Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes — just in case they’re material to our investing thesis. With 22 out of its 30 constituents having made losses, Singapore’s market barometer, the Straits Times Index (SGX: ^STI), has dipped by 0.4% to 3,243 points. Although the blue chips within the Straits Times Index had a poor day (only four shares within the index had made gains), the same can’t be said for shares outside. Let’s take a closer look at some market beaters outside…
Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes — just in case they’re material to our investing thesis.
With 22 out of its 30 constituents having made losses, Singapore’s market barometer, the Straits Times Index (SGX: ^STI), has dipped by 0.4% to 3,243 points.
Although the blue chips within the Straits Times Index had a poor day (only four shares within the index had made gains), the same can’t be said for shares outside. Let’s take a closer look at some market beaters outside the blue chip universe.
Civil engineering outfit Swee Hong (SGX: QF6) is up 13.2% to S$0.30. On Monday, the company announced a rights and warrants issue.
Swee Hong intends to issue 1.474 billion rights and warrants each on the basis of four rights shares and four warrants for every one existing share. The rights shares have a strike price of S$0.01 each while the warrants can be exercised at S$0.011 each.
Swee Hong’s intention is to issue the warrants only to shareholders who have subscribed for the rights on the basis of one warrant for one rights share. These warrants would expire 5 five years after they are issued and its holders can exercise them at any time before expiration.
If the rights issue is subscribed fully, Swee Hong stands to pocket S$14.4 million in proceeds after accounting for the relevant expenses. 80% of the amount would be used for expansion activities like acquisitions, investments, and joint ventures. Meanwhile, the remaining amount would be utilised for general working capital purposes (i.e. purchase of inventory and payment of trade payables, amongst others). If and when the warrants are exercised, Swee Hong would also utilise any funds earned in the same proportion as mentioned earlier.
The company’s main rationale for the rights issue is to “strengthen its financial position and capital base.” With cash & short-term investments having dwindled from S$18.8 million (as of 31 March 2013) to just S$4.5 million currently, this capital raising exercise has arrived at an opportune time.
For investors, it represents an interesting dilemma because those who choose not to subscribe for the rights might see potentially heavy dilution of their existing stake in the company (remember: it is four rights shares and warrants for every share outstanding). On the other hand, the company’s ability to utilise shareholders’ capital efficiently might be suspect given that it has logged losses for its past six consecutive quarters.
Be that as it may, the market’s certainly cheering Swee Hong’s actions judging from its price increase.
Vibrant Group’s (SGX: F01) up next with a 10% jump to S$0.121. The after-glow from the company’s full-year earnings release last Friday seems to not have dimmed at all. After reporting an 11.2% increase in its annual profit to S$42.7 million, Vibrant Group had also gained 6.8% in price to S$0.11 yesterday.
Interestingly, the company’s only valued at 7 times its trailing earnings currently despite its share price having increased some 17.5% since last Friday’s close at S$0.103. That’s a low valuation especially when compared with the Straits Times Index’s trailing price/earnings (PE) ratio of around 14. Vibrant Group’s sharp share price gains so far might be a case of the market trying to correct itself from awarding a low valuation previously.
Offshore vessel builder and engineering solutions provider Triyards Holdings (SGX: RC5) is last on the list with a 4.0% gain to S$0.665. The company announced on Monday its first-ever delivery of a BH 450 liftboat. The vessel is Triyards’ “first lattice-leg liftboat” and is “among the tallest available in the industry” with a height of more than 130 metres. It is “flexible in its deployment and suited to a wide range of offshore and renewable energy projects.”
The company’s chief executive, Chan Eng Yew, commented that the BH 450 delivery “demonstrates [Triyards’] ability to deliver complex designs within budget and on time.” He also added that the liftboat “reaffirms [Triyards] as a trusted and reliable liftboat fabricator with strong engineering capabilities, coupled with flexibility of fabricating projects of varying degrees of complexity, and cements [the company’s] position as one of Asia’s leading builders of these vessels.”
Interestingly, the BH 450 delivery had occurred only shortly after the delivery of a “highly sophisticated ice-class multi-lay construction vessel.” Those could be clues on the company’s vessel building and engineering expertise.
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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.