It can be exciting when share prices hit a high.
This occurrence could imply that the business is doing well, or that investor sentiment towards these stocks is overwhelmingly positive.
As such, you must find out the reasons behind the surge as sentiment alone may not sustain the increase.
If the business is enjoying higher revenue and profits and/or declaring higher dividends, then the fundamentals would justify the share price rise.
We highlight four stocks that recently hit their 52-week highs and try to determine if they can continue their run.
Singtel (SGX: Z74)
Singtel is Singapore’s largest telecommunications company and provides mobile, broadband, and pay TV services to consumers and cybersecurity and data centre services to businesses.
The telco’s share price recently hit its 52-week high of S$2.68 and is up around 8.2% year-to-date (YTD).
The blue-chip group announced two significant business developments in the past week.
First off, Singtel is partnering with both ST Telemedia Global Data Centres (STT GDC) and KKR to form a consortium led by KKR that will invest S$1.75 billion in STT GDC.
STT GDC is a leading data centre colocation services provider while KKR is a global investment firm.
Management believes that this investment will allow Singtel to capitalise on the fast-growing data centre business trend while providing certain downside protection.
This transaction will be funded via internal cash resources.
Next, Singtel’s data centre arm of its Digital InfraCo unit, Nxera, is partnering with TM to jointly develop data centres in Malaysia.
TM is a leading integrated telco and digital technology group in Malaysia offering a comprehensive suite of communication services.
The partnership will start by developing a sustainable, AI-ready data centre in Iskander Putri, Johor, and will be the largest to date for both Nxera and TM.
The initial phase of the data centre is slated for 64 MW and this can be scaled up to 200 MW if there is sufficient market demand.
Riverstone Holdings (SGX: AP4)
Riverstone manufactures nitrile and natural rubber clean room gloves that are used in highly controlled environments, as well as premium nitrile gloves used in the healthcare industry.
The group has six manufacturing facilities located in Malaysia, Thailand, and China with an annual production capacity of 10.5 billion gloves.
Shares of Riverstone shot up 40% YTD and hit their 52-week high of S$1.03 just last week.
The glover producer reported a strong set of results for the first quarter of 2024 (1Q 2024).
Revenue rose 4.8% year on year to RM 249.5 million with gross profit surging 57.3% year on year to RM 97.5 million.
The group’s net profit climbed 54.5% year on year to RM 72.2 million.
Riverstone also generated a positive free cash flow of RM 44.8 million.
An interim dividend of RM 0.04 was declared, in line with the good results.
CEO Wong Teek Son believes that the impending recovery of the semiconductor and consumer electronics industries will bode well for the group’s cleanroom gloves division.
Riverstone is building new lines to increase the production capacity for cleanroom gloves.
Sim Leisure (SGX: URR)
Sim Leisure Group, or SLG, is a designer, developer and operator of theme parks.
The group is the owner of the ESCAPE brand of attractions and also owns theme parks in Malaysia and Singapore (Kidzania Singapore).
The share price of SLG has soared 83% YTD and recently hit its 52-week high of S$0.96.
The group reported a resilient set of earnings for 2023.
Revenue more than doubled year on year to RM 135.5 million while gross profit increased by 29.7% year on year to RM 57.4 million.
Net profit, however, dipped slightly by 1.3% year on year to RM 21.9 million.
SLG also generated a positive free cash flow of RM 18.9 million.
A final dividend of RM 0.03 was declared and paid out, a decrease from the prior year’s RM 0.05 final dividend.
Just last month, SLG entered into a film licence agreement to produce a cinematic immersive roller coaster film that will help to market its mechanical roller coaster ride.
Yangzijiang Shipbuilding (SGX: BS6)
Yangzijiang Shipbuilding, or YZJ, is one of the largest non-state-owned shipbuilding companies in China.
The group owns four shipyards in Jiangsu province that can produce a broad range of commercial vessels.
YZJ’s share price has surged nearly 60% YTD and hit its 52-week high of S$2.51 not long ago.
The shipbuilder reported a record order book of US$16.08 billion as of 1Q 2024 with YTD order wins at 74% of its target of US$3.32 billion.
Management sees healthy demand growth with oil tankers and gas carriers continuing to fuel new-build orders for the group.
In particular, containership demand growth will hit 9.5% this year because of fleet renewal requirements for many ship owners.
As for other types of vessels, LNG carriers should see demand increasing by 3.6% per annum till 2029 while LPG carriers’ demand should increase by 5.5% per annum over the same period.
These increases are driven by increased shale production along with the global energy transition to cleaner fuels.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
