Share prices may fall for several reasons.
First off, a company may be reporting weaker revenue or profits because of lower demand for its products and/or services.
As a result, the business may throw out less cash and reduce its dividends, prompting investors to dump its shares.
Poor sentiment may be another reason for share prices to tumble.
Investors may believe that the company is facing tough times and will report a weaker set of financials in future periods.
With such a belief, shares of the company are then sold down as investors head for the exits or switch to more secure businesses.
However, not all share price falls should be viewed as negative.
If the problems facing a business are temporary, it can eventually pick itself up and report growing profits again.
We highlight four Singapore stocks that are touching their 52-week lows and try to determine if they can eventually recover.
ComfortDelGro Corporation Limited (SGX: C52)
ComfortDelGro Corporation, or CDG, is a land transport company with a fleet of around 34,000 buses, taxis, and rental vehicles.
The group also runs 177 km of light and heavy rail networks in Singapore and New Zealand.
CDG’s share price has fallen by 9.8% year to date and it recently touched a 52-week low of S$1.01.
For 2022, the land transport giant had declared a total dividend of S$0.0848, which included a special dividend of S$0.0387, because of the disposal of a property in Alperton, London, and to commemorate the group’s 20th anniversary of its listing.
Stripping out the special dividends, the core dividend would have been S$0.0461, giving its shares a trailing dividend yield of 4.2%.
Its fiscal 2023’s first quarter (1Q 2023) business update stated that cost challenges arising from inflation remain, while manpower shortages are still ongoing.
Revenue for the quarter inched up 2.1% year on year to S$906.4 million.
However, operating profit fell by 25.6% year on year to S$50.1 million while net profit plunged 56.9% year on year to S$32.8 million.
Despite the weaker results, CDG did manage to generate a positive free cash flow of S$89.6 million for 1Q 2023.
ARA US Hospitality Trust (SGX: XZL)
ARA US Hospitality Trust, or ARAHT, is a hospitality stapled group with a portfolio of 37 select-service hotels with 4,826 rooms across 19 states in the US.
The trust’s share price recently hit a 52-week low of US$0.32 and is down around 5.7% year-to-date.
Its share price performance stands in stark contrast to its business performance.
For 1Q 2023, ARAHT saw revenue rise 10.2% year on year to US$36.2 million as the US lodging market continued to post a strong recovery.
Gross operating profit jumped 20.1% year on year to US$10.5 million with net property income (NPI) climbing 19% year on year to US$6.4 million.
Revenue per available room (RevPAR) shot up 24.4% year on year to US$80.
Last year, the hospitality trust paid out a distribution per stapled security of US$0.03054, up more than eight-fold from the prior year’s US$0.00355.
Looking ahead, domestic travel will continue to drive the recovery in the US travel sector while leisure and business travel are projected to reach 105% and 90% of pre-COVID levels by 2024.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics (Holdings), or MMH, manufactures and markets tools and parts used in the wafer fabrication and assembly processes of the semiconductor industry.
The group has five manufacturing facilities located in Singapore, Malaysia, China, the Philippines, and the US.
The share price of MMH has tumbled by 34.4% year-to-date and touched a 52-week low of S$1.70.
The group saw revenue fall 14.3% year on year for the first nine months of fiscal 2023 (9M FY2023) as demand fell off a cliff for semiconductor-related products.
Factory utilisation rate tumbled to 50% for the latest quarter, resulting in the group’s margin shrinking to 43.8% from 53.4%.
As a result, operating profit plunged by 42.6% year on year to S$10.8 million for 9M FY2023 while net profit fell by 44.2% year on year to S$7.8 million over the same period.
However, MMH still generated a positive free cash flow of S$11 million for 9M FY2023.
Management expects business conditions to remain challenging until the supply-demand imbalance works itself out.
Venture Corporation Ltd (SGX: V03)
Venture Corporation is a blue-chip contract manufacturer and a provider of technology products, services, and solutions.
The group manages a portfolio of more than 5,000 products and solutions and has built-up expertise and know-how in the life science, genomics, medical devices, and consumer lifestyle segments, among others.
Shares of the contract manufacturer bounced off its 52-week low of S$14.54 and are down around 11% year-to-date.
Similar to MMH, Venture has reported a downbeat set of earnings for its 1Q 2023 business update.
Revenue fell 7.6% year on year to S$821.7 million while net profit slipped by 12.4% year on year to S$73.6 million.
The group also expects near-term weakness but will continue to invest in its capabilities to deliver sustainable value to shareholders over the long term.
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Disclosure: Royston Yang owns shares of Micro-Mechanics.