23 million in cash in total for these shares. The private placement also represents 9.4% of the total number of outstanding shares in JES International as of 3 March 2014.

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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 writer Chong Ser Jing doesn’t own shares in any companies mentioned.