S-chips ‘may not do so well for rest of year’     EXCEPT . . .

China measures still affect sentiment

Millet Enriquez

emelita@mediacorp.com.sg

SINGAPORE —

Still, prospects are not all bleak for the S-chips — which have generally taken a beating so far — as some analysts believe there are some bright spots.

Sectors such as consumer goods and food could prove resilient amid the overall market weakness.

“Just when you think that things wouldn’t come back, they often do.

“And I believe that this will be the case for the S-chips — though I would advocate very selective stock picking,”

said Mr Terence Wong, co-head of research at DMG and Partners.

As at Aug 12, some of the component stocks of the FTSE ST China Index have shed as much as 60 per cent in their share prices since the start of the year, according to data provided by

Asia Environment and Jiutian Chemicals were among those whose share prices have dropped considerably.

So far, valuations for S-chips are low. At a price to earnings (PE) ratio of about 5.7 or 5.8, they are quite below their counterparts in Hong Kong and Shanghai where valuations are seeing double digits, said Sias Research vicepresident Roger Tan.

Said Mr Tan: “In general, we are going to see a weaker S-chip market.

There will be one or two gems.”

Among those which could offer some upside potential are Ying Li, C&O Pharmaceutical Technology, and China Minzhong.

Another company singled out with good prospects is Singapore firm Midas Holdings which has significant business interests in China.

C&O Pharmaceutical, for one, is on track to meet its expansion plans, said Mr Tan.

While Midas will likely benefit from the China government’s commitment to improve its railroad system, said DMG’s Mr Wong.

“With the burgeoning of the middle class in China as well as the upping of the minimum wages over there, that would actually benefit a lot of the consumer players.

“Some of the companies that we do cover on that front would be the likes of China Hongxing Sports,” said Mr Wong.

While these stocks offer good valuations, Mr Tan said investors should also be prepared to hold on to the stocks for the long-term as it will take a while before they see some upside.

While investor confidence is gradually returning, further evidence of good business prospects, earnings track record, good management and transparency will be needed to gain investors back, analysts said.

Mr Tan said the fate of S-chips is also likely to rest on how China manages its cooling measures: “(If) they are not careful in managing the way they try to reduce the size of the bubble, and it does burst, then that may cause a panic in S-chips.”

In the meantime, these counters will have to compete with local companies to gain investor interest. “If they have a good growth story I don’t think it’s difficult to do that,” he added.China-based firms that are listed on the Singapore Exchange, or S-chips, may see a lacklustre performance for the rest of the year as China’s economic cooling measures continue to weigh down sentiment on these stocks.Thomson Reuters.

This is a good company.

Technically and Fundamentally are good.

Unfortunately, it's in a rather boring industry. Manufacturing vanes for power generator in China.

Difficult to seem a sudden surge in its share price.

But, I think its good for long-term keep.

Wat abt SGX listed $0.005 to $0.20.Wat got potential

to make money?????? Any lobang

How about Shanghai Turbo? It sound familiar and similar to global well response Shanghai Expo........ Ha. ha.. ha...

How about Shanghai Turbo? It sound familiar and similar to global well response Shanghai Expo........ Ha. ha.. ha...

How about Shanghai Turbo? It sound familiar and similar to global well response Shanghai Expo........ Ha. ha.. ha...