Many companies with China links now trading at a fraction of their old value
By LYNETTE KHOO 1 January 2009
Negative news emanating from troubled firms spooked market sentiment, leading their shares to be sold off.
Many of them have seen their share prices beaten down to just a tenth of their peaks. Coincidental or not, many are Chinese firms or have operations in China.
Zhonghui Holdings, whose future is clouded by a debt repayment, has seen its share price fall to just one cent, a far cry from 26 cents as of end-2007.
The stock plunged on concerns over the company’s ability to repay outstanding loans totalling $19.6 million to UOB and was suspended since Dec 12.
Another beleaguered firm Bio-Treat saw its share price nosedive to five cents as of end-2008 from 78 cents a year ago.
The Chinese wastewater treatment plant has pledged all its assets in favour of former substantial shareholder Precious Wise Group, after the latter issued a notice of default on a HK$360 million (S$67.02 million) loan facility.
Precious Wise has invoked its rights to secure the pledged assets until full payment of the outstanding loan.
Bio-Treat has been persistently plagued by issues concerning its $206 million convertible bonds programme since early 2008, where some bondholders have called for a default.
China Printing & Dyeing, whose shares have been suspended from trading since Oct 13, is now barely a tenth in market value from a year ago, with its last traded price at 2.5 cents, down from 23.5 cents as at end-2007.
The firm fell into trouble after its parent firm Jianglong Holdings went bankrupt and the group’s former CEO and deputy CEO went missing.
Heng Tong Jin, S-chip analyst at DMG & Partners Securities, noted that the fall in share prices of S-chips is a result of both poor sentiment surrounding these stocks given the negative spin on corporate governance, and a weakening of their fundamentals.
Among top losers, China Auto Electronic gave up 92.5 per cent in its share price over the course of the year to close at five cents yesterday and steel trader Novo Group shares tumbled from $3 a year ago to 14 cents as at end 2008. Both have seen weaker demand and depressed selling prices, resulting in net losses in their latest quarterly results.
Beyond S-chips, other firms also have their share of trouble. Missteps at loss-making firms Jade Technologies and Dayen Environment dragged their shares down from 28 cents to two cents and 75 cents to five cents respectively.
While Dayen’s attempt to enter the coal mining business was botched and its net losses widened, the botched takeover bid for Jade Technologies by former president Anthony Soh is now turning into a courtroom battle as OCBC Bank sues Mr. Soh for allegedly misleading the bank into acting for him in the takeover attempt.
Meanwhile, the handful of stocks that marked better fortunes were lifted by corporate actions. Topping the gainers in percentage terms, Tri-M share price jumped more than five-fold from 15 cents at end-2007 to 85 cents at end-2008 as the group entered a China crude-oil venture to turn around its financials.
Others rose on the back of privatisation moves. Singapore Airport Terminal Services is looking to buy Singapore Food, Cityneon will soon be delisted by Star Publications (Malaysia), while Datacraft shareholders have voted to take up Dimension Data’s takeover offer.
Mr. Heng advises investors to avoid stocks with excessive debts in view of the poor credit conditions and go for net-cash companies.
Firms whose fundamentals are deteriorating could likely see further share price weakness.
Despite the concerns surrounding S-chips, Mr. Heng said that there are still some gems out there which are trading at extremely low valuations.
‘If you are careful enough to pick those companies and believe that their businesses are going to bounce back after this crunch, I think they are worthy long-term propositions,’ he added.
But for stocks that are consistently embroiled in some controversial issues, he said that it is best to avoid them.
S-Chips Bear Brunt of Battering
ReplyDeleteMany companies with China links now trading at a fraction of their old value
By LYNETTE KHOO
1 January 2009
Negative news emanating from troubled firms spooked market sentiment, leading their shares to be sold off.
Many of them have seen their share prices beaten down to just a tenth of their peaks. Coincidental or not, many are Chinese firms or have operations in China.
Zhonghui Holdings, whose future is clouded by a debt repayment, has seen its share price fall to just one cent, a far cry from 26 cents as of end-2007.
The stock plunged on concerns over the company’s ability to repay outstanding loans totalling $19.6 million to UOB and was suspended since Dec 12.
Another beleaguered firm Bio-Treat saw its share price nosedive to five cents as of end-2008 from 78 cents a year ago.
The Chinese wastewater treatment plant has pledged all its assets in favour of former substantial shareholder Precious Wise Group, after the latter issued a notice of default on a HK$360 million (S$67.02 million) loan facility.
Precious Wise has invoked its rights to secure the pledged assets until full payment of the outstanding loan.
Bio-Treat has been persistently plagued by issues concerning its $206 million convertible bonds programme since early 2008, where some bondholders have called for a default.
China Printing & Dyeing, whose shares have been suspended from trading since Oct 13, is now barely a tenth in market value from a year ago, with its last traded price at 2.5 cents, down from 23.5 cents as at end-2007.
The firm fell into trouble after its parent firm Jianglong Holdings went bankrupt and the group’s former CEO and deputy CEO went missing.
Heng Tong Jin, S-chip analyst at DMG & Partners Securities, noted that the fall in share prices of S-chips is a result of both poor sentiment surrounding these stocks given the negative spin on corporate governance, and a weakening of their fundamentals.
Among top losers, China Auto Electronic gave up 92.5 per cent in its share price over the course of the year to close at five cents yesterday and steel trader Novo Group shares tumbled from $3 a year ago to 14 cents as at end 2008. Both have seen weaker demand and depressed selling prices, resulting in net losses in their latest quarterly results.
Beyond S-chips, other firms also have their share of trouble. Missteps at loss-making firms Jade Technologies and Dayen Environment dragged their shares down from 28 cents to two cents and 75 cents to five cents respectively.
While Dayen’s attempt to enter the coal mining business was botched and its net losses widened, the botched takeover bid for Jade Technologies by former president Anthony Soh is now turning into a courtroom battle as OCBC Bank sues Mr. Soh for allegedly misleading the bank into acting for him in the takeover attempt.
Meanwhile, the handful of stocks that marked better fortunes were lifted by corporate actions. Topping the gainers in percentage terms, Tri-M share price jumped more than five-fold from 15 cents at end-2007 to 85 cents at end-2008 as the group entered a China crude-oil venture to turn around its financials.
Others rose on the back of privatisation moves. Singapore Airport Terminal Services is looking to buy Singapore Food, Cityneon will soon be delisted by Star Publications (Malaysia), while Datacraft shareholders have voted to take up Dimension Data’s takeover offer.
Mr. Heng advises investors to avoid stocks with excessive debts in view of the poor credit conditions and go for net-cash companies.
Firms whose fundamentals are deteriorating could likely see further share price weakness.
Despite the concerns surrounding S-chips, Mr. Heng said that there are still some gems out there which are trading at extremely low valuations.
‘If you are careful enough to pick those companies and believe that their businesses are going to bounce back after this crunch, I think they are worthy long-term propositions,’ he added.
But for stocks that are consistently embroiled in some controversial issues, he said that it is best to avoid them.