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.

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.

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.

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.

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.