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. The Straits Times Index (SGX: ^STI) has dipped slightly by 0.1% to 3,313 points with 15 of its constituents clocking losses. In contrast, only 10 other blue chips had made gains. Let’s take a look at some market beaters from both within and outside the STI. Thai Beverage Public Company Limited (SGX: Y92) continues its slow upward march with its shares up 0.8% to S$0.64. The…
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.
The Straits Times Index (SGX: ^STI) has dipped slightly by 0.1% to 3,313 points with 15 of its constituents clocking losses. In contrast, only 10 other blue chips had made gains.
Let’s take a look at some market beaters from both within and outside the STI.
Thai Beverage Public Company Limited (SGX: Y92) continues its slow upward march with its shares up 0.8% to S$0.64. The maker of alcoholic and non-alcoholic beverages is now just a hair’s breadth beneath its 52-week high of S$0.65.
Last Friday, the beverage maker had gained 1.6% after it revealed on Thursday that its profit for the first half of 2014 had spiked by 37.2% to THB11.5 billion. As impressive as its growth in earnings was, it’s still not the strongest case for optimism in the future of Thai Bev’s business. Instead, it is – in my opinion – the company’s commentary on the signs of recovery in Thailand’s economy which provides the best case. The country had been rocked by political unrest since late 2013 all the way through to the first half of 2014. It’s good to see things gradually returning to normal after the May 2014 Thai military coup.
That said, it’s certainly not all sunshine and rainbows there for Thai Bev. The company explains:
“Although confidence among consumers and the private sector showed signs of improvement, consumers remained cautious about spending due to a decline in farm income and a high level of household debt, amid the slow recovery in the political situation. These factors have impacted the overall beverage industry, such that it continued contracting during the quarter…
…Nevertheless, the Company’s alcoholic beverage business was not substantially affected due to our diversified portfolio of products, ranging from white spirits to brown spirits to beer. Therefore, although consumers switched from one type of alcoholic beverage to another, they remained consumers of beverages from within our product portfolio. However, our non-alcoholic beverage business continued to be affected by a slow-down in on-premise consumption and intense competition in the non-alcoholic beverage market, with industry players deploying aggressive marketing promotions to gain market share.”
Instant beverage maker Food Empire Holdings Limited (SGX: F03) is up next with its shares gaining 2.6% to S$0.39. The company has had a horrible time in the first quarter of 2014, clocking a quarterly loss of US$3 million mainly due to the intense dispute Ukraine had (and is still having) with Russia; the two countries happen to be the most important geographical markets for Food Empire.
With the release of Food Empire’s second quarter results last Tuesday, there had been some improvement: The company saw its second quarter revenue fall by 7.7% year-on-year to US$59.3 million while its profit declined by 28% to US$2.66 million. Although a profit decline is almost always never welcome news, that’s in stark contrast to the loss of US$3 million suffered in the first quarter.
But unfortunately, the ray of light Food Empire had experienced in the three months ended 30 June 2014 proved to be brief; the tragic accident involving Malaysian Airline’s Flight MH17, which crashed in Eastern Ukraine last month after being hit by a missile, escalated the tension between Ukraine and Russia. In addition, Western governments – with the USA in the lead – are also pinning the blame for the accident on Russia. These developments have dealt another blow to Food Empire’s business, though the company also stressed that it has other positives going for it. Food Empire explains:
“In July 2014, the United States and Europe have agreed to impose wider economic sanctions against Russia, which include its defense, energy and financial sectors. This came amid worries that Moscow is stepping up its intervention in Ukraine. This resulted in a negative impact on the Russian Ruble and Ukrainian Hryvnia against the US dollar during the period and may cause further weakening in future foreign exchange rate.
In August 2014, Russian government announced retaliatory sanctions on import of some food items from EU and US. However, the Group’s operations are currently not affected by these sanctions as the Group does not source food materials from the sanctioned countries.
The Group’s non-dairy creamer plant and snack factory in Malaysia have commenced commercial production, while its beverage manufacturing facility is expected to begin delivering orders by 3Q2014. The Group’s other project, an instant coffee plant in India, is on track for completion by early 2015.
The Group continues to be on the lookout for M&A opportunities that are in line with its overall strategy for diversification and growth.”
Rounding up the trio is PACC Offshore Services Holdings Ltd (SGX: U6C), more commonly known as “POSH”. The offshore support vessels operator has climbed by 2% to S$1.01.
Last Thursday, POSH had released its financials for the first half of 2014. In that period, the company saw its top-line fall by 5% year-on-year to US$111.2 million mainly because it had injected certain operations into its joint venture – the move reduced POSH’s take of the revenue from the operations in question.
Meanwhile, its profit had inched up by 1% to US$48.2 million. The company’s joint ventures in Mexico – an important geographical avenue for oil & gas businesses – had clocked in a loss of US$7.5 million, thus resulting in POSH’s share of profit from Joint Ventures to fall from a profit of US$5.9 million a year ago to a loss of US$2.9 million.
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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.