No one likes a falling share price.
Unless you are a short-seller. But for the Singapore market, where shorting is not well practised and is restricted, the opportunities mostly lie in stocks with fundamentals rather than flaws.
That said, 5 stocks are making the headlines for bad reasons, and share prices of these stocks have been tanking.
Here are the 5 stocks, along with a brief chronology of what happened, and whether you should view them as opportunistic punts.
Cordlife Group Ltd (SGX: P8A)
Your chance is up, Cordlife?
Cordlife is a company in the business of consumer health and it is one of Asia’s leading providers of cord blood and cord lining banking services.
Like all banks, its moat is the trust it receives from its clients who entrust them to store and preserve cord blood and cord lining for their child’s future needs.
And the saying that trust is like a piece of paper is as true as ever. The Ministry of Health (MOH) found that the company had damaged cord blood units belonging to at least 2,150 customers, due to the suboptimal temperature exposure of the cords during storage.
The latest development involves the ex-CEO, four directors and CFO, who were arrested to assist with ongoing investigations.
And it becomes fishy when the CEO and some directors have all coincidentally resigned before the fiasco exploded.
There might be more can of worms or skeletons in the closet as the saga slowly unfolds.
No Signboard Holdings Ltd (SGX: 9I7)
No Signboard used to be one of the places where tourists and locals flock for crabs, with multiple outlets.
Time has not been kind to the company, as the company went through multiple rounds of challenges.
It started with the shuttering of its outlets, hitting the company the hardest during the peak of the pandemic.
Just when things couldn’t become worse, its former chief executive was charged with price rigging offences while a former director Su Haijin was found involved in a high-profile money-laundering raid last year.
2 years have passed since its shares stopped trading, and shares started trading again around 2 weeks ago.
Growth prospects remain uncertain apart from the cost stabilization and optimization process for its current businesses. But it is a mammoth task to see the company return to its glory days.
Best World International Ltd (SGX: CGN)
The company that has courted the most headlines is none other than Best World International.
The latest news involves the company seeking delisting but facing headwinds in doing so.
Due to alleged poor consumer sentiment and growth headwinds in its China market, the company is seeking to delist from the Singapore stock exchange.
However, before the delisting proceedings, existing shareholders are questioning the board’s rationale for not declaring dividends for FY 2023. Not only that, shareholders are also pushing the company’s board to work on solutions to disclose the pay of the existing executive directors, for benchmarking exercise.
It looks like Best World will be catching more headlines in the next few weeks or months as the new arc unfolds.
Manulife US Real Estate Investment Trust (SGX: BTOU)
Months ago, I dived deep into the implosion saga of MUST. Today, the REIT is still mired in the same problems, but investors might be surprised to learn that its C-suite executives are having a massive change of guard.
Due to fair value losses and breach of financial covenants, the REIT has to undergo asset dispositions as part of its recapitalization plan.
Even though multiple possibilities and solutions were considered concurrently back then, it seems now the REIT and the sponsor would have to work hand-in-hand to get through this challenge together.
Although the incoming new executives boast impressive resumes and experiences, there is a saying in Mandarin, that a good rider needs a good horse and vice versa to win a race.
Lum Chang Holdings Ltd (SGX: L19)
Lum Chang’s share prices might not be under pressure like its previous peers, but its management sure is.
Lum Chang operates in the property development, investment, and construction industry. Not only is the company involved in developing high-end condos, it also has a niche in preserving and the conservation of heritage buildings, as well as civil and infrastructure projects like MRT stations.
Mr David Lum Kok Seng, the managing director of Singapore Exchange-listed Lum Chang Holdings, was a new name that surfaced as Singapore’s ex-Transport Minister S Iswaran was handed new charges.
It is unsure whether Mr David Lum poses a key man risk to Lum Chang Holdings. Should that be the case, then any disruption to the managment of the company could be devastating on share prices.
All 5 companies share a similar weakness
Is investing an art or science?
I think it’s a mixture of both. Financials can be approached either quantitatively or qualitatively, but when it comes to judging the individuals running and managing the company, no amount of rocket science theory and principles can help you mitigate this risk.
Chances are, we might not have the chance to see, interact with or even talk to the very people managing the companies in which we invest our hard-earned money.
However, with the news portal and the annual report serving as logs and records, it is easier to keep track of whether such individuals have a track record of doing a good job, or are up to no good.
Even though these companies are operating in different business models, they still share the same core – which is providing products, services, and prudence that garner the trust of its clients, consumers and even shareholders.
Is there a chance for a happy ending or outcome for these 5 companies? Maybe some, but surely not all.
Once crumpled, like paper, it is never going to be the same again.