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Creative leads tech fever rally on its '3D' sound technology
CREATIVE Technology shares came alive on Friday after news broke that it's taking to the market a gadget that will create "3D" sound on headphones.
The timing could not have been better - coming as it did amid a market hungry for electronics outperformers. By the end of Friday, Creative's share price had jumped over 130 per cent, adding over S$100 million to the Singapore soundcard maker's market cap in a single day.
The shares soared S$1.63 to S$2.88, on a volume of 6.9 million as buyers latched on to what they hope would be a revival of Creative's glory days when it was the go-to maker of multimedia soundcards.
On Friday, The Business Times reported that Creative founder Sim Wong Hoo, who has kept a low profile for years, will bring to market a new headphone technology that can rival an eight-piece home theatre system.
It's early days yet, but punters are betting that Creative's Super X-Fi headphone holography, which it plans to release in the later half of this year, will be a catalyst for the stock.
Creative's stock surge drew a query from the Singapore Exchange early on Friday morning. Indeed, the heavy buying took most market watchers by surprise, as the stock has been off most investors' radars for years.
KGI Securities analyst Marc Tan told BT: "Investors have been piling up on manufacturing tech names such as Venture and AEM but they should note that Creative's Super X-Fi has not been launched yet.
"Creative's big move today sends the market cap/cash ratio above 1.35 times from 0.59 times last week. While we are positive on the prospects of Super X-Fi, we would prefer to wait for clarity on execution plans before jumping on the bandwagon."
Although Creative reported a net loss of US$4.2 million in the quarter ended Dec 31, it also has a US$118 million cash pile.
Friday was another great day for tech manufacturing stocks in general.
Venture Corp - the hot pick for almost every house here - touched levels not seen since 2000 on Friday, while AEM and Hi-P International continued to climb to all time-highs.
Venture is up 30.2 per cent so far this year. On Friday, it was up S$1.63 or 6.51 per cent to close at S$26.66 after "strong evidence" surfaced that the notoriously secretive contract manufacturer is ramping up production of a leading consumer device, which has potential revenue in excess of S$2.5 billion per year.
The report was put out by UOB Kay Hian analyst Foo Zhi Wei, who wrote: "Should Venture reach 100 per cent production capacity in 2018, net profit will easily surpass the consensus estimate of S$385 million in 2018.
"Anecdotal evidence suggests this to be likely as the client is already in talks with other suppliers to increase their production capacities."
Mr Foo did not reveal the identity of Venture's customer, saying only that it was an "American multinational company".
In January, Maybank Kim Eng reported that based on channel checks, Venture "may have won contracts for smokeless cigarette devices from a tobacco giant".
Mr Foo raised his target price for Venture to S$31.88 - the highest on the street.
Hi-P International, a supplier for Apple and Amazon, rose 14 cents or 6.2 per cent to S$2.41 on Friday. So far this year, Hi-P is up 28.9 per cent, after beating forecasts with its fourth-quarter results on Feb 13 due to a positive margin surprise. Fourth-quarter net profit more than doubled and Hi-P said it expects higher revenues and profits this year.
Semiconductor test handler maker AEM Holdings was up 32 cents or 5.3 per cent to S$6.36 on Friday, before reporting results later that night. Its fourth-quarter net profit was S$9.7 million, 11.6 times more than that in the previous corresponding quarter.
AEM expects 2018 to outperform 2017, and proposed the issuance of three bonus shares for every one existing share. AEM is up 89.9 per cent so far this year.