business

After Several Alterations, Singer Looks Sharp

Remember the once-ubiquitous Singer sewing machine? True, it's no longer among the nation's hottest products. But overseas, particularly in East Asia and Latin America, sewing machines are selling like hot cakes. And Singer has reemerged as a new company whose stock has zipped up from 14 1/2 to 20 since its Aug. 2 initial public offering.

For investors "looking to participate in the rapidly expanding markets abroad, especially in the so-called emerging countries, Singer is the stock to own," says Chris Helton, a portfolio manager and director of equity research at Security Pacific. He notes that Singer is again thriving as a sewing-machine maker as well as a worldwide distributor of consumer-electronic appliances. The bulk of its sales and earnings come from overseas.

In the 1970s and 1980s, Singer deemphasized sewing machines in favor of aerospace and computers (prior to the company's takeover by Paul Bilzerian). The sewing-machine operation was spun off in 1986 and renamed SSMC. In 1989, Semi-Tech (Global), a Hong Kong company headed by James Ting, acquired SSMC. As new chairman and CEO, Ting reinstated the Singer name and took the company public last year.

Now listed on the Big Board, Singer is "very attractive as an earnings-driven company," says Helton, "and we think its undervalued stock will double over the next 12 to 18 months."

`POWERFUL NAME.' Another Singer bull is Merrill Lynch, which managed the company's recent stock offering. Merrill analyst Jonathan Goldfarb says Singer is putting to good use "its powerful brand name and global-distribution system, which has been revitalized in recent years." With 35,000 outlets around the world, Singer sells other consumer appliances, such as cassette players and VCRs, using the Singer label. The company has attractive contracts with such original-equipment suppliers as Sony, Philips, and Matsushita Electric Industrial.

Singer is trying to resuscitate sales in North America, which contribute less than 15% of total sales. Earnings at Singer have risen to $22 million in 1991 from $13 million in 1989, thanks in part to such big U.S. customers as Wal-Mart Stores and House of Fabrics.

So, in spite of the recession, Singer's earnings and return on equity "have improved impressively," says Goldfarb. Last year, earnings jumped to $1.36 a share from 1990's $1.02, and Goldfarb expects net to hit $1.55 a share this year and then rise 10% to 15% in 1993. Also impressive, he notes, is Singer's modest long-term debt of $24 million.

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