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.
Tuesday, 23 February 2010
What is market direction?
Reporting season is in focus now. As we can see, the result didn't disappoint, it is sort of confirm that we have indeed turn a corner. Even the Greece news failed to trigger more downside. Of course, the risks are still there. But I sort of feel that, the liquidity out there is huge, still searching for value from every drop.
We are not sure how Europe problem will turn out, but I am kind of optimistic still. Waiting for the occasional bigger pull back to buy my favourite stock.
We are not sure how Europe problem will turn out, but I am kind of optimistic still. Waiting for the occasional bigger pull back to buy my favourite stock.
Thursday, 4 February 2010
My Feb view
Expect the unexpected, I guess all the investor should aware of this. Just like we are roaring ahead with the new year. Obama's proposal to regulate US banks and potential China tightening have brought the long overdue correction.
The once high flying IndoAgri food and Wilmar crash back to earth from recent high. Second and third liner are even worst. The position that I have built slowly over the past few months is like back to square, some gain, some loss. However, I remain optimistic, regardless of the fear and rumour around.
This is going to be Asia golden era, at least for the next 10 years, this is the place where the growth will be. US consumer will not recover just yet, until they build up the saving and correct the excess. Asia governments will continue to stimulate the domestic consumption to counter the decline of export sector.
I continue to like China consumer play, but I will not go into stock like China Hongxing until there is clear sign of trend reversal. I bought the stock which continue to grow despite the downturn. I think it is ok to pay a little bit for the quality and spread the buying through a few months period. Whenever there is a market weakness, buy a bit. We have yet to see the bull market go into overdrive. So, those with holding power can afford to wait.
China should still be the centre of growth. Focus on those China stock which have only domestic market exposure and unlikely to be affected by the macro economic outlook. The offshore sector also looks good to me, since the oil price is back to $70 which should support the exploration activities. Another theme which worth a look is Singapore property and tourism revival. As Singapore transformed into new playground for the rich, the demand for property and luxury goods will increase. Time will tell whether I am right.
The once high flying IndoAgri food and Wilmar crash back to earth from recent high. Second and third liner are even worst. The position that I have built slowly over the past few months is like back to square, some gain, some loss. However, I remain optimistic, regardless of the fear and rumour around.
This is going to be Asia golden era, at least for the next 10 years, this is the place where the growth will be. US consumer will not recover just yet, until they build up the saving and correct the excess. Asia governments will continue to stimulate the domestic consumption to counter the decline of export sector.
I continue to like China consumer play, but I will not go into stock like China Hongxing until there is clear sign of trend reversal. I bought the stock which continue to grow despite the downturn. I think it is ok to pay a little bit for the quality and spread the buying through a few months period. Whenever there is a market weakness, buy a bit. We have yet to see the bull market go into overdrive. So, those with holding power can afford to wait.
China should still be the centre of growth. Focus on those China stock which have only domestic market exposure and unlikely to be affected by the macro economic outlook. The offshore sector also looks good to me, since the oil price is back to $70 which should support the exploration activities. Another theme which worth a look is Singapore property and tourism revival. As Singapore transformed into new playground for the rich, the demand for property and luxury goods will increase. Time will tell whether I am right.
Saturday, 23 January 2010
Hongguo delisting offer
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.
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.
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.
Subscribe to:
Posts (Atom)
