Zheneng Jinjiang Environment continues the buyback pace

OVER the four trading sessions from Oct 25 to Oct 30, institutions were net sellers of Singapore equities, resulting in net institutional outflows of S$365 million. This accelerated the net outflow trend observed during the previous ten sessions.

The stocks that led net institutional outflows during these four sessions were DBS, UOB, OCBC, Sembcorp Industries, Singapore Technologies (ST) Engineering, Mapletree Pan Asia Commercial Trust, CapitaLand investment, Zeetrium, CapitaLand integrated commercial trust And Mapletree Logistics Trust.

In the meantime, Fed up, Broadway Industrial Group, Dyna Mac, Jardine Bicycle & Transport, Keppel DC Reit, Yanlord Land Group, Shipbuilding in Yangzijiang, Singapore Airlines, Genting Singapore And River stone led the net institutional inflow.

Riverstone produces high-tech cleanroom gloves, high-performance healthcare gloves and cleanroom consumables. The high-tech cleanroom gloves are designed to protect semiconductor products against contamination, corrosion and electrostatic discharge. Riverstone is ranked this year as a top-50 stock by trading turnover, and a top-30 stock by net institutional inflows.

According to the SGX Stock Screener, the stock maintains a return on equity of 16.5 percent, while its price-to-earnings ratio stands at 16.4 percent.

From a sector perspective, across the four sessions, financial services and real estate investment trusts (Reits) recorded the largest net institutional outflows, while energy and consumer cyclical sectors bucked the trend and recorded the largest net institutional inflows.

During the four sessions, nine listed companies also conducted buybacks totaling S$2.6 million.

This amount was significantly less than the usual quota, which coincided with the current earnings season.

On October 29, ST Engineering bought back 500,000 shares at an average price of S$4.62 per share. This brings the total number of shares repurchased since the start of the current mandate to 0.2 percent of the issued shares (excluding treasury shares).

During the four trading sessions, 70 director interests and substantial shareholdings were filed for more than 30 primary listed shares. Directors or CEOs filed twelve acquisitions and three divestitures, while substantial shareholders filed ten acquisitions and eleven divestitures.

Raffles Medical Group

On October 29, Raffles Medical Group executive chairman Loo Choon Yong acquired 1.1 million shares at an average price of S$0.89 each. This increased his total stake from 55.3 percent to 55.36 percent.

Since February, Dr Loo has gradually increased his total stake in the shares from 53.02 percent. On September 26, he bought 470,000 shares at an average price of S$0.889 per share.

Beng Kuang Marine

On October 24, the Ginko-AGT Global Growth Fund reduced its substantial stake Beng Kuang Marine from 7.13 percent to 5.58 percent by selling three million shares at an average price of S$0.251 per share.

Earlier, on June 6, the fund had increased its stake in the group to over 7 per cent, acquiring shares at an average price of S$0.181 each.

The rotation followed Beng Kuang Marine’s announcement last month that it would be removed from the SGX watchlist effective October 15. When it reported its results in August for the first half ended June 30, the group highlighted that it showed improved operating results. performance over the past four consecutive quarters, marking a financial turnaround from the second quarter of fiscal 2023 (excluding a one-time gain on sales).

Specifically, profit attributable to shareholders stood at S$8.57 million in H1 FY2024, a significant improvement compared to the net loss of S$0.85 million in H1 FY2023.

The Ginko-AGT Global Growth Fund was launched in February 2019. AGT Partners employs three investment strategies: long-term investments, short-term active trading and a quantitatively driven multi-factor strategy.

The fund manager says that the concentrated long-term investments account for approximately 75 percent of the fund’s assets under management (AUM). This strategy targets companies with competitive advantages to maximize potential sustainable earnings power, prioritizing profit certainty over speculative opportunities.

As we enter 2024, the fund manager highlighted key competitive advantage considerations, including network economics, high switching costs, lowest-cost production, favorable locations and valuable intangibles such as brand name, patents and regulatory requirements.

The strategy also focuses on companies that can reinvest their profits for further growth at a reasonable rate of return. The fund managers also said that effective capital allocation by management, including share buybacks and dividends, is an important consideration when investing at reasonable valuations, often using the price-to-earnings ratio.

AGT Partners said the short-term active trading strategy represents about 20 percent of the fund’s assets under management, while the quantitative-driven multi-factor strategy represents about 5 percent.

With the aim of doubling its net asset value every four years, at an average of around 20 percent per year, the fund has consistently attracted investors since 2023, when it opened up to external accredited investors.

Having achieved a compound annual growth rate of more than 40 percent since inception, the fund plans to build on its current track record and focus on managing the wealth of its investors over the long term.

Zheneng Jinjiang area

Zheneng Jinjiang area bought back 350,000 shares at an average price of S$0.40 per share. This brings the total number of shares repurchased since the start of the current mandate to 0.34 percent of the issued shares (excluding treasury shares).

The company is a leading waste-to-energy (WTE) operator in China. As of June 30, 2024, it operated 38 WTE facilities with a combined daily capacity of 44,405 tons. Approximately 98 percent of turnover comes from WTE’s core activities, including waste processing and the sale of electricity and steam generated from this process.

Over the past five years, the group has demonstrated consistent and steady growth in its waste processing capacity, growing by 16.7 percent from 38,060 tonnes in 2020. In addition, its installed electricity generation capacity has grown from 718 megawatts (MW ) to 921 megawatts (MW). MW over the same period, reflecting an increase of approximately 28.3 percent.

The business model includes both build-own-operate and build-own-transfer frameworks. For the first half of 2024 (ended June 30), the group reported revenues of 1.8 billion yuan ($335 million) and net profit of 251.9 million yuan (excluding a loss related to foreign currency translation differences due to of the sale of its Indian activities).

The group aims to increase daily capacity by 36 percent to 60,605 tons over the next ten years. This growth strategy revolves around the commissioning of new facilities, both nationally and internationally, in addition to specific technological developments to improve efficiency and optimize energy generation capacity in existing power stations.

Zheneng Jinjiang Environment has recently made meaningful progress in its overseas operations. On October 18, it announced that its subsidiary, PT Indo Green Power, had signed a facility agreement involving DBS Bank and PT Bank Negara Indonesia as lead arrangers, and PT Bank DBS Indonesia as global facilities agent.

The agreement provides for a facility of US$85 million and an IDR facility of 243 billion rupiah (S$20.5 million). PT Indo Green Power will build, own and operate a WTE plant in Palembang, Indonesia, capable of processing 1,000 tons of waste per day.

Zheneng Jinjiang Environment also uses various strategies to ensure wise capital management. The company has a flexible financing policy, which includes extending short-term working capital loans at maturity and strategically reducing capital expenditure (capex) to align with steady growth plans.

The company targets a balanced equity-to-debt ratio of 30:70 for capital investments in WTE facilities, which helps manage financial risk and maintain a strong balance sheet. In addition, it works closely with the largest controlling shareholder to leverage its strong credit status and thus broaden financing channels.

Zheneng Jinjiang Environment also aims to introduce strategic investors or Reits at the project level and regularly reviews and adjusts its overseas expansion plans to ensure sustainable growth. Collectively, these measures are intended to alleviate liquidity pressure and reduce project and financing costs.

GuocoLand

Between October 23 and 25 GuocoLand chairman and non-independent non-executive director Quek Leng Chan increased his perceived stake through acquisitions by Associated Land. The 65,400 shares were purchased at an average price of S$1.58 each.

This followed the acquisition of 29,600 shares between Oct 21 and 22 at S$1.59 per share, and 56,000 shares purchased at S$1.50 each on June 10.

Quek has an assumed 71.86 percent stake in the leading real estate group that offers extensive opportunities across the entire real estate value chain. GuocoLand claims that its real estate investment segment generates steady rental income and capital growth from high-quality commercial and mixed-use assets, while its real estate development segment is positioned to generate profits through the creation and sale of high-quality residential and integrated developments.

The writer is a market strategist at Singapore Exchange (SGX). To read SGX’s market research reports, visit sgx.com/research.