Turnover -12%
Gross profit -15%
Rental +10%
Operating profit -65%
Net loss of 2,661 compare to profit 14,804 of previous year. Report highlight the underlying profit is 4,065 excluding the one off item and forex loss.
Fixed deposit 14,008
Cash on hand 19,346
Borrowing 53,505
Net borrowing is 20,151
Net cash from operating activities 21,781
Cash at end of FY is 14,823, after minus off the bank overdraft 18,531. I suppose the overdraft has been included in the current borrowing. The cashflow is a bit tight, after comparing the real cash on hand vs net borrowing. The group has to watch over the cost tightly. However, if the operating cashflow remain stable, it should be able to pay off the borrowing.
Although expenses come down together with the turnover, it is not enough to offset the impact. This highlight the difficult retail environment, luxury segment is not being spared. The result is uninspiring. Unless there is a clear indication of retail sentiment turn around, the business would remain challenging.
Sunday, 13 September 2009
Saturday, 12 September 2009
Genting Intl right issue
Those chasing hot stock should beware. The pattern is too common already. First, some news being released cause sharp run up of share price. The next moment, company announce share placement to raise more money. Many has done that to raise capital for growth or to prepare the tough time ahead.
Genting has debts to fund the expansion and new casino, but the cash hasn't roll in yet. In the analyst forecast, there are just too many assumption which when things go wrong, the share price could see sharp correction. But, human is animal of hope, only story could get people excited.
Genting has debts to fund the expansion and new casino, but the cash hasn't roll in yet. In the analyst forecast, there are just too many assumption which when things go wrong, the share price could see sharp correction. But, human is animal of hope, only story could get people excited.
Wednesday, 9 September 2009
Weak Sep and Oct
Traditionally Sep and Oct are two weak months for equity. The situation took a turn at Mar, market trending upwards. The easy money has been made and I missed the boat. Never mind, the economy might recover some what. But, the old growth would no longer be back. American is not going to spend like last time and it would take a while for the next demand to come on stream.
I am looking at adding some equity position if the stock did pull back during month of Sep and Oct. The key thing to do well in this mini cycle should be riding on correct stock. Stock that is not exporting goods to US but meeting the demand locally or across Asia.
I am looking at adding some equity position if the stock did pull back during month of Sep and Oct. The key thing to do well in this mini cycle should be riding on correct stock. Stock that is not exporting goods to US but meeting the demand locally or across Asia.
Monday, 10 August 2009
Hongguo FY09 half year result
Revenue +19.31%
Cost of sales +29.31%
Gross profit +6.2%
Selling and distribution expenses +42.5%
Profit after tax 38,022 (-38.69%)
Cash and equivalent 208,097
Current liabilities 182,456
Amount repayable in one year 14,426 + 41,008
Cash generated from operation 95,753
EPS 9.58 RMB cts (from 15.63 last year same period)
Revenue continue to increase, the company still on the growth track. Gross margin decreased to 38.5% from 43.3%. The retail competition is fierce. Expenses increased because of continue store expansion. But the cost escalation is at alarming level.
This shows the consumer spending is slowing in China because of the financial crisis. But as the China economy picking up and the existing brand building effort already spent. The group could back on the growth track in coming years. The cashflow is strong, more than enough to cover the loan.
I remained confident in the China consumers. But, like planting fruit trees, it takes a while for it to bear fruit. If we estimate the second half they are able to make the same amount of money. Forecast EPS is 19 RMB cts or 4 SGD cts. The stock closed at 0.28 last Friday. It is about PE of 7. It is definitely not very expensive. But I won't buy at the current market level, as market has priced in lots of optimism. Hopefully when the China economy turn up, the company would be able to made up the growth.
Cost of sales +29.31%
Gross profit +6.2%
Selling and distribution expenses +42.5%
Profit after tax 38,022 (-38.69%)
Cash and equivalent 208,097
Current liabilities 182,456
Amount repayable in one year 14,426 + 41,008
Cash generated from operation 95,753
EPS 9.58 RMB cts (from 15.63 last year same period)
Revenue continue to increase, the company still on the growth track. Gross margin decreased to 38.5% from 43.3%. The retail competition is fierce. Expenses increased because of continue store expansion. But the cost escalation is at alarming level.
This shows the consumer spending is slowing in China because of the financial crisis. But as the China economy picking up and the existing brand building effort already spent. The group could back on the growth track in coming years. The cashflow is strong, more than enough to cover the loan.
I remained confident in the China consumers. But, like planting fruit trees, it takes a while for it to bear fruit. If we estimate the second half they are able to make the same amount of money. Forecast EPS is 19 RMB cts or 4 SGD cts. The stock closed at 0.28 last Friday. It is about PE of 7. It is definitely not very expensive. But I won't buy at the current market level, as market has priced in lots of optimism. Hopefully when the China economy turn up, the company would be able to made up the growth.
Monday, 13 July 2009
Downward drift
Market has priced in too much optimism already. Ahead of the Q2 earning season report, the market is set to fluctuate in tight range. Once the earning disappoint, it could correct significantly. Then, maybe it is good time for those still holding lots of cash to enter. Of course, many people have different opinion towards the market and stock price. For me, if it is a little bit expensive and the situation is unclear, I don't want to be caught. I just wait patiently.
Recently, MIDAS announced quite many contract win. I think this is a result of the China railway network expansion policy filter down to the ground level. I am quite bullish on the railway sector. It has nothing to do with export and US consumer. This is government money and they are determined to spend it.
Recently, MIDAS announced quite many contract win. I think this is a result of the China railway network expansion policy filter down to the ground level. I am quite bullish on the railway sector. It has nothing to do with export and US consumer. This is government money and they are determined to spend it.
Sunday, 21 June 2009
Why the rush of placement and right issue?
The sentiment has improved dramatically. Many people buy into the green shoot theory or just not wanting to miss the boat. But is recovery clearly in sight? I viewed the worst is over, the credit market has unfreeze, but the recovery is not clearly in sight. US consumer spending still weak and unemployment is high.
As more people has higher risk appetite, this is a perfect time for company to raise money by placement or right issue. Why? Simply because, if we are going to trend down in next 6 to 12 months, at least the company won't run out of money. Some even plan for expansion, using the current low asset price to buy growth in the future.
The market has peaked, any bad news which dash the hope of green shoot might cause the institution to start selling and lock in the profit.
As more people has higher risk appetite, this is a perfect time for company to raise money by placement or right issue. Why? Simply because, if we are going to trend down in next 6 to 12 months, at least the company won't run out of money. Some even plan for expansion, using the current low asset price to buy growth in the future.
The market has peaked, any bad news which dash the hope of green shoot might cause the institution to start selling and lock in the profit.
Monday, 8 June 2009
Xingquan International Sports to list on Bursa Malaysia
Xingquan is another China sports shoe maker to seek a share listing, not in China, Hong Kong or Singapore, but in Malaysia.
China has many domestic shoe maker, which operate at different city tier. The competition is intense, even in the second or third tier city. To complete efficiently, many have gone the road of China Hongxing, that is to raise capital from the stock market.
The big shoe maker like Anta would go Hong Kong to list. The medium to smaller one came to Singapore. Xingquan took a different road to list in Malaysia, maybe to get more attention. Because it is among the very few China companies listed on the bourse.
China has many domestic shoe maker, which operate at different city tier. The competition is intense, even in the second or third tier city. To complete efficiently, many have gone the road of China Hongxing, that is to raise capital from the stock market.
The big shoe maker like Anta would go Hong Kong to list. The medium to smaller one came to Singapore. Xingquan took a different road to list in Malaysia, maybe to get more attention. Because it is among the very few China companies listed on the bourse.
Tuesday, 26 May 2009
Celestial, no more in heaven
The eventual has happened. The bond holder is calling for redemption and the group issued the statement that they are unlikely to be able to meet the obligation.
It is quite unfortunate that a company with a well known and growing brand, ended up in this kind of situation. The problem started when a small company is trying to expand rapidly and borrow aggressively. The convertible bond was issued with early redemption option, when people don't expect the bond holder would ever call for early redemption. You never know, when crisis strike.
This highlight the risk with small cap stock. The company is small, so you can afford to grow quickly. But, at the same time, the more leverage you have, it is increase the risk. Compare a company with little borrow, you know which one is more stable. Therefore, never bet big on one single small cap. You never know what would happen next.
There could be three outcomes
i) a white knight is willing to acquire shares in the company and the proceed can be used to pay the bond holder
ii) the bond holder is willing to receive the share in the company
iii) the company has to wind up
i & ii should be more likely. But that would dilute the existing shareholder's stake. iii is the unthinkable, you can kiss goodbye to your share.
It is quite unfortunate that a company with a well known and growing brand, ended up in this kind of situation. The problem started when a small company is trying to expand rapidly and borrow aggressively. The convertible bond was issued with early redemption option, when people don't expect the bond holder would ever call for early redemption. You never know, when crisis strike.
This highlight the risk with small cap stock. The company is small, so you can afford to grow quickly. But, at the same time, the more leverage you have, it is increase the risk. Compare a company with little borrow, you know which one is more stable. Therefore, never bet big on one single small cap. You never know what would happen next.
There could be three outcomes
i) a white knight is willing to acquire shares in the company and the proceed can be used to pay the bond holder
ii) the bond holder is willing to receive the share in the company
iii) the company has to wind up
i & ii should be more likely. But that would dilute the existing shareholder's stake. iii is the unthinkable, you can kiss goodbye to your share.
Saturday, 23 May 2009
At the cross road
Recently, the market has ran up quite a fair bit and set to correct soon. The optimism comes from the fact that some indicator is turning up and investor who is itchy for some actions all jump into the bandwagon. The million question now is whether this is a bear rally or sustainable recovery?
I read a lot recently, about the various expert's view and research report. Just like the expert didn't forecast the severe downturn we are having now, the opinion now is also divided. Some say we are poised for recovery, some say beware.
I recognised that the "very worst" might be behind us now, because the credit is flowing again, albeit slowly. We saw many S-chip belly up, due to the worsening credit condition. Share being forced sold and growth went into negative territory.
It might be a good time to slowly adding some risk into the equity portfolio. We should buy when market correct each time. Avoid chasing the rally. Because I don't think the confidence is fully recover and everybody is ready to jump into equity. Mark Mobius said we would start to see another bull run, government is printing money which would cause inflation, stock is going to do well. This is true in certain aspect. But, there are many variables could delay the recovery.
Jim Roger said buy commodity and china share. Maybe I would add some exposure to commodity linked stock and my usual favourite, the china share. There is a commodity ETF on SGX also which can be considered.
Finally, nobody has the crystal ball. You can have your opinion, but the risk abound. Play carefully. Stick to big cap, more stable and the first to rally when recovery materialised.
I read a lot recently, about the various expert's view and research report. Just like the expert didn't forecast the severe downturn we are having now, the opinion now is also divided. Some say we are poised for recovery, some say beware.
I recognised that the "very worst" might be behind us now, because the credit is flowing again, albeit slowly. We saw many S-chip belly up, due to the worsening credit condition. Share being forced sold and growth went into negative territory.
It might be a good time to slowly adding some risk into the equity portfolio. We should buy when market correct each time. Avoid chasing the rally. Because I don't think the confidence is fully recover and everybody is ready to jump into equity. Mark Mobius said we would start to see another bull run, government is printing money which would cause inflation, stock is going to do well. This is true in certain aspect. But, there are many variables could delay the recovery.
Jim Roger said buy commodity and china share. Maybe I would add some exposure to commodity linked stock and my usual favourite, the china share. There is a commodity ETF on SGX also which can be considered.
Finally, nobody has the crystal ball. You can have your opinion, but the risk abound. Play carefully. Stick to big cap, more stable and the first to rally when recovery materialised.
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