SG Share: July 2010

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.