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. Having only 13 of it 30 constituents clock losses for the day had been enough to drive the Straits Times Index (SGX: ^STI) to a slight decline of 0.26% to 3,284 points. As the blue chips have had a forgettable day collectively, let’s venture outside the index for a closer look at some market beaters. Going first, we have Boustead Singapore Limited (SGX: F9D), which has climbed by…
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.
Having only 13 of it 30 constituents clock losses for the day had been enough to drive the Straits Times Index (SGX: ^STI) to a slight decline of 0.26% to 3,284 points.
As the blue chips have had a forgettable day collectively, let’s venture outside the index for a closer look at some market beaters.
Going first, we have Boustead Singapore Limited (SGX: F9D), which has climbed by 0.81% to S$1.87 after the release of its second quarter earnings yesterday evening. The infrastructure engineer had posted a 14% year-on-year increase in quarterly revenue to S$129.7 million and that had helped drive an impressive 94% spike in profit to S$17.5 million. After adjusting for one-off gains, Boustead’s earnings performance was still impressive as its profit managed to grow by 46%.
Besides the sales and earnings growth, there are a number of other bright spots in Boustead’s results. For instance, the company’s growth was driven by broad-based double-digit revenue increases across all business segments, signifying great overall business-health. Boustead also ended the quarter with a rock-solid balance sheet where it had a net cash position (where total cash exceeds total borrowings) of S$131.2 million. These can all be sources of comfort for investors.
Looking forward, there are also encouraging signs for Boustead. For instance, the company’s Real Estate Solutions Division has till date, been awarded S$200 million worth of contracts – that’s higher than the total value of contracts awarded to the division for the entire FY2014 (financial year ended 31 March 2014).
As of 12 November 2014, Boustead has a total order book backlog of S$441 million, a very slight dip from the value of S$445 million seen a year ago. Given that the backlog represents future revenue, it would be important for investors to keep an eye on how this figure changes.
World Precision Machinery Limited (SGX: B49) is up next as its shares has spiked by 16.39% to S$0.355 after the release of its third quarter earnings yesterday evening. Although a sharp jump in a company’s price would usually be accompanied by positive business developments (such as a very promising earnings release), World Precision had interestingly saw both its quarterly top- and bottom-line shrink pretty strongly.
For the quarter ended 30 September 2014, the stamping machine manufacturer’s revenue dropped by 10.7% to RMB182.4 million while its profit actually slid by 28% to RMB19.5 million. And even though the company’s fortunes did improve a little if we take a step back – for the nine months ended 30 September 2014, revenue and profit had inched up by 0.8% and 4.1% respectively to RMB650 million and RMB75 million – the improvement does not seem to warrant such a strong urge in price.
So what gives? Turns out, World Precision Machinery’s valuation might be the answer. Even after its nice jump today, the company’s still valued at 6 times its trailing earnings. That’s a very low valuation and the market’s pessimism might just have been the fuel that boosted the company’s share price today.
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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 does not own shares in any companies mentioned.