AS the stock market begins to look weary, and recent speculative winners start to crash back to rational levels, the perpetual laggard Semi-Tech is shining out as being both attractively rated and extremely defensive. The company is many investors' least-favourite stock. Its success in turning around US sewing machine company Singer has been coupled with corporate meanderings and public relations gaffes, leaving it as one of the stock market's worst performers of the past four years. However, it is a strong beneficiary of the recovering global market place. It also offers a 50 per cent discount to its net asset value and almost no exposure to an over-heating Chinese economy and its MFN status debate. It would therefore be difficult for Semi-Tech shares to slip lower, while the up-side potential has always been apparent. The share price of 51 per cent owned, New York listing Singer continues to go from strength to strength, and the Singer stake is now worth significantly more than Semi-Tech's entire market capitalisation. Singer will have opened 11 retail outlets in China by the end this year as it expands its presence in the world's largest consumer market, but the vast majority of its earnings come from outside the Greater China region. Semi-Tech's earnings will fall sharply in the year to January 1994, due to one-off share sales in the previous two years. However, there is a strong argument that Semi-Tech should be treated as an investment holding company, along the lines of Jardine Strategic Holdings. Jardine Fleming Securities estimates that the shares have a fully diluted net asset value of $35.40, even assuming that the company has to pay out $460 million in its legal action with US firm Bicoastal over royalties on the Singer brand name. This puts the shares at a discount of 52 per cent. Concern remains over Semi-Tech's track record for springing nasty surprises of the capital-raising variety, but it now has more than $1 billion of net cash, sufficient to forestall any concerns over fund-raising. With the recent acquisitions of Pfaff and Sansui, the group is taking on a coherent structure, which is not going to be suddenly changed. Singer has a massive distribution network, and Semi-Tech's strategy is to acquire brand names, source low cost China-made products for these brands, and sell them through the Singer distribution system. It is restructuring the troubled Sansui group into a middle-range brand, while Pfaff will be provided with a huge new market for its industrial sewing machines. The long-term potential for both investments is positive. In the shorter-term, Jardine Fleming anticipates a 25 per cent drop in earnings per share for the current year; even so, it is trading on a pitiful price-earnings ratio of 6.3, and is subsequently looking at strong growth. The discount to net asset value could attract predators, but it is certainly attracting Semi-Tech's Canadian parent ISTM, which had a rights issue partly to purchase Semi-Tech shares. This could be the catalyst to re-rate the stock price. Buyers before June 6 will pick up a 90-cent dividend.