Shares of Singapore construction firm PSL Holdings (PSLL.SI) fell as much as 13 percent on Friday as investors booked profit made from the previous run-up on optimism about its plan to venture into coal mining and a possible stake sale.
At 10:23 a.m., PSL shares were down 8.4% at $0.435 on a volume of 35.8 million shares, around three times its average daily traded volume in the last 30 days.
At 10:23 a.m., PSL shares were down 8.4% at $0.435 on a volume of 35.8 million shares, around three times its average daily traded volume in the last 30 days.
“It’s likely to be profit taking. There was speculation on a stake sale and people were alo excited about the coal venture,” said a local trader.
PSL had recently announced plans to invest in the Indonesian coal mining industry, which was taken positively by the market because of the strong demand outlook for the commodity.
The firm also said last month its controlling shareholders were in discussion with potential parties who are interested to acquire their stakes.
CIMB Research said in a June report that PSL’s venture into coal mining would likely lead to a new stream of earnings, but as the venture is still in the early stage, it is difficult to value the new business.
Nevertheless, CIMB said that construction stocks trade at an average of six times historical price-earnings ratio, while coal miners command an average of 25 times.
“Assuming that this is the potential range (6x-25x) of trading multiple for PSL, its fair value should range between $0.09 and $0.375,” CIMB said.
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