Welcome to this new segment where we feature interesting stocks you can look at every month.
Straits Trading Co Ltd (SGX: S20)
Straits Trading Co, or STC, is a conglomerate with operations and financial interests in resources (tin mining and smelting), property, and hospitality.
It also has a strategic stake in Malaysia Smelting Corporation Berhad (SGX: NPW), one of the world’s leading tin producers.
For the first half of 2022 (1H2022), STC reported a 23.3% year on year jump in revenue to S$270.2 million.
Tin mining and smelting revenue rose 25.5% year on year while property revenue inched up 5.2% year on year.
The group recorded an exceptional gain of S$658.1 million from the disposal of ARA Asset Management to ESR Group Limited (SEHK: 1821).
This transaction resulted in net profit surging more than five-fold year on year from S$122.6 million to S$673 million.
To reward shareholders for the unlocking of value from the above transaction, STC has proposed a special dividend by way of a distribution in specie (DIS).
For the DIS, entitled shareholders can choose to receive either 145 shares of ESR or 180 new STC shares for every 1,000 STC shares owned at books closure.
The equivalent value of these two options is around S$0.50 per share, which is around a 15.7% dividend yield based on STC’s latest share price of S$3.19.
AEM Holdings Ltd (SGX: AWX)
AEM provides comprehensive semiconductor and electronics test solutions for its clients.
The group has manufacturing plants in Singapore, Malaysia, Indonesia, Vietnam, China, Finland, South Korea and the US.
AEM reported its highest half-year revenue and profit before tax for 1H2022.
Revenue nearly tripled year on year from S$192.3 million to S$540.5 million while net profit soared nearly 180% year on year to S$83.1 million.
The group also generated a healthy positive free cash flow of S$13.9 million for the period.
AEM’s interim dividend jumped to S$0.067 for 1H2022, significantly above the S$0.026 that was paid out a year ago.
The testing solutions provider also revised its revenue guidance upwards for fiscal 2022 (FY2022) to a range between S$750 million to S$800 million.
Megatrends such as 5G, the Internet of Things, and artificial intelligence will continue to drive growth in spending for testing solutions, thereby benefitting AEM over the long run.
The next phase of testing, aptly named Test 2.0, will set the scene for AEM’s future growth.
The group estimates that the market for Test 2.0 could grow eightfold over the next eight years.
If this projection comes to pass, it could signal a significant upside for AEM’s revenue and profits in the years to come.
Nanofilm Technologies International Ltd (SGX: MZH)
Nanofilm Technologies is a provider of nanotechnology solutions to clients in a wide range of industries.
The group reported a respectable set of earnings for 1H2022 despite facing a challenging operating environment in Shanghai due to the COVID-19 lockdown.
Revenue climbed 15.2% year on year to S$111.3 million year on year revenue growth for all its three divisions.
Net profit inched up 5.1% year on year to S$18.8 million but would have risen by close to 17% year on year if the effects of COVID-19-related expenses were excluded.
Nanofilm continued to generate a free cash flow of S$11.3 million for 1H2022, a slight drop from the S$12.8 million last year.
An interim dividend of S$0.011 was declared, 10% higher than the S$0.01 paid out in 1H2021.
For 2H2022, Nanofilm will expand its coating services capability with a coating facility in Japan and is currently seeking qualification with a customer for application on ceramic products.
The group is also exploring if it can increase its production capacity for its nanofilm business unit as it sees strong pipeline visibility.
The move to its new corporate headquarters will take place in the fourth quarter of this year and Nanofilm will also set up a Nanofab engineering centre at Tai Seng Drive.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.