Lian beng and the construction sector

It is surprising indeed that Lian Beng has not attracted more market respect. The stock has gone no where in the past 1 year despite impressive biz results.

One possibility is that its dividend is too measly. In calendar year 2011, it paid 1.6 cents a share for a div yield of just 4.57%. 

Clearly, it can give more. How about an extra 1 cent? LB has about 530 million shares, so 1 cent more = $5.3 million. It's a drop in the ocean of net cash of over $80 million!

When the div yield goes to 9%, then the market will give it more attention. Even if the stock doesn't move, the investors get rewarded thru the yield.

IMO, the lack of interest in Lian Beng is the same as that shown in smaller cap stocks across the Singapore market, with the exception of some which are "targets" of buying by specific players.
This lack of interest, in turn, is because:
 
1. Many retail players have left the stock market, for perhaps the casino (ex-punters), property (ex-investors) and cash. The reasons they left are mainly (a) killed by the S-chips; (b) killed by the covered warrants (many have seen their original investments dropped to zero value); (c) lack of cheap loans for stocks (6% share margin account interest rate vs 1% for property loan); (d) less CPF investemnt money going into stocks.
 
2. This resulted in the lack of liquidity in the market (esp the smaller cap sector), and what volatility and volume left are mainly found in institutional, bigger cap stocks, where high speed traders and funds still have some interest in. It is likely that most retail traders (who are still around) have no choice but to move their interest into these bigger cap stocks, leaving smaller caps further out in the cold.
 
3. As players big and small congregate around the bigger caps, demand for these counters then appear relatively healthy compared to the smaller caps. As a result, prices of bigger caps stay relatively strong, luring investors looking for "safety" into the same sector. The vicious circle of relative disinterest in smaller caps and more interest in bigger caps then continues.
 
While Lian Beng looks attractive (and I do own some), many other construction or property related stocks are just as undervalued, if not more. So Lian Beng is not the odd one out, and what it suffers from is a market-wide phenomena.
 
Or at least this is what I suspect is happening.
 

sumer's view on the market trend is interesting. I wasn't aware of it. A spinoff from that view would be that this is a fantastic time to accumulate the small and mid caps which are gems, cos they would be in great demand when the retail investor crowd comes back (god knows when though!). A 50%-100% return would make it worth the wait!

Just 2 postings ago, people were talking about the lack of interest in Lian Beng and now I am seeing a huge massive gigantic wave of interest in the stock. What a difference a few days make! Lian Beng touched 37 cents already but there is a tug of war between sellers & buyers. So who knows what it will end today?

Lian Beng Group said it has established a new subsidiary,   Sin Lian, as part of its plans to list its engineering and concrete business on the Taiwan stock exchange.

The IPO will mean more cash coming into Lian Beng = special dividend?  

Another one invited to lim kopi at CAD….


The Board of Directors (the “Board”) of TEE International Limited (the “Company”) wishes to announce that the Company has been informed by Mr. Bertie Cheng Shao Shiong, the Independent and Non-Executive Chairman of the Company, and Mr. Phua Chian Kin, the Group Chief Executive and Managing Director, that they are assisting the Commercial Affairs Department (“CAD”) with its investigations on possible contravention of market rigging provisions in the Securities and Futures Act (Chapter 289).

Mr. Cheng and Mr. Phua have indicated that they will cooperate fully with CAD in its investigations, and are providing CAD with access to the relevant records for the period from 1 July 2008 to 31 March 2009.

The business and operations of the Company are not affected by the CAD investigations and will continue normally. The Company will monitor the progress of the investigation and will make such further announcements when appropriate.