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 managed to inch up slightly by 0.1% to 3,316 points despite seeing more of its 30 constituents clock losses as opposed to gains – 13 shares had ended the day in the red while 12 made headway. With the STI only moving a little, suffice to say that most of the 12 shares that made gains had only made small steps…
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 managed to inch up slightly by 0.1% to 3,316 points despite seeing more of its 30 constituents clock losses as opposed to gains – 13 shares had ended the day in the red while 12 made headway.
With the STI only moving a little, suffice to say that most of the 12 shares that made gains had only made small steps upwards. So, let’s jump outside the index to take a closer look at some market beaters which had substantial moves.
Marco Polo Marine Ltd (SGX: 5LY), which runs marine logistics, shipping, and shipyard businesses, has spiked by 7.6% to S$0.355. Earlier in the morning before the market opened, Marco Polo Marine had issued a joint media release with industry peer Nam Cheong Ltd (SGX: N4E) on a joint venture between the two companies.
The 50-50 joint venture had recently purchased a new Accommodation Work Vessel from Nam Cheong and shortly after, clinched a US$27 million five-year bare-boat contract. The contract actually comes with extensions which could potentially bump up the total contract value to US$50 million. For some perspective, Marco Polo Marine had earned revenue of only S$118 million in the last 12 months, so the contract for the Accommodation Work Vessel can potentially represent a nice chunk of the company’s future revenue.
Leaders from both Marco Polo Marine and Nam Cheong had also touched on how they can harness the respective strengths of each in a bid to grow the businesses of both.
Civil engineering and construction outfit Tiong Seng Holdings Limited (SGX: K2P) has climbed by 3.8% to S$0.193. Just last Thursday, the company reported its results for the first half of 2014. In that period, revenue had increased by 17% year-on-year to S$325 million but its profit had declined by 79% to S$3.02 million.
Tiong Seng’s top-line had increased simply due to more construction contracts. But as the company had made “necessary investment[s] into various technologies”, its cost structure had increased over the short term, leading to the profit decline; significant one-off gains in the first half of 2013 also contributed to the shrinking bottom-line.
In any case, Mr. Pek Lian Guan, Chief Executive of Tiong Seng Holdings, commented that the investments made are expected to produce “cost benefits and competitive advantages… over the mid to long term.”
SBS Transit Ltd. (SGX: S61) rounds up the trio with a 1.5% increase to S$1.68. A week ago, the public bus and rail operator had released its second quarter earnings and actually turned in great figures. For the first half of 2014, revenue went up by 10.6% year-on-year to S$456 million driven by growth in both its Bus (8.4%) and Rail segment (19.8%); both segments had experienced the general trend of higher number of passengers, higher fares, and higher advertising and rents in its bus and rail stations. A better handle of costs (especially in fuel and electricity costs) had resulted in the much higher jump in profit.
But despite the growth, management painted a bleaker picture for the rest of the year. I’d let the company speak for itself regarding its future outlook:
“Bus ridership growth is expected to be maintained. Rail ridership is expected to experience higher growth with the opening of DTL 1 [Downtown Line 1].
Staff costs are expected to be higher due to the headcount increase mainly from the build-up for BSEP [Bus Service Enhancement Programme] and DTL 2 [Downtown Line 2] and salary adjustments. With the renewal and expansion of the bus fleet, depreciation and financing costs are expected to increase. The outlook for the Bus and Rail segments will continue to be challenging.”
Back in May this year, the Land Transport Authority of Singapore had just announced sweeping changes to be made to the public bus industry. As part of the change, the government would assume ownership of related assets and infrastructure needed to run public bus services while the incumbents within the industry would transition into pure service providers. The changes can take the burden of heavy capital investment (like what SBS Transit’s management spoke about above) away from the current public bus service providers. In light of that, it’s likely that SBS Transit would be hoping the changes can come sooner rather than later.
To keep up to date on the latest financial and stock news, sign up for a free subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead. Also, like us on Facebook to follow our latest hot articles.
The Motley Fool's purpose is to help the world invest, better.
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.