Singapore’s Big Loser of the Week: Soon Lian Holdings Limited

Credit: hobvias sudoneighm

Soon Lian Holdings Limited  (SGX: 5MD), a supplier of aluminum alloy products, has seen its shares slump a massive 62.5% since last Friday to end the week at S$0.057.

This is a way worse decline than the 3.1% slide that’s experienced by the Straits Times Index  (SGX: ^STI) for the week. It thus makes Soon Lian a big loser in the local stock market.

Soon Lian, which was listed in 2007, provides more than 1,200 aluminum alloy products mainly to the marine and precision engineering industries. It has more than 100 suppliers and currently serves over 1,000 clients in more than 15 countries.

The company recently announced its financial results for the six months ended 30 June 2015. For the period, Soon Lian’s revenue increased by 15% to around S$24 million but its net profit plunged by 97% to S$364,000.

The top-line growth was largely attributed to “an increase in sales to our customers in the precision engineering industry as well as to stockists and traders, partially offset by a decrease in sales to customers in the marine industry.” The sales decline in the marine sector was on the back of delay and/or scaling down in shipbuilding activities undertaken by its clients.

Moving down the income statement, the poor showing in the bottom-line was due to a lack of one-off gains that was seen a year ago. In the previous year, Soon Lian had sold a property at 35 Tuas Avenue 2 for S$10.1 million.

Looking at its balance sheet, as of 30 June 2015, the firm’s financial health had weakened slightly. It had S$32.7 million in total debt and cash reserves of S$4.3 million. This translates to a net debt figure of around S$28 million. In comparison, at the end of 2014, the number stood at S$25 million.

Soon Lian’s slightly weaker balance sheet is not surprising as it didn’t generate any cash flow from operations for the first half of 2015. In fact, the company had burned through S$1.6 million in cash as compared to generating S$633,000 in cash one year ago.

Going forward, Soon Lian said that it has a cautious outlook for the rest of the year. But, it added that it “will continue to leverage on our strengths while managing costs, and will simultaneously build on our extensive international networks to drive revenue.”

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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.