Friday, 16 May 2014

Stock watch: Sin Heng Heavy Machinery


In the recent months, it has been tough to find value in the current stock market, especially the STI has climbed quite a fair bit and shy of the 2014 new high (as reported in the papers today). Recently, I found a pretty useful global stock screener portal (ft.com) which has the same and better feature than SGX or google screener. This website even allows you to compare with it's peer on the ratio that you are interested. Using this, I did not find anything attractive in the Singapore market, until I stumbled upon Sin Heng and Tiong Woon.
As I continue to build and refreshed my portfolio and also mindful that we are already in the 7th year peak for STI, I decided to just put in a small stake after doing the following analysis. 


During the recent Asean summit, there has been many positive outcomes in Myanmar, one of which our PM Lee has spoken to it's leader on allowing Singapore banks to set up shops in the country.  When I saw the news, I started to look from the filtered list on stocks with exposure to this country and already have a foothold there. From the screened lists, the shortlisted ones were Sin Heng and Tiong Woon.

The analysis started with comparing these 3 companies, Sin Heng, Tiong Woon and Tat Hong. Tat Hong was dropped due to it's high capex, so we were left with Sin Heng and Tiong Woon. Both were comparable with ratios such as PE, PB, debt to equity and cash from operation. For the first time, I was not able to decide on one, even after consulting a friend who is good in FA. Finally, the deciding factor was that Tiong Woon was dropped due to the numbers being rather erratic over the years, cant see the trend. Sin Heng has higher ROE and better quality earnings, and with that a decision was made. 

From the TA perspective, it was corrected from a year ago, and the closing price today is above the daily 200MA which is a good sign. When I saw the closing price today, it was a good decision to buy Sin Heng.

Disclosure: I am Long.

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2 comments:

Richard Ng said...

Looks like a value find! What is your Target Price for Sin Heng?

Oldman said...

Hi Richard, I don't have target price but I watch the downside risk.