WITH THE Singapore market having staged a stunning recovery in the last two months, the question investors are asking is: What are the laggards that are a bargain?
After a few keystrokes at our Bloomberg terminal, we found a list of stocks that are way behind, which excludes stocks whose trading have been suspended.
Among the laggards are: China Sky Chemical (market cap: 142.6 mln sgd), Celestial Nutrifoods (136.8 mln), Map Technology (72.5 mln), Bright World Precision Machinery (54.0 mln), Sino-Environment Technology (34.6 mln) and ISDN Holdings (34.3 mln).
Four of them occupy the combined engineering/&or machinery sector, while the other two are engaged in the soybean and nylon trades.
And all six have had a rather 'busy' first few months of 2009, which partly explains -- for some of them at least -- their underperformance relative to the Straits Times Index.
SINO-ENVIRONMENT TECHNOLOGY, a China-based environmental protection and waste recovery solution provider, has undergone some tumult in its upper management of late, which is hardly a panacea for quelling investor unease in a weak economy.
The company recently announced that Stark Master Fund Ltd, Stark Asia Master Fund Ltd and Centar Investments (Asia) Ltd acquired an additional 6.23% interest in the Sino-Environment, due to the enforcement of 21,130,564 shares of the company under a share charge.
As a result, Mr. Sun Jiangrong no longer holds any shares.
Stark has been selling massive amounts of the acquired shares - and, mysteriously, it has been buying shares of the company very recently.
The company’s independent directors last week advised shareholders that they have requested key management to reconsider their respective resignations and are in the meantime awaiting their respective responses. 
The resignations by key management consist of Sun Jiangrong, You Shengquan, Li Shouxin and Lin Xin.“(Their resignations) are detrimental to the interests of the company as the current business contracts, and the external and internal operations, of the company may be adversely affected,” Sino-Environment added.
Pursuant to this, the company was granted permission from the Singapore Exchange Securities Trading Ltd for a financial report extension of 45 days, from the original deadline of May 15 to June 30, for its quarter ending March 31 period.
Sino-Environment said the extension was sought due the absence of Sun Jiangrong, You Shengquan, Li Shouxin and independent director Pan Jinquan from its May 6 board meeting.
Sino-Environment is also implementing measures to hasten the announcement of its first quarter results, and has hired an independent auditor to clear up any recent issues prior to the announcement’s release.
“We have engaged PricewaterhouseCoopers LLP to conduct a review of the significant cash transactions for the three months period ended 31 March 2009, so as to provide added clarity to the Audit Committee on the governance surrounding these cash transactions. For the purposes of conducting such review, representatives from Sino-Environment and the auditors would be travelling to the offices of the relevant subsidiaries of the company in China as currently scheduled on 18 May 2009.”
ISDN HOLDINGS is a leading engineering solutions provider offering a wide range of engineering services, mainly to customers who are manufacturers and original design manufacturers of products and equipment that have specialized requirements in precision controls.
With headquarters in Singapore, ISDN has more than 50 offices across Greater China including Suzhou, Shenzhen, Guangzhou, Chongqing, Beijing and Shanghai as well as presence in Asian growth markets such as Hong Kong, Taiwan, Malaysia, Indonesia , Vietnam, Thailand, India and the Philippines.
When the company’s share price plunged in March, ISDN purchased 2,665,000 of its shares at the open market at an average price of 12.7015 cents per share “to underscore the Group’s confidence in the company’s future prospects and business fundamentals.”
The company’s first quarter to March 31 revenue was down 21.8% year-on-year at S$19.614 m resulting in a 68% net profit fall to S$322,000.
The company added that the effective tax rate increased from 35.8% to 50.7%.“This is because the group has lower profit before tax in Q109 compared to Q108, hence more unutilized tax losses were not recognized as deferred tax benefits.”
However, ISDN expects the operating environment to improve going forward.
“The group continues to be cautious and prudent with its business and cost management in view of the global economic crisis. On a day-to-day basis, it has observed improving business conditions against the backdrop of the current economic crisis. Comparably, its North Asia operations, in particular China, will likely display a better outlook than in South Asia going forward,” the company said.
It added that it is “proactively developing” new income streams via its nascent business ventures and new business opportunities.
11- 66.5 cents
BRIGHT WORLD PRECISION MACHINERY engages in the research, develop, manufacture, and sale of stamping machines, metal parts, complementary machines, and related components in China.
The company, which was the target of a failed takeover offer at 70 cents last year, offers a range of products, including bending, cutting, and CNC punching machines under the WORLD brand name.
The Group recorded turnover of RMB89.4 million, a drop of 36.8% from RMB141.5 million for the 3 months ended 31 March 2008.
Overall, net profit attributable to equity holders dropped to RMB7.9 million in 1Q09 from RMB32.3 million in 1Q08.
“We reckon that the reforms in the PRC Value Added Tax (“VAT”) system will continue to encourage manufacturers to purchase stamping machines. We have also adjusted our selling prices in a bid to reflect current market needs and attract more customers,” Bright World said.
CELESTIAL NUTRIFOODS is nestled in the heart of China’s soybean agriculture base - Heilongjiang, the country’s northern-most province.
It is a leading manufacturer of a wide range of soybean protein-based food and beverage products, sold under the "Sun Moon Star" brand name and supplied to both the consumer market and to industrial users.
1QFY09 net profit increased 8.4% to RMB141.1 million, due to lower operating expenses and taxation.Income tax expense fell 45.4% to RMB15.6 million in 1QFY09.The company is encouraged by prospects in the biodiesel sector, and is targeting annual production capacity of 100,000 tons.
“Our trial run is on schedule with commercial production to commence in Q2FY2009.It is also undergoing expansion for 6 new branded health and beverages, including high protein nutrient beverages (15,000 tonnes p.a.) and high protein nutrient powders (5,000 tonnes p.a.), with commercial production to commence in 2QFY09."
CHINA SKY CHEMICAL is one of the largest high quality nylon manufacturers in China.Its products are sold under the trademark "Tianyu" (天宇), and are used in the production of a wide variety of end products ranging from high-end apparel wear to home furnishing consumer durables.
Its January-March revenue fell 71.09% year-on-year to 176.437 mln yuan.
“Despite the acquisition of Qingdao Zhongda Chemical Fibre Company Limited (“QZ”), revenue of the Group decreased 71% to RMB 176 million for 1Q2009 as compared with 1Q2008 largely due to the decrease in both the average selling prices and sales volume of the Group’s main Full Drawn Yarn (“FDY”) and High Oriented Yarn (“HOY”) products,” the company said in a statement.
It said a lower average selling price was in part due to the depressed demand for the end products of its customers a result of the slower export markets in 1Q2009.
Looking ahead, the company is cautiously upbeat.Demand and prices have shown some tentative signs of improvements in 2Q2009. Management is uncertain as to whether these improvements can be sustained.
“Management is hopeful that things would stabilise in 3Q2009 with a pickup in 4Q2009. The Group has completed the installation of production equipment for its new Super-Resilient (“SR”) nylon products in the last quarter of FY2008 and has since commenced trial production. While originally scheduled for launch in early FY2009, the commercial production of SR products has been deferred to late FY2009 or FY2010, when the macro-economic fundamentals have hopefully improved.”
To continue to fund its operations and its capital commitments with a better mix of debts and equity, the Group is currently sourcing for additional short-term funding from banks in the PRC.
MAP TECHNOLOGY HOLDINGS has three business divisions: manufacture and sale of precision stamping products; plastic injection moulding and mould design and fabrication; and manufacture and sale of die-cut components.
The company paid a hefty 73% of its net profit as a first and final tax exempt (1-Tier) cash dividend of 1.77 US cents (2.65 Singapore cents) per share for FY08, which is unchanged from the 1.77 US cent dividend declared for FY 2007.
The company’s first quarter revenue fell 8.0% year-on-year to 10.862 mln usd.The decline was mainly attributable to the precision stamping division, which recorded a sharp decline in sales due to the global economic slowdown and uncertainties.
“The decline in precision stamping sales was mitigated by the revenue contribution form the newly acquired plastic injection moulding and mould design and fabrication business,” the firm said.
The group said it has taken a cautious approach to endure the adverse effects of the present downturn through pro-active cost management and to stay nimble in its cost structure.
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