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.
Saturday, 23 January 2010
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.
Monday, 30 November 2009
Dubai triggers the correction
Last Friday, Dubai created wave in financial market by asking for loan repayment extension. Market suffer a knee jerk sell off, many of the European bank are being affected, because of lending money to them. The debt amount is staggering.
Compared to last Friday sell off, STI only suffered a bit. The market player properly figured out Dubai is not US. Only stocks linked to the middle east likely to be impacted. However, this could be the trigger point for a meaningful market correction.
Those with cash should start looking to add position. Growth likely to be muted for US in coming years. The future still lies with China. Should add good stock which could ride on China wave.
Compared to last Friday sell off, STI only suffered a bit. The market player properly figured out Dubai is not US. Only stocks linked to the middle east likely to be impacted. However, this could be the trigger point for a meaningful market correction.
Those with cash should start looking to add position. Growth likely to be muted for US in coming years. The future still lies with China. Should add good stock which could ride on China wave.
Sunday, 15 November 2009
Hongguo FY09 Q3 result
Revenue +27.23%
Gross profit +17.49% (because cost increase faster)
Selling and distribution cost +35.39%
Net profit -27.5% after the cost and tax increase
Cash and cash equivalent 247,971
Current liabilities 244,356
Debt repayable in one year 40,974
Net cash from operation 46,281
EPS 3.52 RMB cts (27% drop)
Sales still increase due to outlet expansion, but the profitability suffers. The gross profit margin is now 35.2% due to lower selling price. This actually tally with other consumer stock's performance. But management foresee the pick up in consumer demand and would intensify the store expansion. This might signal the bottom.
The result is uninspiring. Year to date, the earning is 13.10 RMB cts. Assume Q4 they are able to earn another 4 RMB cts, it would be 17.1 RMB cts (3.46 SGD cts). At last closing of 0.30 cts, it work out to be PE 8.67. This is not expensive. If the earning growth can restart, it could come down very quickly. Investor might want to look at next quarter result to decide.
Gross profit +17.49% (because cost increase faster)
Selling and distribution cost +35.39%
Net profit -27.5% after the cost and tax increase
Cash and cash equivalent 247,971
Current liabilities 244,356
Debt repayable in one year 40,974
Net cash from operation 46,281
EPS 3.52 RMB cts (27% drop)
Sales still increase due to outlet expansion, but the profitability suffers. The gross profit margin is now 35.2% due to lower selling price. This actually tally with other consumer stock's performance. But management foresee the pick up in consumer demand and would intensify the store expansion. This might signal the bottom.
The result is uninspiring. Year to date, the earning is 13.10 RMB cts. Assume Q4 they are able to earn another 4 RMB cts, it would be 17.1 RMB cts (3.46 SGD cts). At last closing of 0.30 cts, it work out to be PE 8.67. This is not expensive. If the earning growth can restart, it could come down very quickly. Investor might want to look at next quarter result to decide.
Sunday, 4 October 2009
Market weakness in October
Last Friday, US market dropped again. The new set of numbers do not look good, especially unemployment rate rose. This could be the trigger point to a mild correction which bring all the market back to ground. The market rebounded from Mar low base on the green shoot theory, but economy recovery would not be straight line most of the time.
US numbers
The numbers do not look good. After the financial and subprime crisis, the American is unlikely to go back to old way of spending. Now thrift is the in thing among the people. This would means the demand is unlikely to pick up fast enough for us to return to strong growth. Other countries need to participate more in the consumption to drive growth.
V or W shape of recovery
The stock market looks like recovering in V shape but many suspect it would be W instead. That means the current market euphoria is on the basis on growth coming back next year. Some say this is just inventory restocking, where demand comes from under supply. After the restocking, the demand is unlikely to catch up again.
Local stock market
Many think that the market has run far ahead. Due to the huge cash waiting at the sideline, we saw a continuous strength of equity. You see, market is all about human psychology. If more and more people believe that the market is overvalued, they would find excuse to take profit and wait for better entry point. This couple with the traditional weak October sentiment, we could see some healthy correction.
I see the crisis is over but the growth is going to be slow in coming years. Depends on the correction, and oppotunity, there would be some bargain that worth the risk.
US numbers
The numbers do not look good. After the financial and subprime crisis, the American is unlikely to go back to old way of spending. Now thrift is the in thing among the people. This would means the demand is unlikely to pick up fast enough for us to return to strong growth. Other countries need to participate more in the consumption to drive growth.
V or W shape of recovery
The stock market looks like recovering in V shape but many suspect it would be W instead. That means the current market euphoria is on the basis on growth coming back next year. Some say this is just inventory restocking, where demand comes from under supply. After the restocking, the demand is unlikely to catch up again.
Local stock market
Many think that the market has run far ahead. Due to the huge cash waiting at the sideline, we saw a continuous strength of equity. You see, market is all about human psychology. If more and more people believe that the market is overvalued, they would find excuse to take profit and wait for better entry point. This couple with the traditional weak October sentiment, we could see some healthy correction.
I see the crisis is over but the growth is going to be slow in coming years. Depends on the correction, and oppotunity, there would be some bargain that worth the risk.
Monday, 28 September 2009
Book: Yes, you can time the market
Over the weekend, I was reading the book "Yes, You can time the market" by Ben Stein and Phil DeMuth. It is quite an interesting book to read, especially the concept presented in the book. The authors are trying to prove that you can actually time the market, despite the conventional wisdom. Don't get it wrong. It is about time the market on long term basis, not short term.
The analysis presented is interesting. First, take the S&P 500 index as basis, chat the ratio like PE or dividend yield against its 15 years moving average. Using lump sum investment and dollar cost averaging approach, compare buying regardless of the market timing against buy the stock when particular point fall below the moving average. It shows market timing actually work(when buying the market, not individual stock).
I think the basic principal is quite obvious. Buying good stock is not enough, you have to buy it cheap enough, in order to enjoy good return on your capital. By combining the buy low and long term compounding strategy, it actually make more return than just buy and hold regardless of buying time.
The analysis presented is interesting. First, take the S&P 500 index as basis, chat the ratio like PE or dividend yield against its 15 years moving average. Using lump sum investment and dollar cost averaging approach, compare buying regardless of the market timing against buy the stock when particular point fall below the moving average. It shows market timing actually work(when buying the market, not individual stock).
I think the basic principal is quite obvious. Buying good stock is not enough, you have to buy it cheap enough, in order to enjoy good return on your capital. By combining the buy low and long term compounding strategy, it actually make more return than just buy and hold regardless of buying time.
Sunday, 13 September 2009
FJ Benjamin FY09 full year result
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.
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.
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