The bear market has spared few companies so far. Most have seen their share prices fall to a year-low.
Some blue-chip companies have even seen their share prices decline to a decade-low.
There are good reasons why share prices have fallen. Most companies are expected to report weak financial numbers due to measures implemented to contain the Covid-19 pandemic.
Remember that the 52-week low is just one of many possible filters for value.
It is up to the investor to determine if the company may display good long-term value after pricing in the slowdown of the business.
With that in mind, here are three companies that are trading near their year-lows.
HRNetGroup Ltd is a leading talent acquisition and flexible staffing firm operating in 13 cities within Asia. The group serves clients from over 30 diversified sectors such as financial institutions, healthcare life science and information technology.
HRNetGroup’s share price has fallen from S$0.78 a year ago to S$0.42, for a 46% decline.
The group reported a slight decline in revenue for the fiscal year 2019 (FY 2019) but profit attributable to shareholders was up 7.1% year on year.
Its balance sheet is strong with S$266.2 million of cash and no debt. The group also generated S$58 million of free cash flow (FCF) last year.
With many businesses in turmoil due to the coming recession and stringent border shutdowns, HRNetGroup’s business will likely suffer reduced volume.
Singapore O&G Ltd is a healthcare service provider with a long and established track record in the Obstetrics and Gynaecology (“O&G”) segment in Singapore. The group operates under four key segments, namely O&G, cancer-related, dermatology and paediatrics.
The group’s share price has tumbled by 54% from S$0.35 a year ago to S$0.16.
For FY 2019, Singapore O&G reported a 14.6% year on year increase in revenue but recorded a loss of S$1.1 million. The loss was mainly due to the impairment of goodwill at its dermatology division of S$11.9 million.
If the impairments were removed, net profit would be down around 10% year on year.
The group’s balance sheet remains strong with S$25.9 million in cash and no debt. FCF of S$13 million was generated for FY 2019.
Investors should note, however, that the previous CEO Dr Ivan Lau had just resigned last year. Eric Choo, his successor, officially took over as the new CEO on 3 February 2020.
Meanwhile, a former independent director, Christopher Chong, was charged with two counts of cheating in connection with the business and medical practices acquired from Dr Joyce Lim.
The instances of executive turmoil do raise eyebrows as to whether Singapore O&G has its house in order.
Straco Corporation Limited is an owner and operator of tourism assets in both China and Singapore.
The group owns two aquariums, namely the Shanghai Ocean Aquarium (SOA) and Underwater World Xiamen (UWX), both located in China.
It also owns 90% of the Singapore Flyer, a giant observation wheel. To round it off, Straco owns the Lixing Cable Car attraction in Xi’An, China.
Straco’s share price has declined 40% from S$0.80 a year ago to S$0.48.
In November 2019, the Singapore Flyer experienced a technical fault and was shut for repairs. The Flyer was only reopened on 20 March 2020 after the problem was fixed.
SOA, UWX and Lixing Cable Car were shut on 25 January 2020 due to Covid-19.
There was good news for Straco when the SOA was re-opened on 18 March 2020. Unfortunately, the positive development was short-lived, as the aquarium had to be closed again on 30 March 2020 due to concerns over another Covid-19 outbreak in Shanghai.
At the moment, only the Singapore Flyer and Lixing Cable Car are operational. Both SOA and UWX remain temporarily shuttered.
These closures will materially impact the group’s revenue, profitability and cash flow for this year.
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Disclaimer: Royston Yang owns shares in Straco Corporation Limited.