Tumbling share prices can be a cause for worry among investors.
Such events may either signal a deterioration in the business (i.e. falling revenue, profits and dividends) or are triggered by short-term, sentiment-based fear and worry.
Deciding between the two is the job of a savvy bargain-hunter.
Since the start of this year, there have been a group of stocks whose share prices have steadily fallen.
Macroeconomic challenges such as high inflation and surging interest rates could be the culprits as they dampen consumer sentiment and lead to lower business volumes.
However, such declines present opportunities for enterprising investors.
If the company has a solid product or service and is run by a competent management team, it should enjoy a swift recovery once business conditions improve.
We highlight four Singapore stocks that saw double-digit share price declines year-to-date (YTD) that you may wish to take a second look at.
Aztech Global (SGX: 8AZ)
Aztech Global is a one-stop design and manufacturing services group with four research and development centres in Singapore, Hong Kong, and China along with three manufacturing facilities in China and Malaysia.
Shares of the manufacturer have slid 17.1% YTD to close at S$0.68.
Aztech Global recently released its 2023 first quarter (1Q 2023) earnings, with revenue jumping 26.3% year on year to S$161.6 million.
However, inflation and foreign exchange movements caused expenses to jump, resulting in a 3.6% year on year dip in net profit to S$13.4 million.
The group boasts a strong order book of S$627.4 million as of 31 March 2023 along with an additional S$34.5 million to date.
A new 300,000-square-foot manufacturing facility was also recently completed in Johor, and this additional capacity ramp-up is to meet anticipated demand growth from its customers.
Operations at its new plant are projected to commence in June 2023.
Aztech Global is cautiously optimistic about its business prospects and will work closely with its customers and suppliers to manage forecasts and component requirements.
UMS Holdings Limited (SGX: 558)
UMS is a one-stop equipment engineering and services provider to the original equipment manufacturers (OEMs) of semiconductors and related products.
UMS’ share price has tumbled by 18.2% YTD and is now trading just below a dollar.
For 1Q 2023, revenue dipped by 5% year on year to S$80.8 million because of a slowing semiconductor industry coupled with tough economic conditions.
Net profit declined by 10% year on year to S$17.4 million.
Despite the drop, UMS still generated a free cash flow of S$16.6 million.
The group also paid out an interim dividend of S$0.01, unchanged from a year ago.
Despite the short-term challenges, UMS remains confident about the long-term outlook as the semiconductor market’s growth will be driven by the increasing role of microchips in powering all manner of electronic devices and equipment.
Fraser and Neave Ltd (SGX: F99)
Fraser and Neave, or F&N, is a Southeast Asia consumer group with businesses in food and beverage and printing and packaging.
F&N is present in 11 countries and employs more than 6,700 staff worldwide.
The group’s share price has fallen 13.6% YTD to S$1.08.
For its fiscal 2023’s first half (1H FY2023) ending 31 March 2023, revenue inched up 3.5% year on year to S$1 billion while gross profit improved by 3.8% year on year to S$296.6 million.
Stripping out exceptional items, net profit tumbled by 19.8% year on year to S$55 million on higher marketing and administrative expenses.
F&N’s free cash flow, however, turned in a positive S$71.5 million for 1H FY2023 compared with a negative free cash flow of S$81.3 million in the prior year.
An interim dividend of S$0.015 was declared, unchanged from a year ago.
F&N has secured the rights for Nestle’s (SWX: NESN) Bear brand sterilised milk in Cambodia, effective till 2027, where the former will help to promote the latter’s products.
The group has also acquired the remaining 72.4% equity interest in Cocoaland Holdings Berhad for around S$147.6 million and has delisted the company from Bursa Malaysia.
Ho Bee Land Ltd (SGX: H13)
Ho Bee has property investments and developments in Singapore, Australia, China, the UK and Germany.
In Singapore, the group is recognised as the pioneer development of luxury homes on Sentosa Cove.
Shares of the property company have declined by 13.8% YTD to close at S$2.07.
For 2022, Ho Bee’s revenue increased by 25% year on year, boosted by sales from the group’s development projects in Australia and rental income from The Scalpel property in London.
However, fair value losses resulted in operating profit falling by 34% year on year to S$187.2 million.
Excluding these losses, operating profit would have increased by 25% year on year to S$286 million.
A final dividend of S$0.08 was declared, 20% lower than the S$0.10 paid out in 2021.
In March this year, Ho Bee announced the disposal of two properties for S$115 million, netting a gain on disposal of S$47.1 million.
The disposal is part of the group’s capital recycling efforts and the proceeds will be used for general working capital.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
