When I read today’s Business Times today, a few articles caught my attention. 2 of which is nothing new.
1) Q&M dives on vendor share sale plan
I have previously written a post on the sudden surge in Q&M share prices and what appears to be a bubble forming for Q&M. (read here). So it came as no surprise that the share prices of Q&M recently dived. Now it is trading at $0.85 with a P/E of 60.71 and Enterprise Value/EBITDA of 38.99. Both values are still very high.
6 shareholders will sell a total of up to 46 million shares, or 8.18 percent of the 562.3 million shares they hold in Q&M. This was possible through the lifting of a moratorium that were previously imposed on these strategic investors to Q&M or whom have sold their business to the group and were paid in part through the shares. This is possibly what riled the market. At the recent share prices, it would probably been a good deal for the 6 shareholders.
I have my doubts on the ‘growth at warp speed’ strategy by Q&M, as the true value of Q&M (organic growth) is not obvious, and there are risks involved via such strategy (esp. for a service orientated business that relies on quality of service &reputation of professions).
2) Chinese equities: Will it all end in tears
It seems that nowadays every time I read the news, there would be an article about Chinese market high valuations / possible bubble. I have previously written a post about this as well. (read here)
Well, this article mentioned about what might trigger a sell-off:
- The possibility of restriction on the availability of funds for stock margin lending by local brokers there.
- Regulator CSRC or PBOC to create a blanket restriction on margin trading.
Well if these happen, there would be a lot of tears flowing around for sure. Can’t really anticipate any of these and not really interested in participating in this ‘bigger fools’ game.
3) SMRT drops telco venture bid
This article came as a surprise.
It was stated that SMRT was under fire after saying in April that it may invest up to $34.5 million in partnership with OMG if OMG were to win Singapore’s fourth wireless telcom carrier license. For instances, MPs have raised concerned in May over whether SMRT would be distracted from improving train services, and asked for ways to ensure that he rail operator’s management would stay focused on its core business even though other segments might be more profitable. SMRT mentioned that it would ‘continue to place its investment focus on business areas such as in rail engineering where the company has an active interest’.
SMRT earnings have only recently started improving and the drop in oil prices would likely benefit SMRT as well (read here and here).
These news reinforce the fact that SMRT is not in a ‘perfect business’ (read here). SMRT’s market is anything but unregulated and it seems there is still a long way from it ever becoming unregulated.
And what SMRT does is closely scrutinized by the public and the government.