Falling Knife of the Week: Soon Lian Holdings


This week’s Falling Knife is Soon Lian Holdings (SGX: 5MD). Its shares closed at $0.103 on Thursday, representing a fall of 14.9% from last Friday’s close.

Soon Lian, which has a track record of over 20 years, is a specialist supplier of over 1,200 different aluminium alloy products to the marine and precision engineering industries. It boasts a diversified clientele with over 1,000 customers in more than a dozen countries. Its suppliers include some of the major global manufacturers of aluminium alloy products such as Alcoa and Alcan.

On 4 June 2014, Sim Lian released an announcement that it had sold a property located at Tuas, Singapore to Galmon (S) Pte Ltd at a price of S$19.8 million.

Two months prior to the above, it made public that it had purchased a property, this time at a slightly different part of Tuas, from Metal One Stainless (Asia) Pte Ltd for S$21.5 million. The property is a 2-storey detached factory, with a land area of around 149,000 square feet.

The rationale for the purchase is that it will provide additional space required for its business expansion. Sim Lian’s headquarters and warehouse will also be relocated to the new property. The built-in area of the new property is approximately 30% larger than the company’s then-existing premises (the property it recently sold).

Soon Lian is trading at a historical PE ratio of 30 currently. It does not pay any dividends.

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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.