MARKET PANIC is a good time for strong investors and companies to buy selectively into stocks that are relatively insulated from the global financial woes.
Such buying, however, is untimely for a number of companies currently -- even if they have share buyback programmes and their management are bullish on growth.
Reason: They are still inside the black-out periods prior to the release of 2Q results.
Some of those which have just released their results and are under no such constraint have jumped in to support their stock.
DMX Technologies, Wee Hur Holdings and LMA International - which have just released strong profit growth numbers - are three examples presented below.
In addition, we highlight the regular confident stock buying by Stamford Tyres’ President.
DMX Technologies bought 500,000 shares on Monday, bringing the total it has bought in the last three months to 2.2 million shares.
DMX has a vast amount of cash to support its stock.
For 2Q, whose results it had released last Friday, DMX posted a 46.2% surge in net profits attributable to shareholders of US$4.2 million.
Revenues surged 37.4% to US$80.5 million on broad-based growth across all its business segments.
Shares of DMX, a leading integrated network infrastructure and digital media solutions provider, closed at 28.5 cents on Monday.
Recent story: DMX: 2Q11 Net Profit Up 46.2% at US$4.2 million
Wee Hur Holdings never touched its own shares until 3 months ago.
Since then, it has been a regular buyer at the 26-cent level where the trailing PE is 7.
And when the stock market came under selling pressure on Monday, Wee Hur stepped in to buy 1.3 million shares at 26 cents. The stock closed at 26.5 cents, down by just 0.5 cents from Friday’s closing.
In its recent 2Q results announcement, the Group announced an interim dividend of 1 cent a share, unchanged from the previous year.
It has had a seemingly dismal set of figures.
This arose from its adoption of all new and revised Financial Reporting Standard (FRS) and Interpretations of FRS (INT FRS).
This accounting standard now requires revenue and hence profit recognition for all industrial and commercial property projects only at the completion stage.
Group’s quarterly and yearly reporting will now see spikes in both revenue and profitability figures as and when its property projects are completed.
Under the percentage of completion method of revenue recognition, Wee Hur’s 1H2011 revenue and net profit to shareholders would have been S$120.6 million and S$25.1 million respectively, representing 90% and 215% y-o-y growth instead.
The figures are S$84.3 million and S$2.9 million, respectively, under the new accounting standard.
Recent story: LIAN BENG, WEE HUR: Winning $100-million-plus contracts
LMA International has been a regular buyer of its own shares, accumulating 4.321 m shares under the previous buyback mandate.
It renewed its mandate at the recent AGM and made its maiden purchase on Monday with 235,000 shares.
At 31 cents on Monday, its stock price has proven to be resilient, and now is barely just below where it was at the start of this year.
LMA is the world’s market leader in the laryngeal mask airway range of supraglottic airway management devices.
In its recent 1H results, LMA achieved record sales of US$62.1 million, up 15% year on year.
Net income grew 174% to a record US$13.6 million with the inclusion of a one-time gain of US$4.5 million from a litigation settlement.
LMA declared an interim dividend of 0.5 Singapore cents per share.
Mr. Trevor Swete, Executive Group Chairman of LMA, said: “We are delighted with the strength of our results and the consistency of LMA’s growth trajectory. The new management team has brought fresh energy, ideas, and strategic focus to the business, which is already generating significant results."
LMA ended H1 2011 with a healthy level of cash and cash equivalents amounting to US$21.9 million as at June 30, 2011 and no debt.
Net cash provided by operating activities rose 41% to US$10.5 million in H1 2011.
The stock closed at 30 cents on Monday, translating into a dividend yield of 5% based on its recently-proposed final dividend of 1.5 cents.
It trades at just 0.7x its Net Tangible Assets.
Stamford Tyres recently reported a 41.4% jump in net earnings to S$13.3m for the year ended April 2011.
It is on track for strong growth – from a low base – in South Africa and China. Its established markets in Southeast Asia are growing too.
Reflecting an optimistic outlook for the business, Stamford Tyres President Wee Kok Wah has bought 675,000 shares in the past three months, raising his direct stake to 29.36 million, or 12.52%.
He has a deemed interest in another 56.54 million shares, or 24.8%.