As 1Q19 ended, it is also a good time to look back at the share price performance of some of the local-listed counters we have looked at on Shares Investment (SI).
Hi-P International – Recovering Lost Ground
One of the largest significant moves among the list of counters written during the quarter on Shares Investment website was Hi-P International. At the time the article was published, the closing stock was trading at $0.935. The stock lost value in 2018 as a result of technology giant, Apple slashed its earnings downwards. As a result, the stock prices of many Apple suppliers, including Hi-P International, were heavily punished on the news.
Fast forward a few months later, the stock price shot up by 14 Singapore cents or 9.0 percent to trade at $1.69 on 10 March 2019 on no significant market moving news. It was reported in The Business Times, that on that day that there were about 21.9 million shares that changed hands, higher than the counter’s average 13.9 million shares traded over the past 15 trading days. The value of the trades placed on as at the afternoon stood at $36.0 million, said to be the highest level seen in the Singapore Exchange.
Source: Phillip Securities Pte Ltd (March 28, 2019)
Y Ventures – Embroiled In Accounting Woes
The stock price of Y Ventures continue to see rapid descent following reports in late January that the e-commerce outfit disclosed that it had discovered some accounting misstatements in its 2H18 financial statements. In the revised financial statements, Y Ventures initially reported a profit of about US$130,000 for the period. It has since been revised it to a net loss of US$1.2 million.
Separately, DBS Equity Research cut their earnings estimates of the firm and suspended coverage of the stock due to the accounting errors made. In the final research report, DBS equity analyst team noted that the administrative lapses were mainly related to the overstatement of “inventories”, “property, plant, and equipment” and “revenue” and understatement of “trade and other receivables”, “cost of sales” and “administrative expenses”. As a result, there was an overstatement of about US$1.3 million profit in the firm.
Later on 12 March 2019, Y Ventures appointed Deloitte to undertake an independent review, including evaluating the adequacy and effectiveness of the internal controls of the Group starting from January 2014 to December 2018; quantify and particularise any misstatements in the prior years’ financial statements as disclosed in the IPO documents and to-date as a result of the internal control lapses; investigate the circumstances, and responsible parties.
Source: Phillip Securities Pte Ltd (One-year daily chart of Y Ventures, March 29, 2019)
As one might note, the stock price of Y Ventures has fallen from $0.65 one year ago to $0.038 or a peak-to-trough decline of almost 94.2 per cent over the period. This is equivalent to almost a complete wipe out.
No Short Cuts To Identify Gems
Forecasting where the set of companies mentioned this quarter is always a tricky issue. As we can see, no one can exactly accurately predict the fate of a company as shown by the likes of Challenger Technologies which we highlighted its potential undervaluation. The company has received an exit offer, though there is still an ongoing debate over being potentially underpaid by the offerors.
Another company is Procurri Corp which just gotten a sizeable shareholder support when Novo Tellus Capital Partners came in and bought the entire interest from its former parent company, DeClout which has already been bought out by Tokyo-listed Kyowa Exeo Corp. at $0.33 per share.
It is more important for one to thoroughly go through the financial statements, and determine, based on valuations relative to other peers, and understanding different business environments to spot undervalued counters. Therefore, do your homework before taking a huge plunge in any stocks.
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