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 18 of its 30 constituents ending the day in the red, the Straits Times Index (SGX: ^STI) has slipped by 0.2% to 3,335 points. Let’s step outside the STI for a closer look at some market beaters. Palm oil producer Bumitama Agri Ltd (SGX: P8Z) is up 4.6% to S$1.14. Last Tuesday, the company had just issued RM500 million worth of Islamic medium term notes. Although notes…
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 18 of its 30 constituents ending the day in the red, the Straits Times Index (SGX: ^STI) has slipped by 0.2% to 3,335 points.
Let’s step outside the STI for a closer look at some market beaters.
Palm oil producer Bumitama Agri Ltd (SGX: P8Z) is up 4.6% to S$1.14. Last Tuesday, the company had just issued RM500 million worth of Islamic medium term notes. Although notes issued under the purview of Islamic financial rules are different from conventional debt, it can still be broadly understood as simply borrowings.
In the case of the Islamic medium term notes, they would mature on 2 September 2019 and would bear a “periodic distribution rate [i.e. interest rate]” of 5% per year. Following the issuance of the notes, the company then “entered into a Cross Currency Swap transaction” of the notes into US dollars; in the process, the notes’ 5% annual interest rate had turned into a rate equivalent to a 6 month LIBOR plus 1.81%.
Bumitama Agri has stated that it intends to use the borrowings for “general corporate purposes” and to refinance existing borrowings. As of 30 June 2014, the palm oil outfit had around S$67 million worth of borrowings coming due within the next 12 months while carrying S$197 million in cash. The extra funds from the newly issued notes can come in handy, though it might not seem absolutely necessary.
Tai Sin Electric Ltd (SGX: 500) has gained 2.7% to S$0.380.The electric cable manufacturer had announced its full-year earnings roughly 2 weeks ago on 29 August 2014. For the 12 months ended 30 June 2014, the company saw its annual revenue inch up from S$305 million a year ago to S$307 million. Meanwhile, its profit also climbed slightly from S$21.16 million to S$21.61 million.
Tai Sin’s results were driven by slight broad-based improvements across two of its three business segments. Its Cable & Wire and Test & Inspection segments were the two contributors to its revenue growth while the Electrical Material Distribution segment was the laggard.
Furniture and household appliances retailer Courts Asia Ltd (SGX: RE2) has stepped up by 2.3% to S$0.45. The retailer has had a rough time these past few months, with its shares falling by 22% since the start of June. Poor corporate performance seemed a likely culprit. The company’s first quarter results, released on 13 August 2014, saw its quarterly profit drop by 28% year-on-year to S$5.1 million despite revenue slipping by just 1.5% to S$194 million.
Interestingly, the company has been steadily buying back its own shares starting from 20 August 2014. From then till today, Courts Asia has bought back 900,000 shares for a total sum of S$417,000. The company’s latest share buyback mandate (with a start date of 30 July 2014) allows a maximum of 55.57 million shares to be bought back by itself. With only 900,000 shares bought so far, there’s room for more buying.
Investors have to watch such buying activity by Courts Asia though. Share buybacks makes economic sense and builds value for shareholders only if it is done at prices which are lower than what the company’s true worth might be.
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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.