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Hock Lian Seng: Buying on weakness.

Friday, May 31, 2013

In my last blog post on Hock Lian Seng, I said that we could see its share price moving lower and it has moved lower. Do I believe that this is the lowest it could go?

Well, I certainly do not know if the stock price will stop declining although I will say that it could have found support. We can see this if we draw a trendline connecting various lows. Also, the higher low in the CMF gives us a positive divergence against a declining share price.

More likely than not, there will be a host of positive catalysts for Hock Lian Seng's share price to move higher but investors must be willing to wait. 

While waiting, the company's payment of meaningful dividends to shareholders annually will provide some comfort. If the dividend per share should be a more conservative 1.5c, with a share price of 26c, we will have a yield of 5.77%.

The weakness in Hock Lian Seng's share price allows me to buy more with a bigger margin of safety and any further weakness will create more opportunities to accumulate.

Related post:
1. Hock Lian Seng: Dividend of 1.8c per share.
2. Hock Lian Seng: Insider buying.


David & Thi said...

I think the problem for hock lian seng is the lack of activities over last 6 months. Besides their own industries project and diary farm joint venture, we haven't seen any third parties projected secured by the firm. This compare to say chip eng seng which won several hdb projects.

AK71 said...

Hi David,

It is a sleepy company. I wonder what would happen once they wake up from their slumber. :)

ZHANG Zheng said...

There are many construction companies listed in main board of SGX, i.e., Chip Eng Seng, Lian Beng, Lum Chang, CSC, BBR, etc, besides Hock Lian Seng. Do you mind sharing what make you think Hock Lian Seng stands out from the peers? Thank you very much.

AK71 said...

Hi Zhang Zheng,

I do not know if Hock Lian Seng is a better choice compared to its peers. ;p

I invest in Hock Lian Seng because its numbers are reasonably strong and it has been paying good dividends. I also think that Hock Lian Seng is a logical beneficiary of the upcoming increase in spending by the Singapore government to double the MRT network through 2020.

Most importantly, I am buying more because I think Mr. Market has ignored the company and its shares represent pretty good value for money at 26c.

AK71 said...

Hock Lian Seng Holdings said its unit has secured a $105.5 million project from Changi Airport Group (Singapore).

The project will commence in March 2014 and is expected to be completed by September 2018.

yeh said...

another gem.

AK71 said...

Hi yeh,

Well, I don't know if it is a gem. ;p

As an investment, it has not given me much to be excited about. It has instead paid consistent and meaningful dividends over the years. :)

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