China Animal rallied 9% today. The powerful rally could be due to the news that the company is looking at increasing work force and M&A next year. The other reason could be the coming HK listing.
I have high hope on China Animal. If things turn out to be what analysts have predicted, the earning growth could continue and share price heading north. Invest in small cap is about taking position early when it is undervalued and look to sell if it become way overvalued.
The future is still bright for the company. Let's see how it perform next year.
Tuesday, 7 December 2010
Saturday, 20 November 2010
What to buy?
This is a lazy afternoon, sitting in front of the computer, just want to let my mind be empty. However, read some blog entries, this trigger me to write something.
The market remain uncertain as the economy data is not so rosy. In view of US QE2 measure and the general comment I read every where, I am confident next year will be a good year for stock. I suspect more hot money will flow to Asia seeking for return. So, the usual candidate will be Asia consumption stock.
Here are some stocks that I will buy if the price is right
Wilmar - Big cap is not usually my cup of tea. However, I found my style to shift as I gain more experience in stock market. Being burnt by few stock, I supposed I am wiser now. Wilmar remain the stock in my watch list because of the China factor. It's cooking oil business is doing well in China. The previous quarter result is disappointing because of wrong timing. More importantly, Kouk said it is a good company but a bit high already. So, I guess I won't make my move yet, waiting for more price weakness. Reasons to buy: market leader in cooking oil, going into rice and flour business and new sugar business.
China Animal - I never truly understand the business. It sounds contradicting that why buy into the company if you are not truly understand the business itself. My thought is you don't really understand the business unless you are in the company or in same line of business. The company has shown promise on new acquisition, high barrier of entry and good ROE. If thing turns out like what analyst predicted, it should worth a lot more than currently.
Eratat - It is my favourite now mainly from valuation point of view. If thing turns out more promising, there are few catalyst that could make the price rocket - low valuation, continuous market share gain and higher ASP. When the market feel more excited about the company, there is room for further re-rating and hence more upside potential. The negative side of this business is the cash hasn't come in yet - negative cashflow
China Mobile (ADR) - You can either buy Hong Kong stock or buy the ADR listed on SGX. The reason is pretty obvious. Trading at PE of 12-14, having dividend yield of 4% and dominant position in China market. It is reasonable priced and have good growth potential for the long term.
I will stop here. There are still quite a number of stock I monitor and might go into if the risk reward ratio is attractive. But it will be too long to list down one by one.
The market remain uncertain as the economy data is not so rosy. In view of US QE2 measure and the general comment I read every where, I am confident next year will be a good year for stock. I suspect more hot money will flow to Asia seeking for return. So, the usual candidate will be Asia consumption stock.
Here are some stocks that I will buy if the price is right
Wilmar - Big cap is not usually my cup of tea. However, I found my style to shift as I gain more experience in stock market. Being burnt by few stock, I supposed I am wiser now. Wilmar remain the stock in my watch list because of the China factor. It's cooking oil business is doing well in China. The previous quarter result is disappointing because of wrong timing. More importantly, Kouk said it is a good company but a bit high already. So, I guess I won't make my move yet, waiting for more price weakness. Reasons to buy: market leader in cooking oil, going into rice and flour business and new sugar business.
China Animal - I never truly understand the business. It sounds contradicting that why buy into the company if you are not truly understand the business itself. My thought is you don't really understand the business unless you are in the company or in same line of business. The company has shown promise on new acquisition, high barrier of entry and good ROE. If thing turns out like what analyst predicted, it should worth a lot more than currently.
Eratat - It is my favourite now mainly from valuation point of view. If thing turns out more promising, there are few catalyst that could make the price rocket - low valuation, continuous market share gain and higher ASP. When the market feel more excited about the company, there is room for further re-rating and hence more upside potential. The negative side of this business is the cash hasn't come in yet - negative cashflow
China Mobile (ADR) - You can either buy Hong Kong stock or buy the ADR listed on SGX. The reason is pretty obvious. Trading at PE of 12-14, having dividend yield of 4% and dominant position in China market. It is reasonable priced and have good growth potential for the long term.
I will stop here. There are still quite a number of stock I monitor and might go into if the risk reward ratio is attractive. But it will be too long to list down one by one.
Sunday, 7 November 2010
Eratat promising turn around and low valuation
Eratat has just released the Q2 result. A quick scan on the financial statement:
For 6 months result,
Gross profit +3.3%
Because of reduced in expenses, Operating profit increased 23.4%
Trade receivable is quite high at 347,747 because of lengthen credit term
Current liabilities 130,968
Cash and bank balance 131,936
Margin improvement +2.8% for 6 months
Operating cash flow at 99,189
But because of the high trade receivable, it registered a cash outflow
EPS is 17.16 RMB cts (3.31 SGD cts)
In the cut throat China sports wear market, Hongxing has suffered a lot. Eratat is moving away to lifestyle fashion sector. How successful it is, remain to be seen. However, this set of result is quite promising. There are few important points
- Margin increased
- ASP increased
- Profit growth
The negative part
- Higher receivable days
- Cash outflow (company earn money but no cash comes in)
The management may be smart in changing the direction of business, and on the surface, they might just have succeeded in doing so. However, challenges abound. Management is looking forward for better time ahead.
The risk is still there, especially there is no cash coming into the company. Distributors still haven't pay back the money. Comparing the cash balance and current liabilities, company should have enough cash to pay the liabilities until real cash flowing in.
The valuation is low. Without considering the seasonality, if you just double the half year EPS, we are looking at whole year earning of 6.62 cts. Last Friday closing price was 0.205 and it is trading at forward PE of 3. That is super cheap.
For 6 months result,
Gross profit +3.3%
Because of reduced in expenses, Operating profit increased 23.4%
Trade receivable is quite high at 347,747 because of lengthen credit term
Current liabilities 130,968
Cash and bank balance 131,936
Margin improvement +2.8% for 6 months
Operating cash flow at 99,189
But because of the high trade receivable, it registered a cash outflow
EPS is 17.16 RMB cts (3.31 SGD cts)
In the cut throat China sports wear market, Hongxing has suffered a lot. Eratat is moving away to lifestyle fashion sector. How successful it is, remain to be seen. However, this set of result is quite promising. There are few important points
- Margin increased
- ASP increased
- Profit growth
The negative part
- Higher receivable days
- Cash outflow (company earn money but no cash comes in)
The management may be smart in changing the direction of business, and on the surface, they might just have succeeded in doing so. However, challenges abound. Management is looking forward for better time ahead.
The risk is still there, especially there is no cash coming into the company. Distributors still haven't pay back the money. Comparing the cash balance and current liabilities, company should have enough cash to pay the liabilities until real cash flowing in.
The valuation is low. Without considering the seasonality, if you just double the half year EPS, we are looking at whole year earning of 6.62 cts. Last Friday closing price was 0.205 and it is trading at forward PE of 3. That is super cheap.
Sunday, 24 October 2010
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.
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.
Wednesday, 20 October 2010
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.
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.
Friday, 15 October 2010
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.
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.
Wednesday, 13 October 2010
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.
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.
Sunday, 3 October 2010
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.
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.
Sunday, 26 September 2010
Eratat Lifestyle gaining momentum
My first investment in China sport sector was through China Hongxing which disappoint me very much. Obviously, after Olympic, there is excess capacity and cut throat competition which squeeze every player. In a very competitive environment, it is better to buy the leader than those playing catch up.
Recently, Eratat Lifestyle has been making headline. Being mentioned by media and analyst, I think they are trying to drum up the interest on the stock. Interestingly the company claimed they are out of sport shoe sector and into the lifestyle sector which allow them leeway to earn a meaningful profit. We shall see what number the company can produce in coming quarter annoucement before making further judgement.
The interesting fact about the stock is PE valuation is super low. Less than 5 based on previous quarters of earning and management hinting the margin is on the up trend. Valuation is cheap but whether the future is substantially changed is yet to see.
Recently, Eratat Lifestyle has been making headline. Being mentioned by media and analyst, I think they are trying to drum up the interest on the stock. Interestingly the company claimed they are out of sport shoe sector and into the lifestyle sector which allow them leeway to earn a meaningful profit. We shall see what number the company can produce in coming quarter annoucement before making further judgement.
The interesting fact about the stock is PE valuation is super low. Less than 5 based on previous quarters of earning and management hinting the margin is on the up trend. Valuation is cheap but whether the future is substantially changed is yet to see.
Subscribe to:
Posts (Atom)
