S-chips battered in market turmoil
Share values take a big hit, adding to worries over euro crisis and scandals in China firms
Remisier kings
The cousins who have taken over Peter Lim’s throne View PDF
Popular posts from this blog
Ex-bank owner Agus Anwar declared bankrupt
Prominent former bank owner Agus Anwar was yesterday declared bankrupt by the High Court.
Two ex-UOBKH staff charged with lying to MAS over due diligence reports on a Catalist aspirant
TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
Comments
15 October 2011
Recent market volatility has hit China companies listed in Singapore, known as S-chips, particularly hard.
Even before the turmoil, S-chips had already been dragged down by a collective lack of confidence in the wake of a spate of accounting and corporate scandals.
But now, their share values have been so badly hammered that some are languishing with a price-to-earnings (P/E) ratio of under two - a very low figure.
This ratio is a widely used measure of share value in relation to net profits. The higher the ratio, the more highly valued is the company.
Combine Will International, Anchun International and SunVic Chemical are among the estimated 10 S-chips trading at ratios of under two, according to Bloomberg data based on Thursday’s closing price and past-year earnings.
There are also several companies which have price-to-earnings above two but below three, according to the data, which excludes companies that made losses in the most recent financial year.
About 150 China firms are listed here, according to Singapore Exchange data.
The low valuations are compounded by recent worries over the economies of the United States and Europe and the scandals in China firms listed here and elsewhere.
The companies themselves are aware of this, and are pulling out all the stops to address the issue.
‘We’re definitely not happy about the low valuations, but we’ll continue to work hard to let people understand our company more,’ said Mr Lim Jin Sin, group financial controller for SunVic Chemical, whose P/E ratio was 1.69.
He said accounting and corporate scandals at some S-chips have not helped the sector, while the chemicals industry ‘is not the darling for a lot of investors’.
SunVic has, for the past 18 months, been briefing investors on its business. But Mr Lim said they ‘may need more time to understand the industry before they appreciate it’.
‘We’re still working hard to do our investor relations,’ he quipped.
The ratio of Anchun International, which makes chemical systems and components for China’s petrochemical and chemical industries, has sunk to 1.3.
External factors such as the shaky global market and poor local sentiment for S-chips have dragged down the stock, said Anchun’s chief financial officer Leow Wei Chang.
The company’s results were also not as good as previous years’, owing to mainland China policies, such as the tightening of monetary policy, he added. This affects the firm’s customers who use credit to finance their capital expenditure.
‘We are focusing on the core of business, trying to improve on the results,’ said Mr Leow.
Some firms have also been hit by fears over their accounts and governance.
Sky China Petroleum Services shares were hammered earlier this week, after it was announced that its auditor Ernst and Young (E&Y) has resigned. As a result, its P/E ratio was 1.56 on Thursday. The resignation is due to an internal process in the E&Y worldwide network, said Sky China.
E&Y in China had resigned as auditor of Nasdaq-listed SinoTech Energy, whose chairman Liu Qingzeng had made an unauthorised transfer of cash. Mr Liu is also Sky China’s chief executive.
Mr Liu has agreed to being barred from accessing Sky China’s bank accounts and funds, it said.
When The Straits Times contacted Sky China chief financial officer Jeff Li last night, he was in China verifying the company’s cash balances. ‘We are working on it, and we are trying to regain our shareholders’ confidence,’ he said.
Low liquidity is also a common complaint of S-chips.
Another factor which may be dragging down S-chips is the scandals at China companies listed elsewhere, such as alleged fraud at forestry giant Sino-Forest, listed in Toronto. Chinese companies trading elsewhere were affected.
For instance, the shares of US-listed Baidu and Sina Corp plunged in early June after the Sino-Forest scandal broke, though they later recovered to pre-scandal levels.