THE STOCK MARKET may be dismal but buying by substantial shareholders and corporate buyback schemes is alive. Among the lower-profile companies which have been regularly scooping up their own shares are Straco Corp, Action Asia and XMH Holdings. Their buying accounted for most of their shares traded recently:
With its purchase on 17 Nov, Almond Garden Corp has emerged as a substantial shareholder of Action Asia with a holding of 20,756,000 shares, or a 5.2% stake.
It has made a series of purchases (see table) whose prices were not announced but believed to be around the 15-cent level which the stock has been trading in recent times.
At 15 cents, Action Asia is at a discount to its NAV per share of 23.86 cents. Another positive metric is its trailing dividend yield of 6.9%.
And it has just declared an interim dividend of 0.4 cent, down from 0.5 cent in FY2010, following its 3Q results recently.
Almond is a wholly-owned subsidiary of Action Electronics, which in turn is a major shareholder of Action Asia with its 59.6% stake.
Action Asia is a designer, manufacturer and assembler of video and audio mobile entertainment products. Its key customer is Philips.
Its 3Q2011 saw revenue and profit decline, year on year, of 30.3% and 18.7%, respectively.
However, on a quarter on quarter basis, the revenue grew 77.0% while profit surged 186.2% on strong seasonal demand.
For 9M2011, net profit was S$12.4 million on sales of S$182.3 million.
Recent story: ACTION ASIA, SATS: What analysts say now....
In the past three months, Straco Corporation, continuing is share buyback programme, has bought back 3.049 m shares from the open market.
Not particularly well-known among stock investors in Singapore, Straco owns and operates the Shanghai Ocean Aquarium, the Xiamen Underwater World and the Lintong Cable Car.
Straco is debt-free and enjoys strong operating cashflow.
In the first nine months of this year, its cash balance increased 22.4% to $79.66 million. The cash represents about 53% of its current market cap of S$150 million.
Adding to its allure, it has a track record of profitability. In 9M2011, it reported $14.38 million in net profit. The 3Q alone, typically the busiest period for Straco, accounted for $9.53 million of that profit.
The fundamentals look set to stay firm. Straco said that despite the volatility in the global economy and the Euro zone debt crisis, “our business is expected to remain robust in view of the strong domestic demand in China.”
While it did not give out an interim dividend, it has been paying a final dividend in past years, and has a trailing dividend yield of 4.3%.
And though its business is entirely in China, it is not quite an S-chip as its top shareholder is Straco Holding which is 100% owned by its Singaporean executive chairman Wu Hsioh Kwang and his wife.
Recent story: Insider buying: SERIAL SYSTEM, MEIBAN, STRACO
XMH Holdings began its maiden share buyback at end-Sept after announcing that in 1Q (ended July 2011) its net profit dropped 19.4% to $1.5 million.
XMH, which went IPO in January this year at 25 cents, has since bought back 3.297 m shares around the 15-cent level.
The company distributes 9 brands of marine and industrial engines, gearboxes, propellers and related components with a product catalogue of over 4,000 items.
Globally, it is Mitsubishi’s no.1 distributor for marine diesel engines.
Revenue dropped by $4.5 million, or 27.0%, from S$16.8 million for 1Q2011 to approximately $12.3 million for 1Q2012 due mainly to a decrease of $4.1 million from the distribution and value-added products and services.
The chief cause was the rescheduling of deliveries by customers citing factors such as project delays and uncertainty arising from fluctuations in the Yen and Singapore Dollar.
The marine and offshore sector remained weak but the Group was quite shielded as it maintained its focus on the tugs and barges segment in its key market, Indonesia.
Global demand for natural resources from Indonesia, including coal and palm oil, will continue to spur demand for trans-shipment services and, coupled with the gradual implementation of the Cabotage Rule, is expected to stimulate demand for marine vessels, particularly tugs and barges.
The Group is confident that it will benefit from the growth in the Indonesian market.
Recent story: XMH: 1- cent dividend, or 5% yield