China Animal rallied 9% today. The powerful rally could be due to the news that the company is looking at increasing work force and M&A next year. The other reason could be the coming HK listing.
I have high hope on China Animal. If things turn out to be what analysts have predicted, the earning growth could continue and share price heading north. Invest in small cap is about taking position early when it is undervalued and look to sell if it become way overvalued.
The future is still bright for the company. Let's see how it perform next year.
Tuesday, 7 December 2010
Saturday, 20 November 2010
What to buy?
This is a lazy afternoon, sitting in front of the computer, just want to let my mind be empty. However, read some blog entries, this trigger me to write something.
The market remain uncertain as the economy data is not so rosy. In view of US QE2 measure and the general comment I read every where, I am confident next year will be a good year for stock. I suspect more hot money will flow to Asia seeking for return. So, the usual candidate will be Asia consumption stock.
Here are some stocks that I will buy if the price is right
Wilmar - Big cap is not usually my cup of tea. However, I found my style to shift as I gain more experience in stock market. Being burnt by few stock, I supposed I am wiser now. Wilmar remain the stock in my watch list because of the China factor. It's cooking oil business is doing well in China. The previous quarter result is disappointing because of wrong timing. More importantly, Kouk said it is a good company but a bit high already. So, I guess I won't make my move yet, waiting for more price weakness. Reasons to buy: market leader in cooking oil, going into rice and flour business and new sugar business.
China Animal - I never truly understand the business. It sounds contradicting that why buy into the company if you are not truly understand the business itself. My thought is you don't really understand the business unless you are in the company or in same line of business. The company has shown promise on new acquisition, high barrier of entry and good ROE. If thing turns out like what analyst predicted, it should worth a lot more than currently.
Eratat - It is my favourite now mainly from valuation point of view. If thing turns out more promising, there are few catalyst that could make the price rocket - low valuation, continuous market share gain and higher ASP. When the market feel more excited about the company, there is room for further re-rating and hence more upside potential. The negative side of this business is the cash hasn't come in yet - negative cashflow
China Mobile (ADR) - You can either buy Hong Kong stock or buy the ADR listed on SGX. The reason is pretty obvious. Trading at PE of 12-14, having dividend yield of 4% and dominant position in China market. It is reasonable priced and have good growth potential for the long term.
I will stop here. There are still quite a number of stock I monitor and might go into if the risk reward ratio is attractive. But it will be too long to list down one by one.
The market remain uncertain as the economy data is not so rosy. In view of US QE2 measure and the general comment I read every where, I am confident next year will be a good year for stock. I suspect more hot money will flow to Asia seeking for return. So, the usual candidate will be Asia consumption stock.
Here are some stocks that I will buy if the price is right
Wilmar - Big cap is not usually my cup of tea. However, I found my style to shift as I gain more experience in stock market. Being burnt by few stock, I supposed I am wiser now. Wilmar remain the stock in my watch list because of the China factor. It's cooking oil business is doing well in China. The previous quarter result is disappointing because of wrong timing. More importantly, Kouk said it is a good company but a bit high already. So, I guess I won't make my move yet, waiting for more price weakness. Reasons to buy: market leader in cooking oil, going into rice and flour business and new sugar business.
China Animal - I never truly understand the business. It sounds contradicting that why buy into the company if you are not truly understand the business itself. My thought is you don't really understand the business unless you are in the company or in same line of business. The company has shown promise on new acquisition, high barrier of entry and good ROE. If thing turns out like what analyst predicted, it should worth a lot more than currently.
Eratat - It is my favourite now mainly from valuation point of view. If thing turns out more promising, there are few catalyst that could make the price rocket - low valuation, continuous market share gain and higher ASP. When the market feel more excited about the company, there is room for further re-rating and hence more upside potential. The negative side of this business is the cash hasn't come in yet - negative cashflow
China Mobile (ADR) - You can either buy Hong Kong stock or buy the ADR listed on SGX. The reason is pretty obvious. Trading at PE of 12-14, having dividend yield of 4% and dominant position in China market. It is reasonable priced and have good growth potential for the long term.
I will stop here. There are still quite a number of stock I monitor and might go into if the risk reward ratio is attractive. But it will be too long to list down one by one.
Sunday, 7 November 2010
Eratat promising turn around and low valuation
Eratat has just released the Q2 result. A quick scan on the financial statement:
For 6 months result,
Gross profit +3.3%
Because of reduced in expenses, Operating profit increased 23.4%
Trade receivable is quite high at 347,747 because of lengthen credit term
Current liabilities 130,968
Cash and bank balance 131,936
Margin improvement +2.8% for 6 months
Operating cash flow at 99,189
But because of the high trade receivable, it registered a cash outflow
EPS is 17.16 RMB cts (3.31 SGD cts)
In the cut throat China sports wear market, Hongxing has suffered a lot. Eratat is moving away to lifestyle fashion sector. How successful it is, remain to be seen. However, this set of result is quite promising. There are few important points
- Margin increased
- ASP increased
- Profit growth
The negative part
- Higher receivable days
- Cash outflow (company earn money but no cash comes in)
The management may be smart in changing the direction of business, and on the surface, they might just have succeeded in doing so. However, challenges abound. Management is looking forward for better time ahead.
The risk is still there, especially there is no cash coming into the company. Distributors still haven't pay back the money. Comparing the cash balance and current liabilities, company should have enough cash to pay the liabilities until real cash flowing in.
The valuation is low. Without considering the seasonality, if you just double the half year EPS, we are looking at whole year earning of 6.62 cts. Last Friday closing price was 0.205 and it is trading at forward PE of 3. That is super cheap.
For 6 months result,
Gross profit +3.3%
Because of reduced in expenses, Operating profit increased 23.4%
Trade receivable is quite high at 347,747 because of lengthen credit term
Current liabilities 130,968
Cash and bank balance 131,936
Margin improvement +2.8% for 6 months
Operating cash flow at 99,189
But because of the high trade receivable, it registered a cash outflow
EPS is 17.16 RMB cts (3.31 SGD cts)
In the cut throat China sports wear market, Hongxing has suffered a lot. Eratat is moving away to lifestyle fashion sector. How successful it is, remain to be seen. However, this set of result is quite promising. There are few important points
- Margin increased
- ASP increased
- Profit growth
The negative part
- Higher receivable days
- Cash outflow (company earn money but no cash comes in)
The management may be smart in changing the direction of business, and on the surface, they might just have succeeded in doing so. However, challenges abound. Management is looking forward for better time ahead.
The risk is still there, especially there is no cash coming into the company. Distributors still haven't pay back the money. Comparing the cash balance and current liabilities, company should have enough cash to pay the liabilities until real cash flowing in.
The valuation is low. Without considering the seasonality, if you just double the half year EPS, we are looking at whole year earning of 6.62 cts. Last Friday closing price was 0.205 and it is trading at forward PE of 3. That is super cheap.
Sunday, 24 October 2010
Weekend random thoughts
My random thoughts for this weekend
ADR
ADR has finally began trading. Some market watchers said the volume is disappointing. Every journey starts with first step right? I think it is a good move. Slowly more will be buying and selling the ADR, SGX stands to gain and also investor stand to gain from saving the custody fee.
My favourite will be two - China Mobile and Ctrip.com. I am not sure whether I will start buying China Mobile, but the valuation looks cheap. Selling at PE of 10+, with dominant China market share. It will be a good stock for long run. Ctrip is not so straight forward. The valuation is a bit too high. Although at times, analyst will argue that its forward earning is this and that, therefore justify the high price. I just feel too risky to go in at this level. However, the future will be very bright for online travel booking. I hope it will come down soon.
Nation of gambler
I read the Saturday's newspaper report about the type of patron for RWS and Marina Sands. I pity them. Many of them are with weak self control. That's why they stuck with the habit for a long time and lose all the money.
If they gamble in stock market, will the outcome be different? Buying stock also needs a lot of self control. Not to get carried away by short term success or failure.
Road ahead
US has announced plan for QE2 (Quantitative easing 2). Market will be flushed with liquidity and hot money will have to find a home. Stock market will just go higher and higher. Looking at cause and effect. Printing more money, money will have to find a place to go, stock market will go higher. Just be careful don't get stuck with no chair when the music stops.
I am still bullish with local stocks, especially the valuation is not excessive. Small and mid cap still selling at single digit PE, I hope the market will recognise their value and re-rate them.
Mapletree Industrial Trust being chased up like hot stock during debut. I was interested in buying but only realised I missed the cut off date. Looking at current price and consider the forecast yield, MIT is less attractive now.
The Edge highlighted
A-Reit @2.08 Forecast DPU 14.7 cts. Yield 7%
MIT @1.11 Forecast DPU 7.46 cts. Yield 6.7%
If you want an industrial reit, you may be better of buying A-Reit.
ADR
ADR has finally began trading. Some market watchers said the volume is disappointing. Every journey starts with first step right? I think it is a good move. Slowly more will be buying and selling the ADR, SGX stands to gain and also investor stand to gain from saving the custody fee.
My favourite will be two - China Mobile and Ctrip.com. I am not sure whether I will start buying China Mobile, but the valuation looks cheap. Selling at PE of 10+, with dominant China market share. It will be a good stock for long run. Ctrip is not so straight forward. The valuation is a bit too high. Although at times, analyst will argue that its forward earning is this and that, therefore justify the high price. I just feel too risky to go in at this level. However, the future will be very bright for online travel booking. I hope it will come down soon.
Nation of gambler
I read the Saturday's newspaper report about the type of patron for RWS and Marina Sands. I pity them. Many of them are with weak self control. That's why they stuck with the habit for a long time and lose all the money.
If they gamble in stock market, will the outcome be different? Buying stock also needs a lot of self control. Not to get carried away by short term success or failure.
Road ahead
US has announced plan for QE2 (Quantitative easing 2). Market will be flushed with liquidity and hot money will have to find a home. Stock market will just go higher and higher. Looking at cause and effect. Printing more money, money will have to find a place to go, stock market will go higher. Just be careful don't get stuck with no chair when the music stops.
I am still bullish with local stocks, especially the valuation is not excessive. Small and mid cap still selling at single digit PE, I hope the market will recognise their value and re-rate them.
Mapletree Industrial Trust being chased up like hot stock during debut. I was interested in buying but only realised I missed the cut off date. Looking at current price and consider the forecast yield, MIT is less attractive now.
The Edge highlighted
A-Reit @2.08 Forecast DPU 14.7 cts. Yield 7%
MIT @1.11 Forecast DPU 7.46 cts. Yield 6.7%
If you want an industrial reit, you may be better of buying A-Reit.
Wednesday, 20 October 2010
Healthway deflated
Healthway was in my watch list after it attracted the market attention that Peter Lim has became the major share holder. However, I didn't buy into the company since the valuation is quite high. Basically, the story sounds good but the numbers not delivered yet.
To my surprise yesterday, Peter Lim has pared down his stake in the company. Clearly, the stock is now in down trend because the confidence has been shaken. It would take sometime for the price to stablise and then investor can reaccess the attractiveness of the company.
Health care service company is usually more expensive. But not all the stocks are equal. The company has grand plan for China expansion, but it takes time for the result to show.
To my surprise yesterday, Peter Lim has pared down his stake in the company. Clearly, the stock is now in down trend because the confidence has been shaken. It would take sometime for the price to stablise and then investor can reaccess the attractiveness of the company.
Health care service company is usually more expensive. But not all the stocks are equal. The company has grand plan for China expansion, but it takes time for the result to show.
Friday, 15 October 2010
Monitor Wilmar
For the past few months, Wilmar has underperformed the general market. It is one of the stock that under my watch list. I seldom have big cap stock in the watch list, primary reason is the slower growth it provides.
However, after some brief study on Wilmar, I am interested in investing in the company. It has few draws:
- Market leader in China cooking oil
- Diversifying into flour and rice
- New sugar business
I think it will do well in the long run. It might not grow as fast as it used to be. However, the new business should provide enough growth driver. I am not really classifying it as CPO play, but the increase in CPO price might have positive impact on the company.
However, after some brief study on Wilmar, I am interested in investing in the company. It has few draws:
- Market leader in China cooking oil
- Diversifying into flour and rice
- New sugar business
I think it will do well in the long run. It might not grow as fast as it used to be. However, the new business should provide enough growth driver. I am not really classifying it as CPO play, but the increase in CPO price might have positive impact on the company.
Wednesday, 13 October 2010
Market going up?
Despite the worries, I observed that market is slowly climbing up. Another leg of bull run might be on the card. When market discounted all the bad news, next is for some good news to take the market forward.
I remain optimistic about the prospect. We are definitely out of the bottom and not going into the double dip. US recovery will take time, gradually and painfully. We still have China to depend on for the growth. China consumer stock remain a good bet for the long run.
I remain optimistic about the prospect. We are definitely out of the bottom and not going into the double dip. US recovery will take time, gradually and painfully. We still have China to depend on for the growth. China consumer stock remain a good bet for the long run.
Sunday, 3 October 2010
Uncertainty ahead
September has gone by. The expected dip didn't happen, most of the stock go up instead of go down. The focus was still on small cap, and likely remain so in October. Will be see a correction in October? Maybe, just my guess.
On the individual stock front, I bought Eratat Lifestyle based on following observation:
- Stock price has recovered and unlikely to go down again looking at the trend
- Company is coming out to engage the investor to promote the story
- It attracts more analyst interest and price could move due to increased interest
- Compared to Hongxing and China Sport, it has a better story to tell. Competing with big brand like Li Ning and Anta might be too challenging
The stock on my permanent watch list - Wilmar has seen gradual decline. I view this as a good sign. It allows those interested to get in for the long run. Wilmar is both a CPO story and consumer story. Of course, I like the later more. If I can get it at a cheap price, I am willing to wait for the outlook to improve and stock deliver in the longer term.
On the individual stock front, I bought Eratat Lifestyle based on following observation:
- Stock price has recovered and unlikely to go down again looking at the trend
- Company is coming out to engage the investor to promote the story
- It attracts more analyst interest and price could move due to increased interest
- Compared to Hongxing and China Sport, it has a better story to tell. Competing with big brand like Li Ning and Anta might be too challenging
The stock on my permanent watch list - Wilmar has seen gradual decline. I view this as a good sign. It allows those interested to get in for the long run. Wilmar is both a CPO story and consumer story. Of course, I like the later more. If I can get it at a cheap price, I am willing to wait for the outlook to improve and stock deliver in the longer term.
Sunday, 26 September 2010
Eratat Lifestyle gaining momentum
My first investment in China sport sector was through China Hongxing which disappoint me very much. Obviously, after Olympic, there is excess capacity and cut throat competition which squeeze every player. In a very competitive environment, it is better to buy the leader than those playing catch up.
Recently, Eratat Lifestyle has been making headline. Being mentioned by media and analyst, I think they are trying to drum up the interest on the stock. Interestingly the company claimed they are out of sport shoe sector and into the lifestyle sector which allow them leeway to earn a meaningful profit. We shall see what number the company can produce in coming quarter annoucement before making further judgement.
The interesting fact about the stock is PE valuation is super low. Less than 5 based on previous quarters of earning and management hinting the margin is on the up trend. Valuation is cheap but whether the future is substantially changed is yet to see.
Recently, Eratat Lifestyle has been making headline. Being mentioned by media and analyst, I think they are trying to drum up the interest on the stock. Interestingly the company claimed they are out of sport shoe sector and into the lifestyle sector which allow them leeway to earn a meaningful profit. We shall see what number the company can produce in coming quarter annoucement before making further judgement.
The interesting fact about the stock is PE valuation is super low. Less than 5 based on previous quarters of earning and management hinting the margin is on the up trend. Valuation is cheap but whether the future is substantially changed is yet to see.
Tuesday, 21 September 2010
Soilbuild delisting offer
Today Soilbuild announced a delisting offer by major shareholder at 0.80. For the past few trading session, I noticed a sudden surge on share price. This proves again market know what is going to happen next. Maybe those familiar with the deal have already buy in advance.
One less good stock to buy. It is in my watch list, waiting for a lower entry point. The company average ROE more than 20% for the past few years and is on track for recurrent income which could give yield up to 5%. It is a good stock, major shareholder thinks that it is cheap to take it private now rather than later.
We might be seeing more such deal or M&A coming.
One less good stock to buy. It is in my watch list, waiting for a lower entry point. The company average ROE more than 20% for the past few years and is on track for recurrent income which could give yield up to 5%. It is a good stock, major shareholder thinks that it is cheap to take it private now rather than later.
We might be seeing more such deal or M&A coming.
Sunday, 19 September 2010
Excited about ADR trading on SGX
The past few months haven't been easy on me, I was very busy with work. It will be even so in the coming months. However, this didn't stop me from reading and thinking about investment. I guess I was too obssesed in finding good company. Nevertheless, the stock hunt is coming to the end as I have a list of stock that I am interested and following.
The big news last week is about ADR trading on SGX. It is coming in Oct. The details are not known yet. Just the news itself already make me excited. Now, it is possible to buy the China growth without incurring the broker custody fee. The unknown to this assumption is how SGX will charge on holding the ADR. On short term, currency is also a risk.
Cost aside, the primary reason I am excited is because now you have a chance to buy the premier growth company. I scanned through the list, not that interested in the more prominent one like Baidu or Petro China. This interesting stock - ctrip.com caught my attention. The company is the leader in China online hotel and travel booking. However, the stock is not cheap, it is selling at USD 43.21 on PE 52.
52 looks like a crazy number to me. But, business look interesting to warrant a follow up. The most important part of ADR trading is the convenience. Valuation is a separate consideration.
The big news last week is about ADR trading on SGX. It is coming in Oct. The details are not known yet. Just the news itself already make me excited. Now, it is possible to buy the China growth without incurring the broker custody fee. The unknown to this assumption is how SGX will charge on holding the ADR. On short term, currency is also a risk.
Cost aside, the primary reason I am excited is because now you have a chance to buy the premier growth company. I scanned through the list, not that interested in the more prominent one like Baidu or Petro China. This interesting stock - ctrip.com caught my attention. The company is the leader in China online hotel and travel booking. However, the stock is not cheap, it is selling at USD 43.21 on PE 52.
52 looks like a crazy number to me. But, business look interesting to warrant a follow up. The most important part of ADR trading is the convenience. Valuation is a separate consideration.
Saturday, 18 September 2010
Long term share investment is about compounding growth
The primary reason for people wanting to trade stock is to buy low sell high. So, they can earn the price difference. Market is driven by greed and fear. Many people made wrong decision because of emotional factor, which causes them to sell low and buy high.
Buying stock is different from buying things from supermarket. In supermarket, everyone has a benchmark on the value of goods, you will buy if the item is on sale, the price is now lower. Stock price is different, when the price is low, people are afraid it will fall further. This is because of the fear factor. On the other hand, if your favourite stock is going up each day, sooner or later you will get sucked into the rally and buy it too high.
How do we avoid that? We need to have a mental framework of establishing the value of stock. Once you have a benchmark on what price this stock is worth. When it is selling below the benchmark, you can take time to accumulate. When it is selling way above the benchmark, you can take time to unload it.
My colleague was asking me what share to buy every day. However, she doesn’t have much capital and want to make quick bucks. I said I don’t know how to do it. I have no idea what price this share will sell tomorrow and day after. She missed the point – we know buy low sell high will make money, but who can do it consistently? Not many.
Buy and sell too frequently will not get you too far. The attractiveness of long term investing is good company takes time to evolve and outperform. In my opinion, this is the essence of stock investing or rather you call it business investing. If you have bought a wonderful business that can grow your money at above average rate every year, the ideal time frame to hold it, is forever.
That’s what I am trying to say in this post. You keep good stock for long term and let the compounding effect work its wonder. If the business can achieve return on equity over 20% a year, just be patient, compounding takes time. Eventually you will find that your investment has grown to a big amount that you dreamed for.
Buying stock is different from buying things from supermarket. In supermarket, everyone has a benchmark on the value of goods, you will buy if the item is on sale, the price is now lower. Stock price is different, when the price is low, people are afraid it will fall further. This is because of the fear factor. On the other hand, if your favourite stock is going up each day, sooner or later you will get sucked into the rally and buy it too high.
How do we avoid that? We need to have a mental framework of establishing the value of stock. Once you have a benchmark on what price this stock is worth. When it is selling below the benchmark, you can take time to accumulate. When it is selling way above the benchmark, you can take time to unload it.
My colleague was asking me what share to buy every day. However, she doesn’t have much capital and want to make quick bucks. I said I don’t know how to do it. I have no idea what price this share will sell tomorrow and day after. She missed the point – we know buy low sell high will make money, but who can do it consistently? Not many.
Buy and sell too frequently will not get you too far. The attractiveness of long term investing is good company takes time to evolve and outperform. In my opinion, this is the essence of stock investing or rather you call it business investing. If you have bought a wonderful business that can grow your money at above average rate every year, the ideal time frame to hold it, is forever.
That’s what I am trying to say in this post. You keep good stock for long term and let the compounding effect work its wonder. If the business can achieve return on equity over 20% a year, just be patient, compounding takes time. Eventually you will find that your investment has grown to a big amount that you dreamed for.
Monday, 6 September 2010
Better US job data send market soaring
Last Friday, US release better than expected job data, this cause the worldwide market to soar. I think economy is a complex system where nobody has exact idea on where it will head to. Sometime analyst or economist is right, sometime is wrong.
Market has been bearish for quite sometime and this could be the exercise for a relief rally. After that, the fear will set in, the invisible hand will focus on the negative side. I listened to quite a lot "expert" analysis on paper or news, market is going to be volatile. On which day it doesn't? The investor is trying to price the risk now, by selling when pessimistic and buying when optimistic.
Where does the long term investor stands here? Exploit the opportunity when it arises. If you are long, time is on your side and market volatility is your friend. It allows you to buy cheap and wait for business fundamental to take over. I am bull by nature, because I believe stock appreciate on the long run and when business is doing better and better.
I don't know where market is going to, you cannot get it right always. I am concentrating in finding good company to invest, and when the opportunity arises, buy on a reasonable price.
Market has been bearish for quite sometime and this could be the exercise for a relief rally. After that, the fear will set in, the invisible hand will focus on the negative side. I listened to quite a lot "expert" analysis on paper or news, market is going to be volatile. On which day it doesn't? The investor is trying to price the risk now, by selling when pessimistic and buying when optimistic.
Where does the long term investor stands here? Exploit the opportunity when it arises. If you are long, time is on your side and market volatility is your friend. It allows you to buy cheap and wait for business fundamental to take over. I am bull by nature, because I believe stock appreciate on the long run and when business is doing better and better.
I don't know where market is going to, you cannot get it right always. I am concentrating in finding good company to invest, and when the opportunity arises, buy on a reasonable price.
Sunday, 5 September 2010
Keep in mind the megatrend
For fundamental investors, some focus solely on the company fundamental and pay little attention on the economy or industry condition. Some will combine the technical analysis or other factor in analysing the company. Although I am fundamentalist, I also take note of the megatrend around us.
A simple example and also my favourite will be China. China is going through the urbanization process and there is no turning back. Through this process, when consumer become more wealthy, they will spend more. China consumer story is my constant favourite. Beside this, China property looks good on the long run. More people living in the city will mean more demand for housing. As more people get richer, the demand for luxury goods or housing will rise too.
Analysts have been talking up the commodity story and emerging market story for past few years. I believe that is true but the timing is quite tricky. Commodity sector has been volatile all the while, I think it make sense to buy only when there is bad news and wait for turn around, buying cheap and keep for longer term. Beside China, Indonesia might have turn the corner, the Asia growth story is very much alive and on track.
Once you have identified the megatrend, what can you do to leverage on it? Buy stocks that are beneficiary of it. For example, China consumer stock, I wish those listed on HK exchange is easily accessible to SG investor. Those strong player like Tingyi and Want Want listed in HK. I am quite reluctant to pay the month custody fee. I observed there is a trend for Indonesia company to list in Singapore. This is an opportunity to the investor here as Indonesia is a big market. Hopefully more quality company will come.
A simple example and also my favourite will be China. China is going through the urbanization process and there is no turning back. Through this process, when consumer become more wealthy, they will spend more. China consumer story is my constant favourite. Beside this, China property looks good on the long run. More people living in the city will mean more demand for housing. As more people get richer, the demand for luxury goods or housing will rise too.
Analysts have been talking up the commodity story and emerging market story for past few years. I believe that is true but the timing is quite tricky. Commodity sector has been volatile all the while, I think it make sense to buy only when there is bad news and wait for turn around, buying cheap and keep for longer term. Beside China, Indonesia might have turn the corner, the Asia growth story is very much alive and on track.
Once you have identified the megatrend, what can you do to leverage on it? Buy stocks that are beneficiary of it. For example, China consumer stock, I wish those listed on HK exchange is easily accessible to SG investor. Those strong player like Tingyi and Want Want listed in HK. I am quite reluctant to pay the month custody fee. I observed there is a trend for Indonesia company to list in Singapore. This is an opportunity to the investor here as Indonesia is a big market. Hopefully more quality company will come.
Sunday, 29 August 2010
Pay for growth
When buying things, we usually compare the price across different shop, hoping to get a bargain. This is not usually the case with stock investing, investor watching the price going up has tendency of catching the train. However, generally the seasoned investor knows when to buy and hopefully buy on cheap.
I was reading extensively recently. In general, I would also like to buy on cheap, but sometime it is not easy to carry out. Good stock will be in hot demand, and it pays to pay for growth. Don't buy cheap, buy value.
I was reading extensively recently. In general, I would also like to buy on cheap, but sometime it is not easy to carry out. Good stock will be in hot demand, and it pays to pay for growth. Don't buy cheap, buy value.
Tuesday, 3 August 2010
Market knows what is going to happen
I was puzzled by Etika share price for past two days, it keep going up for no apparent reason. The answer is out now. Templeton fund is subscribing to the convertible bond that the company issues. The conversion price is 1.05 which is higher than current share price. However, if you look at the long term and potential of the company, it is very cheap. The company is trading at prospective PE of 9. If the earning does grow strongly, my estimate that it is going to worth a lot more.
That's the exciting part of investing in small cap. It is possible to get multi bagger faster if the company is able to grow strongly.
That's the exciting part of investing in small cap. It is possible to get multi bagger faster if the company is able to grow strongly.
Tuesday, 20 July 2010
Bull or bear, where market going to next?
As this juncture, the direction of the market is less clear to most of the people. Some are still fearful for the Europe problem or the double dip situation. They haven't happen yet, but there is still posibility.
As fundamental investor, I am less concern on the market direction. If you know the company you are investing in is doing well. Naturally, sooner or later, the share price will reflect that. However, I am more mindful nowadays on the market direction. I don't want to being caught off guard like the credit crisis time. There is no guarantee it won't happen again and you will escape unhurt, I think it taught me to be careful.
I recognize the direction of the market for coming 3-5 years is up. I am not so worried about the short term fluctuation. Again, there is no guarantee the market will definitely go up, but we have suffered for two years. It is time market adjust back to normal. Overall, I remain positive on the general direction.
I bought C&O Pharm before the dividend go XD. The key selling points to me are
China Pharmaceutical sector is going to continue to do well
The valuation in PE term is not high after you discount the dividend amount
The cashflow is strong and they are likely to keep paying high dividend
There will be new product launch which can open up new revenue stream
Soon, market will forget about the 4 cts dividend it paid out and re-adjust back the share price. The business is stable and has potential to do well in coming years. Giving cash back to share holder also signal management confidence in the company.
The other stock Longcheer I bought months back had a buy call from DBS. The stock is cheap, by any measure. The PE is low, business doing well in and outside China, giving good dividend, they are doing share buy back. The only potential downside is handset design business is very competitive and it might turn quickly. Keep the finger crossed that it is going to do well.
As fundamental investor, I am less concern on the market direction. If you know the company you are investing in is doing well. Naturally, sooner or later, the share price will reflect that. However, I am more mindful nowadays on the market direction. I don't want to being caught off guard like the credit crisis time. There is no guarantee it won't happen again and you will escape unhurt, I think it taught me to be careful.
I recognize the direction of the market for coming 3-5 years is up. I am not so worried about the short term fluctuation. Again, there is no guarantee the market will definitely go up, but we have suffered for two years. It is time market adjust back to normal. Overall, I remain positive on the general direction.
I bought C&O Pharm before the dividend go XD. The key selling points to me are
China Pharmaceutical sector is going to continue to do well
The valuation in PE term is not high after you discount the dividend amount
The cashflow is strong and they are likely to keep paying high dividend
There will be new product launch which can open up new revenue stream
Soon, market will forget about the 4 cts dividend it paid out and re-adjust back the share price. The business is stable and has potential to do well in coming years. Giving cash back to share holder also signal management confidence in the company.
The other stock Longcheer I bought months back had a buy call from DBS. The stock is cheap, by any measure. The PE is low, business doing well in and outside China, giving good dividend, they are doing share buy back. The only potential downside is handset design business is very competitive and it might turn quickly. Keep the finger crossed that it is going to do well.
Spam comment
Due to undesirable spam comment keep popping up in the blog, I have temporary disabled the comment field. Let's see how it goes.
Sunday, 9 May 2010
Market might just continue the slide next week
Last Friday, Dow dropped another 100 plus points. The bad news is one after another. After the strong rebound last year, we are hitting the first speed bump. No one could tell how the market will play out.
1. China cramp down on property speculation. Although in the short term, this has dragged down the market performance, but it is an essential step for China to prevent the price bubble. Some might argue it is already in the bubble stage. I don't think China government want to kill the growth and market. We just need to cool it down.
2. Greece chaos. It will take sometime for them to find the solution, instead of dragging on the problem
3. Dow plunging 1000 points. Common sense tells us, if the situation is too extreme, it might not be true. Be it computer error or human error. Although confidence shaken, market will take sometime to recover.
China problem is unlikely to slow down the whole economy, as the authority doesn't want to kill the growth. The Europe problem takes time to sort itself out. In the mean time, market will keep sliding, I guess. The long awaiting opportunity has come, I hope you have spare cash.
I don't think the double dip is going to come, unless the Greece debt problem has contagiously spread to debt market. Even that is true, I doubt the magnitude will be the same like sub prime crisis. For the value investor, time has come to pick up great stock selling at cheap price. Investor should focus on stock with bright industry prospect, cheap valuation and strong balance sheet. When situation improved, stock will move up again.
1. China cramp down on property speculation. Although in the short term, this has dragged down the market performance, but it is an essential step for China to prevent the price bubble. Some might argue it is already in the bubble stage. I don't think China government want to kill the growth and market. We just need to cool it down.
2. Greece chaos. It will take sometime for them to find the solution, instead of dragging on the problem
3. Dow plunging 1000 points. Common sense tells us, if the situation is too extreme, it might not be true. Be it computer error or human error. Although confidence shaken, market will take sometime to recover.
China problem is unlikely to slow down the whole economy, as the authority doesn't want to kill the growth. The Europe problem takes time to sort itself out. In the mean time, market will keep sliding, I guess. The long awaiting opportunity has come, I hope you have spare cash.
I don't think the double dip is going to come, unless the Greece debt problem has contagiously spread to debt market. Even that is true, I doubt the magnitude will be the same like sub prime crisis. For the value investor, time has come to pick up great stock selling at cheap price. Investor should focus on stock with bright industry prospect, cheap valuation and strong balance sheet. When situation improved, stock will move up again.
Thursday, 15 April 2010
Charging ahead
Stock market is back in active mode where the volume is high. Blue chips again leading the pack. There were few good news from US, especially news like US consumer is spending again will boost the sentiment.
In fact, everybody believes that we are really in recovery mode. There will be no double dip in US. The outlook is sort of clear for the stock market to get higher. Understanding of the way recovery happen is important. That provides idea for stock that will benefit from the recovery. Stock selection is the key to a good performance.
I bought NOL, since the shipping outlook has improved and once the international trade increases, the stock should recover. I have built up some holdings which I believe will have bright future. The rest is to wait for the time for them to perform.
In fact, everybody believes that we are really in recovery mode. There will be no double dip in US. The outlook is sort of clear for the stock market to get higher. Understanding of the way recovery happen is important. That provides idea for stock that will benefit from the recovery. Stock selection is the key to a good performance.
I bought NOL, since the shipping outlook has improved and once the international trade increases, the stock should recover. I have built up some holdings which I believe will have bright future. The rest is to wait for the time for them to perform.
Sunday, 28 March 2010
Small cap in focus
I have been reading many commentaries or view that small cap would be in play for coming weeks. So far, the recovery in earning has not disappoint. The correction is also moderate. The big caps are mostly well priced for the growth. Naturally, the attention will shift to mid and small cap, where the valuation playing catch up.
Market move through cycles. When the recovery start to take place, blue chips will run first, and subsequently the mid and small cap. Because only when the economy is in more stable stage, the smaller company will experience the earning growth again. In the mid, small cap space, there are still many undervalued companies which offer low PE and higher dividend yield.
I hope it is time for the stocks in my portfolio to start performing.
Market move through cycles. When the recovery start to take place, blue chips will run first, and subsequently the mid and small cap. Because only when the economy is in more stable stage, the smaller company will experience the earning growth again. In the mid, small cap space, there are still many undervalued companies which offer low PE and higher dividend yield.
I hope it is time for the stocks in my portfolio to start performing.
Thursday, 25 March 2010
China New Town announced a surprise first ever dividend
In the original result announcement, China New Town didn't recommend paying any dividend. Although the company is back in black. According to latest announcement, the management has decided to reward the shareholder after meeting with the investment commitee.
If you read The Edge article on the company, management is confident to continue making money with the land sales. So, the act of paying dividend does signal the confidence. Ironically, if the company can make use of the retained cash to keep growing the company, shareholders should be very happy. However, many still looking at dividend as a token that company is performing well.
If you read The Edge article on the company, management is confident to continue making money with the land sales. So, the act of paying dividend does signal the confidence. Ironically, if the company can make use of the retained cash to keep growing the company, shareholders should be very happy. However, many still looking at dividend as a token that company is performing well.
Sunday, 21 March 2010
Hongguo offer closing soon
The major shareholder of Hongguo has received more than 90% of the company share. It looks like the delisting will become a reality soon. The offer is a generous one, considering the premium they are willing to pay.
However, looking at it in the long term perspective, it is cheap for them to take the company private. Who knows? Once the business turn around in 1-2 years time, they can float it in hong kong and fetch higher price.
Through these years of holding the stock, I have learned
1. Being third doesn't mean you are going to be first soon. There is a big gap between the first and second/third place shoe brand. It takes a lot more effort for the company to catch up. In another word, it is better to buy the market leader, which can outgrow the smaller player.
2. Being a good company is not enough. Hongguo steadily grows through the years. However, most of the time, market is not appreciating the company by giving it a better valuation. If the company can grow at 20% annually, having the single digit PE, is too cheap. Of course, this is before the sub prime crisis occurred.
Hopefully my next venture will be more profitable.
However, looking at it in the long term perspective, it is cheap for them to take the company private. Who knows? Once the business turn around in 1-2 years time, they can float it in hong kong and fetch higher price.
Through these years of holding the stock, I have learned
1. Being third doesn't mean you are going to be first soon. There is a big gap between the first and second/third place shoe brand. It takes a lot more effort for the company to catch up. In another word, it is better to buy the market leader, which can outgrow the smaller player.
2. Being a good company is not enough. Hongguo steadily grows through the years. However, most of the time, market is not appreciating the company by giving it a better valuation. If the company can grow at 20% annually, having the single digit PE, is too cheap. Of course, this is before the sub prime crisis occurred.
Hopefully my next venture will be more profitable.
Tuesday, 23 February 2010
What is market direction?
Reporting season is in focus now. As we can see, the result didn't disappoint, it is sort of confirm that we have indeed turn a corner. Even the Greece news failed to trigger more downside. Of course, the risks are still there. But I sort of feel that, the liquidity out there is huge, still searching for value from every drop.
We are not sure how Europe problem will turn out, but I am kind of optimistic still. Waiting for the occasional bigger pull back to buy my favourite stock.
We are not sure how Europe problem will turn out, but I am kind of optimistic still. Waiting for the occasional bigger pull back to buy my favourite stock.
Thursday, 4 February 2010
My Feb view
Expect the unexpected, I guess all the investor should aware of this. Just like we are roaring ahead with the new year. Obama's proposal to regulate US banks and potential China tightening have brought the long overdue correction.
The once high flying IndoAgri food and Wilmar crash back to earth from recent high. Second and third liner are even worst. The position that I have built slowly over the past few months is like back to square, some gain, some loss. However, I remain optimistic, regardless of the fear and rumour around.
This is going to be Asia golden era, at least for the next 10 years, this is the place where the growth will be. US consumer will not recover just yet, until they build up the saving and correct the excess. Asia governments will continue to stimulate the domestic consumption to counter the decline of export sector.
I continue to like China consumer play, but I will not go into stock like China Hongxing until there is clear sign of trend reversal. I bought the stock which continue to grow despite the downturn. I think it is ok to pay a little bit for the quality and spread the buying through a few months period. Whenever there is a market weakness, buy a bit. We have yet to see the bull market go into overdrive. So, those with holding power can afford to wait.
China should still be the centre of growth. Focus on those China stock which have only domestic market exposure and unlikely to be affected by the macro economic outlook. The offshore sector also looks good to me, since the oil price is back to $70 which should support the exploration activities. Another theme which worth a look is Singapore property and tourism revival. As Singapore transformed into new playground for the rich, the demand for property and luxury goods will increase. Time will tell whether I am right.
The once high flying IndoAgri food and Wilmar crash back to earth from recent high. Second and third liner are even worst. The position that I have built slowly over the past few months is like back to square, some gain, some loss. However, I remain optimistic, regardless of the fear and rumour around.
This is going to be Asia golden era, at least for the next 10 years, this is the place where the growth will be. US consumer will not recover just yet, until they build up the saving and correct the excess. Asia governments will continue to stimulate the domestic consumption to counter the decline of export sector.
I continue to like China consumer play, but I will not go into stock like China Hongxing until there is clear sign of trend reversal. I bought the stock which continue to grow despite the downturn. I think it is ok to pay a little bit for the quality and spread the buying through a few months period. Whenever there is a market weakness, buy a bit. We have yet to see the bull market go into overdrive. So, those with holding power can afford to wait.
China should still be the centre of growth. Focus on those China stock which have only domestic market exposure and unlikely to be affected by the macro economic outlook. The offshore sector also looks good to me, since the oil price is back to $70 which should support the exploration activities. Another theme which worth a look is Singapore property and tourism revival. As Singapore transformed into new playground for the rich, the demand for property and luxury goods will increase. Time will tell whether I am right.
Saturday, 23 January 2010
Hongguo delisting offer
I did some quick sum on the hongguo de-listing offer.
The cash per share is roughly 0.13. For the past 9 months, the EPS is 13.1 RMB cts. So, this year, the company might be able to earn 16 RMB cts which is 3.29 SGD cts. With the offer price of 0.439, the offer PE will be 13.3 which is a good offer. Good in the sense that for past two years, the company has been trading at lower PE.
In the Q3 result, profit margin was down to 35.2% reflecting the tough business environment. This might be a good offer depends on your entry price. Most likely they will seek some professional advise for the shareholder.
The cash per share is roughly 0.13. For the past 9 months, the EPS is 13.1 RMB cts. So, this year, the company might be able to earn 16 RMB cts which is 3.29 SGD cts. With the offer price of 0.439, the offer PE will be 13.3 which is a good offer. Good in the sense that for past two years, the company has been trading at lower PE.
In the Q3 result, profit margin was down to 35.2% reflecting the tough business environment. This might be a good offer depends on your entry price. Most likely they will seek some professional advise for the shareholder.
Tuesday, 19 January 2010
Major shareholder of Hongguo announce delisting offer
After trading halt for a few days, Hongguo major shareholder has announced the voluntary delisting offer at 0.439. At the first glance, this is a bad offer for me. I will review and update my comment later on. Offer at 0.439 is good for those hold the company since IPO. In a way, it also says the company is worth more than the current price.
Tuesday, 12 January 2010
China Sports Intl stir up the interest
China Sports has announced the win of master distributorship of FIFA football lifestyle clothing and accessories. This look like a significant win, analyst quickly upgraded the stock. The interest is high and stock price move swiftly. FIFA is a significant brand, this signal the intention and capability of the company
At the sametime, this has a spill over effect on China Hongxing too. Hongxing up with large volume. Recently the market focus on mid and small cap. Especially the forgotten S-Chip with story like dual listing and privatization coming out. These are just speculation, but it helps to normalise the valuation of the stock. The depressed price offer a good opportunity to investor, but on the other hand, not attractive for company to raise capital.
The bull market has moved to second phase, where interest focus on mid and small cap. Once the interest is changed to junk stock, you know it is time to sell out, waiting for correction.
At the sametime, this has a spill over effect on China Hongxing too. Hongxing up with large volume. Recently the market focus on mid and small cap. Especially the forgotten S-Chip with story like dual listing and privatization coming out. These are just speculation, but it helps to normalise the valuation of the stock. The depressed price offer a good opportunity to investor, but on the other hand, not attractive for company to raise capital.
The bull market has moved to second phase, where interest focus on mid and small cap. Once the interest is changed to junk stock, you know it is time to sell out, waiting for correction.
Tuesday, 5 January 2010
My quick review on 2009
Year 2009 was a meaningful year for Singapore stock market. In the first 3 months of the year, market continue to drift lower. Basically, I was not in the market at all, watching from the sideline, hoping to see the light at the end of tunnel. Nobody knows, stock market took a dramatic turn since Mar and has never look back.
I missed the chance to make some sure win money. However, like I say always, nobody can foresee the top and bottom. It might be better to wait for definite signal of turn around. Beside that, bull market would not move in straight line. Investors have many chance to get back into the game. The continuous strength of stock market surprised many people. This was supported by steady stream of good news.
Since September, I am back in the game, bought some counters that could offer further upside when economy growth returns. Despite the China stock market has gone up substantially, S-chips are still being ignored by investor. Many small cap stocks are simply not in the investor's radar. I bought into Hsu Fu Chi which turn in very good result despite weak consumer spending. The stock is no longer cheap in PE terms. This also shows market pay premium to good performing company.
The property market in 2009 surprises me and many property stocks have recovered since then. Going into 2010, I believe in what analyst said, the high end segment is going to do well when IR open. Thus, Ho Bee is my choice. It has exposure to Sentosa Cove, joint venture plan with Yanlord in China and good cost control.
Oil and exploration market also spring back to life, as oil companies increase the offshore activities. Swiber coming from the low base, having remain subdue for a whole year, finally wake up as more contracts are being awarded. The stock might trend higher as each contract announcement unfold.
Caveat to investor. 2010 has more surprises in store for us. Prepare to sell when valuation has gone too far. However, the liquidity built up over the past two years might keep pushing the stocks higher, until a tipping point where significant correction would set in.
I missed the chance to make some sure win money. However, like I say always, nobody can foresee the top and bottom. It might be better to wait for definite signal of turn around. Beside that, bull market would not move in straight line. Investors have many chance to get back into the game. The continuous strength of stock market surprised many people. This was supported by steady stream of good news.
Since September, I am back in the game, bought some counters that could offer further upside when economy growth returns. Despite the China stock market has gone up substantially, S-chips are still being ignored by investor. Many small cap stocks are simply not in the investor's radar. I bought into Hsu Fu Chi which turn in very good result despite weak consumer spending. The stock is no longer cheap in PE terms. This also shows market pay premium to good performing company.
The property market in 2009 surprises me and many property stocks have recovered since then. Going into 2010, I believe in what analyst said, the high end segment is going to do well when IR open. Thus, Ho Bee is my choice. It has exposure to Sentosa Cove, joint venture plan with Yanlord in China and good cost control.
Oil and exploration market also spring back to life, as oil companies increase the offshore activities. Swiber coming from the low base, having remain subdue for a whole year, finally wake up as more contracts are being awarded. The stock might trend higher as each contract announcement unfold.
Caveat to investor. 2010 has more surprises in store for us. Prepare to sell when valuation has gone too far. However, the liquidity built up over the past two years might keep pushing the stocks higher, until a tipping point where significant correction would set in.
Subscribe to:
Posts (Atom)
