S-chips – to bet or not to bet?

• Many S-chips have seen their share price decimated with the sell down in the equity market. The poor performance by S-Chips was also due to accounting irregularities at some S-chips. The latest hit was Oriental Century’s announcement that there were irregularities in its cash balance.

• Until ‘cash rich’ S-chips takes meaningful measures such as declaring dividends, major shareholder making substantial purchase of their shares and possibly privatization exercises, investor confidence is unlikely to return any time soon.


• Our quick check with S-chips under our coverage also revealed that Epure and Raffles Education’s major shareholders had pledged their shares for financing. This in itself is not an issue but there could be negative repercussions for investors if the major shareholders are not prudent in managing their finances.

• For investors who want to act on their view that the market is undervaluing S-chips and have faith in the reported numbers, we highlight some good pickings.

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