S$1.235-YZJL.SI
The company has provided the following updates in response to the sharp drop in its share price:
a. there are no current plans to issue convertible bonds;
b. the company has witnessed a diversification of its “customers portfolio away from European based customers”, which are long term customers that “had withstood the crisis with strong financial standing and payment track record”;
c. confidence in delivering not less than 30% profit growth in the upcoming H1 results (profit was up % in Q1) to be released on Aug 11th (note this would suggest only a moderate 6% growth in Q2 vs +63% in Q1);
d. the Board does not “eliminate the possibility of share buy back to protect minority shareholders interest”.
We are however not confident the above clarifications could stem the decline (the stock has, in just over a fortnight, fallen from $1.46 to $1.23), not when no one is clear just what are the “real” reasons for the weakness: general disillusionment with S- chips (Yanlord for instance is also under severe stress, Dukang, the maker of baiju, has breached important technical support ; the company’s many non-core related investments in recent years; concern over fallout from the Euro crisis....
Our last BUY call in Oct ’10 (partly on the basis of its cheaper valuation relative to Cosco) needs to be reviewed.
No comments:
Post a Comment