3 Stocks to Watch This Week

2020-07-08     thesmartinvestor
3 Stocks to Watch This Week

As investors, it’s imperative to keep ourselves updated on the latest corporate developments.

These include stocks within our portfolios, as well as those on our watchlists.

With COVID-19 raging around the world, many companies are also reacting by looking for alternative supply chains or ways to mitigate revenue and profit declines.

Here are three stocks that are worth highlighting due to recent, important corporate developments.

Hi-P International (SGX: H17)

Hi-P is one of the region’s largest and fastest-growing integrated contract manufacturers.

The group has 13 manufacturing plants worldwide and serves customers in industries such as wireless communications, consumer electronics and medical devices.

For its Singapore operations, Hi-P had announced last week that it had applied for an exemption for suspension of business activities pertaining to Singapore’s “Circuit Breaker” measures.

The good news is the group will be allowed to continue its manufacturing operations as they are deemed to be part of the global supply chain.

Its subsidiary, South East Asia Moulding Company Pte Ltd, has also received approval from the Ministry of Trade and Industry (MTI) to continue manufacturing operations.

As such, investors should pay close attention to Hi-P’s next set of earnings to assess the impact of COVID-19 on its business.

Previously, the group had announced that its manufacturing operations in China were temporarily interrupted due to Government-mandated closures.

Hi-P shares have declined by 40% year to date and are trading at a historical price-earnings ratio of just 9.5 times.

Frasers Logistics and Industrial Trust (SGX: BUOU)

Frasers Logistics and Industrial Trust, or FLT, is a REIT with a portfolio of 93 logistics and industrial properties spread across Australia, Germany and the Netherlands.

In December last year, FLT and Frasers Commercial Trust (SGX: ND8U), or FCOT, announced a merger (through a scheme of arrangement) whereby FLT will acquire all the units in FCOT for S$1.68 for each FCOT unit.

The scheme document has been issued by FLT and a court hearing to sanction the trust scheme has been conducted.

FLT has announced the books closure date for a distribution (known as the “Clean-Up Distribution”) in respect of the period from 1 October 2019 till immediately before the effective date of the merger.

Investors should wait for news on the exact quantum of this Clean-Up Distribution as FLT’s manager will announce it at a later date.

Penguin International (SGX: BTM)

Penguin International is a designer, builder, owner and operator of aluminium high-speed craft.

The group owns a fleet of crew boats and passenger ferries that are manufacturer at its shipyards in Singapore and Batam, Indonesia.

Last week, the group announced the proposed acquisition of Swissco Offshore (Pte) Ltd (“SOPL”) for US$1.4 million.

SOPL owns two leasehold properties in 58 Penjuru Lane and 21 Tuas Road.

The rationale behind the acquisition is to develop a dedicated one-stop aluminium shipbuilding hub that can design, build, and maintain larger vessels for its clientele.

The group’s lease on its current premises at 18 Tuas Basin Link will expire at the end of 2021, and will be replaced by the SOPL-owned Tuas property which is around 120% larger.

The new property also has a 100-metre waterfront, making it suitable as a new replacement waterfront manufacturing location.

This acquisition is interesting for the group as it will enable it to grow and take its business to the next level.

Shares in Penguin have declined by 36% year to date and the group trades at just five times historical earnings.

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Disclaimer: Royston Yang owns shares in Frasers Logistics and Industrial Trust.

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