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.
Sunday, 28 March 2010
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.
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