buyback2.14Chart shows the number of shares and the price range bought by XMH in each of the months since Oct 2013. This month, the share price recovered strongly. Between 1 Feb and 24 Feb, XMH bought back 941K shares, accounting for 18.8% of the total volume traded.
Chart: Bloomberg



XMH HOLDINGS bought back shares prior to the release of its 2QFY14 results and continued to do so after.

Details of the buying spree can be viewed in the chart above.


XMH's 2QFY14 results released on 13 Dec showed that profit was down 44% to S$2.0 million on a weakening in the rupiah, which is the currency of its main customers in Indonesia.

These customers range from shipbuilders to owners of vessels which transport coal mined in the country.

The weaker rupiah has increased their cost of buying marine diesel engines from XMH, a distributor for a wide range of such engines.

As a result, some Indonesian customers have delayed taking delivery of their engines after these have arrived at XMH from Mitsubishi of Japan, mainly.

Weak coal prices in the past year have also impacted these customers but XMH said in a December press release that there are "some external indications on the growth in demand for coal, especially from China."



Click above for a 64-second video of a visit by investors to XMH.


Following the release of its 2Q results, XMH shares slid further over the next couple of weeks, touching a low of 28 cents this month (Feb).

XMH resumed its buying of shares from 20 December, which helped win back investor confidence, resulting now in a recovery of the share price to about where it was before the 2Q results were released.

The coming quarters will not only see some Indonesian customers finally take delivery of their engine orders (or their deposits would be forfeited) but also recently-acquired Mech-Power contribute to the profitability of XMH.

Mech-Power is slated to complete certain contracts and recognise all the profit at one go, under its accounting policy.

One of the biggest players in its industry in Singapore, Mech-Power manufactures, assembles, sells and services diesel-powered generator sets.

These are are primarily used as standby generators to ensure business continuity during a power black-out.

They are widely installed in buildings in Singapore and Mech-Power has customised a number of products for military needs as well. 

150_1Lee-YuejerWhat OSK-DMG analyst Lee Yue Jer (right) wrote on 12 Dec 2013: 

XMH still provides a healthy 3.8-4.4% forward yield and a 25% ROE without gearing.

Its SGD33m in net cash allows it to continue to executing its growth strategy via acquisitions while waiting for its Tuas Bay facility to be built.

Our TP, pegged to 14x blended FY14/15F P/E, categorizes XMH as a growth stock with yield support. 



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