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2 Stocks That Dropped 20% in Less Than 2 Weeks
Corporate Digest | 05 November 2014
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By: Louis Kent Lee
Articles (199) Profile

Japfa Dropped Nearly 20 percent Over 2 Days. After releasing the financial results of its Indonesian listed subsidiary, PT Japfa Comfeed, Japfa’s shares took an approximately 20 percent hit in just over 2 days.

PT Japfa Comfeed reported a 57.3 percent slump in earnings, which resulted in a similar 57% slide in earnigns per share. We feel this sell-off is highly due to poor earnings figure as approximately 87 percent of Japfa’s FY13 revenue came from the Animal protein segment, mostly powered by PT Japfa Comfeed.

There’s also the added pressure of further depreciation of the rupiah, coupled with volatile raw material costs that will add pressure to the performance of PT Japfa Comfeed.

    That said however, the company’s investment merits still do not warrant any fundamental change per se.

  • Sizable Market Share In Operating Segments
  • Ability to command significant price premium for its raw milk in China and fresh milk in Indonesia
  • Poised growth in Dairy segment remains undeterred
  • Poultry revenue growth from Asia still remains strong

Osim‘s Share Price Slashed By Analysts; Down 24 percent In Less Than 2 Weeks. The market darling saw a congregated effect by analysts as most slashed their price targets in unison after OSIM released its 3rd quarter earnings. It broke its streak of 22 consecutive quarters of record profit, as net profit for 3Q14 reflected a 28 percent slide.

Concerns ramped when sales growth, not taking its TWG segment into consideration, is slowing. This is coupled with legal fees surrounding two legal disputes (Singapore and Hongkong), and the expected increase in capex moving forward as a result of more TWG stores in Taipei, Shanghai, Beijing, and Guangzhou.

    The higher capex moving forward, plus slower growth seen other than the TWG segment does warrant a need to relook some points. We look to see if OSIM can show that:

  • Sales contribution from TWG is sustainable and whether same store sales growth can grow with the new store openings
  • Slowdown in contribution from North Asia is just temporary and not dragged across multiple quarters

OSIM’s current balance sheet is still solid, with a strong cash chest of $427 million in cash and equivalents, more than enough to pare down its $190 million in debt and convertible bonds, on top of Capex needed for opening of new stores.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

Please click here for more information about this author.

Japfa  0.480 +0.005 +1.05%   
Business: Co is an agri food company that produces multiple types of protein foods. It is headquarterd in Singapore and has operations in China, India, Myanmar and Vietnam.

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