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DBS Group Holdings Ltd Leads the Singapore Market Higher This Week

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), which consists of 30 shares, closed at 3,286 points for the week, a slight uptick of 0.4%, from last Friday’s close at 3,274.

DBS Group Holdings Ltd (SGX: D05) was the biggest winner in the index as it put on 4.7% to S$19.34. The bank was one of the nine index components that ended the week in the green. Last week, DBS Group released its third quarter results and saw its profit rise 17% to S$1 billion.

Meanwhile, 17 of the STI’s 30 constituents ended in the red, with SIA Engineering Company Limited (SGX: S59) losing the most ground with a 10% decline to close at S$4.29. SIA Engineering said on Tuesday that its second quarter earnings slumped 41% year-on-year. The rest of the STI’s components finished flat.

Outside the index, semiconductor outfit STATS ChipPAC Ltd. (SGX: S24) lost 18.1% to end the week at S$0.475. For the whole of the week, except Friday, trading of the company’s shares was halted pending an announcement. Once the halt was lifted, the stock fell to as low as S$0.47.

Turns out, it was made public on Thursday that Jiangsu Changjiang Electronics Technology (JCET), the largest electronics packaging service provider in China, has tabled a non-binding bid to buy STATS, sans its partially- and wholly-owned subsidiaries in Taiwan, for US$780 million. This translates to an offer of S$0.452 per share.

This is a far cry from the share’s 52-week high of S$0.78 that was reached near the end of August this year. Shares of the semiconductor chip tester had hovered around a price of S$0.35 before embarking on a steep ascent after news first broke in May that it’s in talks to potentially be acquired – that piece of news became the likely fuel for speculation that the company might be taken private at a high price, even though the firm had struggled with losses in recent years.

On 2 September,  STATS had suffered an intra-day drop of as much as 11.5% after it announced that there would be a low possibility of any sale happening with one of its potential suitors. Back then, my Foolish colleague Stanley Lim warned that “it’s more important to focus on the real business value of a company rather than speculating on whether it might be taken over at a higher price.”

The largest shareholder of STATS, Singapore Technologies Semiconductors Pte Ltd (STSPL), is a unit of Temasek Holdings, an investment arm of Singapore’s government. JCET, STATS, and STSPL will be negotiating on an exclusive basis until 30 November 2014 to hammer out the exact terms of the proposal.

Stepping aside from acquisition-drama, we have public transport operator, SMRT Corporation Ltd. (SGX: S53). The company rose 6.4% to S$1.59. Earlier this week, it announced that its Chief Financial Officer, Mr Ong Eng Keang, will resign on 9 November 2014 to “pursue philanthropic interests and business prospects”. He is resigning after just eight months at the transport company.

SMRT announced its second quarter results last week. Net profit jumped 75.5% To S$25.3 million, on the back of a 6% increase in revenue. The firm had experienced broad-based revenue growth in almost all its segments. Dividends went up from 1.0 Singapore cents per share in the corresponding period a year ago to 1.5 cents in the latest quarter.

SMRT’s President and Group Chief Executive Officer, Mr Desmond Kuek, gave some outlook for the company’s future:

We will continue our efforts to drive productivity improvement to help mitigate the impact of the increased cost pressures. With the recent incorporation of Singapore Rail Engineering in the Group, we are making a good start in building on our existing rail engineering capabilities for future growth.”

The STI is currently going at 13.4 times its historical earnings and has a market capitalisation of S$539.6 billion.

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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.