Those that have listened to me talk about stocks will have heard me mention this stock at least once. I know! Many fund managers are selling out, Templeton is one of them. Many believe that this company is poorly managed, especially after their last quarterly financial announcement. Believe it or not! I am calling for a strong buy. I really love this company. Loads of cash, positive operating cashflow and 2nd largest abattoir in China. Why has this stock fallen from its lofty position to this lowly price? Once a darling on the STI index, it has fallen from grace and landed on earth...guess who is there to catch it? ME of course. SVI loves stocks which the world do not.
Ok I am not saying there is no risk, but while the world is watching COSCO, China Milk, Midas as possible dual listings, I believe PFOOD is going the be the leading candidate for a dual listing because of its high profile and ridiculous valuation. Another reason for liking this stock? You still need another reason!! Ok let me give it to you....RMB$1.4 billion in cash....RMB$611 million total liabilities. Superb. Every year cash from operations have been above RMB$300 million making it $60 million a year positive cashflow. That is just a very prudent amount I am assuming. Market cap is $711 million now. So positive cash from operations is almost 1/10 of market cap. What a great business!
Love it! Thats how I would describe this gem. Risks of course are high, but so are returns...This could be my meal ticket for next year!!
When pigs fly...So will I.
Best,
SVI
Wednesday, December 30, 2009
Monday, December 28, 2009
Hwa Hong and Tourism
Today, I was sitting in front of the computer feeling as sick as I have been for the past 2 years. Cannot remember the last time I was down with the flu and this virus reminds me of how strong the market feels and look before the end of the year. Looks like people are really feeling the "love" for the market in 2010. As I said before, its time to be a little cautious and I am sticking to my guns. In my outlook piece, I specifically pointed out tourism as a top play for 2010. But it seems like the market has already gone ahead and started the party early.
SIA, Hotel related plays have done well over the past 2 weeks and I hope that you all have jumped onto the bandwagon when I made the call. A very good example of how cheap hotel plays in singapore is accentuated by the premium paid for Furama holdings. The premium paid was in access of 50% of the last close price for the stock. As I have said before, value is getting harder to find in the market. I know some of you will tell me their earnings are really abysmal and most of which are registering losses for the year. Some would even say that the supply of rooms in Singapore will only rise once the IRs are open next year. That is without a shadow of a doubt true but with the introduction of the IRs will not only bring about more tourists but also the value per room should rise as the real estate prices continue to rise. In valuing a hotel, it is important for us to also focus on the revenue per average room and also the value per room. Revpar will only rise as economic recovery gains traction and the value per room will increase along with this rise. My belief is that the value per room in Singapore is going to go up as real estate prices continue to rise. So look out for hotel stocks that are trading at a significant discount to their NAV. Orchard Parade, Singland are a couple that comes to mind.
Now for Hwa Hong...I really like that fact that the company is looking to reinvent itself. For too long it has been regarded as the grand father stock of the decade. One of the earliest listed companies on the Singapore Exchange. You ask any one on the street or maybe even veterans in the market on this stock, they will give you a puzzled look. Well it has been making some headlines this year, giving a good dividend of $0.12 earlier and now...now they have sold one of their core businesses for a cool $95 million bucks! That is about 1/3 of its total market capitalisation. The best thing was that insurance arm (the one they are selling) only brings in $2 mil per year. So what does that mean? They sold it for a PE of more than 40 times! So was it a good price? Hell yes! What is the money going to be used for? Dividends? I doubt it. I think that it will be used for more investment acquisitions, most probably land as this would reinforce their property business arm. I always like companies that work on what they are good at, and this is something Hwa Hong is doing well. When a company concentrates on its strengths, that is always something a value investor should look out for. If you followed my earlier posts, I called for a buy since $0.505. Now its $0.585. A good return...you think? Ha! Well this makes me want to sing out the old Carpenters song..."Its only just begun"
Best
SVI
SIA, Hotel related plays have done well over the past 2 weeks and I hope that you all have jumped onto the bandwagon when I made the call. A very good example of how cheap hotel plays in singapore is accentuated by the premium paid for Furama holdings. The premium paid was in access of 50% of the last close price for the stock. As I have said before, value is getting harder to find in the market. I know some of you will tell me their earnings are really abysmal and most of which are registering losses for the year. Some would even say that the supply of rooms in Singapore will only rise once the IRs are open next year. That is without a shadow of a doubt true but with the introduction of the IRs will not only bring about more tourists but also the value per room should rise as the real estate prices continue to rise. In valuing a hotel, it is important for us to also focus on the revenue per average room and also the value per room. Revpar will only rise as economic recovery gains traction and the value per room will increase along with this rise. My belief is that the value per room in Singapore is going to go up as real estate prices continue to rise. So look out for hotel stocks that are trading at a significant discount to their NAV. Orchard Parade, Singland are a couple that comes to mind.
Now for Hwa Hong...I really like that fact that the company is looking to reinvent itself. For too long it has been regarded as the grand father stock of the decade. One of the earliest listed companies on the Singapore Exchange. You ask any one on the street or maybe even veterans in the market on this stock, they will give you a puzzled look. Well it has been making some headlines this year, giving a good dividend of $0.12 earlier and now...now they have sold one of their core businesses for a cool $95 million bucks! That is about 1/3 of its total market capitalisation. The best thing was that insurance arm (the one they are selling) only brings in $2 mil per year. So what does that mean? They sold it for a PE of more than 40 times! So was it a good price? Hell yes! What is the money going to be used for? Dividends? I doubt it. I think that it will be used for more investment acquisitions, most probably land as this would reinforce their property business arm. I always like companies that work on what they are good at, and this is something Hwa Hong is doing well. When a company concentrates on its strengths, that is always something a value investor should look out for. If you followed my earlier posts, I called for a buy since $0.505. Now its $0.585. A good return...you think? Ha! Well this makes me want to sing out the old Carpenters song..."Its only just begun"
Best
SVI
Thursday, December 24, 2009
Santa Claus Rally?
Merry Christmas to all! Here I am sitting here after shot after shot of whisky writing about the market. I have to say, it is times like this when the mind works uninhibited and inspiration flows straight from the brain (sedated and a little high).
In my 8 years in the market, I have paid attention to the smallest details and the biggest moves. There has never been a boring moment and I have to say to all my dealer or remisier friends, be glad that you are in the most interesting job the world can offer.
Ok enough of sentiments, now back the important stuff. The week has been rather boring with the mood of Christmas in the offing. The markets have managed to break the 2800 points convincing and we are at 15 month highs. Personally, I feel that Singapore's bourse being strongest in the face of Shanghai and Hong Kong dropping has been due to the optimism of a strong recovery driven by mainly the 2 IRs to be opened in 2010. The other market that has looked very strong and I have a gut feeling it is going to be the outperformer for at least 1H2010 will be the Nikkei. Historically, the worst performing market for the year before will be an outperformer in the next year. The yen is expected to fall the coming year and the only worry is that the Japanese sovereign debt gets the downgrade. But that is highly unlikely as the Japanese Debt is mainly held by their own citizens unlike the US. So it is very unlikely that the Japanese citizens will come and ask for their money back. So I will be looking for niche Japanese stocks which fits my value criteria. Which is very stringent. I have said many times to others, price is what you pay, value is what you get.
So go forth and seek out the value plays for the next year.
A word of caution, the technical charts for Shanghai and Hang Seng do not look good. They not managed to hit higher highs and if they breakdown and hit lower lows, it is a tell tale sign.
I have a few ideas up my sleeve but I will let you guys know as time passes as more work needs to be done.
I have been wrong about the US dollar hitting the markets. I may be wrong now, but I am sure if the US dollar keeps rising, we are going to be in for an interesting ride.
Best Christmas Wishes,
SVT
In my 8 years in the market, I have paid attention to the smallest details and the biggest moves. There has never been a boring moment and I have to say to all my dealer or remisier friends, be glad that you are in the most interesting job the world can offer.
Ok enough of sentiments, now back the important stuff. The week has been rather boring with the mood of Christmas in the offing. The markets have managed to break the 2800 points convincing and we are at 15 month highs. Personally, I feel that Singapore's bourse being strongest in the face of Shanghai and Hong Kong dropping has been due to the optimism of a strong recovery driven by mainly the 2 IRs to be opened in 2010. The other market that has looked very strong and I have a gut feeling it is going to be the outperformer for at least 1H2010 will be the Nikkei. Historically, the worst performing market for the year before will be an outperformer in the next year. The yen is expected to fall the coming year and the only worry is that the Japanese sovereign debt gets the downgrade. But that is highly unlikely as the Japanese Debt is mainly held by their own citizens unlike the US. So it is very unlikely that the Japanese citizens will come and ask for their money back. So I will be looking for niche Japanese stocks which fits my value criteria. Which is very stringent. I have said many times to others, price is what you pay, value is what you get.
So go forth and seek out the value plays for the next year.
A word of caution, the technical charts for Shanghai and Hang Seng do not look good. They not managed to hit higher highs and if they breakdown and hit lower lows, it is a tell tale sign.
I have a few ideas up my sleeve but I will let you guys know as time passes as more work needs to be done.
I have been wrong about the US dollar hitting the markets. I may be wrong now, but I am sure if the US dollar keeps rising, we are going to be in for an interesting ride.
Best Christmas Wishes,
SVT
Saturday, December 19, 2009
Review of picks
Can it be true? I am writing for the third time this week on my blog. I guess it really is the holiday season, how else would I have so much time to write here? Haha. Ok lets start off with some review on my picks so far.
NOL...I remember picking shipping as one of my favorites going into the next year. I stick to this because I do believe that the better results will be reflected in 1Q10. Goldman has just issued a buy call for this last week, setting the 12 month target at $2.20 so it shows that they are thinking the same thing as I did. I do believe that Asian shippers look like they are going to be strong and NOL is well positioned to benefit from this. Also bearing in mind that they have done their equity raising, so funding fears have abated and now its time to focus on improving business performance.
Trump Dragon...The sleeping dragon seems to have awaken after a month and a half of hybernation. I still like the story of Baijiu, especially after my trip to China earlier this month. However one worry I have about this particular counter is that they have to deliver on their promises. The past 2 quarters have been poor in terms of operating results and they blamed it all on the change in product mix. So they will have to deliver over the next few quarters of 2010. The deal to buy Ruyang Dukang has been delayed for 2 weeks till Jan 15 2010, this is something that I am conerned about too. For people who have studied this deal will know that Kwei Zhou Moutai tried to buy this distillery but the deal fell through, so it keeps us sober to the fact that this is no done deal by any means. Gut feel tells me it will be moving strongly till the end of the year. But I do think that I will be taking some profits off the table for this one soon.
Ziwo...This is a company that is still a work in progress. It seems to have fizzled off after my call. I am only concerned about the loss of interest from investors, however the company is still on the right track for some good results going forward. Patience is going to be the key word for this one.
Lion Asia Pac...I really liked this company but I did say that the key risk is overpaying for Polaris metals. It does seem that it will be going that way. So KIV this stock and see how things pan out. However the value is still here and it takes time for value to shine through.
Reyoung...It has been stuck here for some time. Results were good and still showing good organic growth. Setting up the JV in the US recently is a good step forward for the company and I maintain my stance that this is a company to look out for. The support at $0.30 looks like a very patient accumulator for the company.
New stocks to look out for:
Tat Hong...Major laggard, ready for a jump very soon.
Hwa Hong...I know...alot of Hongs, but this company has shown a lot of positive initiatives. A sleeping giant awakening. Selling their insurance business is a good step forward and transforming into a full fledged investment company. One to look out for in 2010. Special dividend could be in the offing here. NAV of $0.55 but I think it could trade at a premium.
Hong Leong Asia...Good news, good news and more good news. The past 2 months have been great for this company. I think this will continue into 2010. Flushed with cash and another special dividend candidate in the making. Promising and strongly backed by the Kweks. What else can you ask for?
Have many more picks but typing is very tiring...having a stiff shoulder right now.
I never run out of ideas, but I just feel that if I had to write it all at once, I will need a symphony pillow and the newest Osim chair. So for those of you who have made money from the picks and decided to buy me these items, please feel free to let me know. Thanks in advance.
SVI
NOL...I remember picking shipping as one of my favorites going into the next year. I stick to this because I do believe that the better results will be reflected in 1Q10. Goldman has just issued a buy call for this last week, setting the 12 month target at $2.20 so it shows that they are thinking the same thing as I did. I do believe that Asian shippers look like they are going to be strong and NOL is well positioned to benefit from this. Also bearing in mind that they have done their equity raising, so funding fears have abated and now its time to focus on improving business performance.
Trump Dragon...The sleeping dragon seems to have awaken after a month and a half of hybernation. I still like the story of Baijiu, especially after my trip to China earlier this month. However one worry I have about this particular counter is that they have to deliver on their promises. The past 2 quarters have been poor in terms of operating results and they blamed it all on the change in product mix. So they will have to deliver over the next few quarters of 2010. The deal to buy Ruyang Dukang has been delayed for 2 weeks till Jan 15 2010, this is something that I am conerned about too. For people who have studied this deal will know that Kwei Zhou Moutai tried to buy this distillery but the deal fell through, so it keeps us sober to the fact that this is no done deal by any means. Gut feel tells me it will be moving strongly till the end of the year. But I do think that I will be taking some profits off the table for this one soon.
Ziwo...This is a company that is still a work in progress. It seems to have fizzled off after my call. I am only concerned about the loss of interest from investors, however the company is still on the right track for some good results going forward. Patience is going to be the key word for this one.
Lion Asia Pac...I really liked this company but I did say that the key risk is overpaying for Polaris metals. It does seem that it will be going that way. So KIV this stock and see how things pan out. However the value is still here and it takes time for value to shine through.
Reyoung...It has been stuck here for some time. Results were good and still showing good organic growth. Setting up the JV in the US recently is a good step forward for the company and I maintain my stance that this is a company to look out for. The support at $0.30 looks like a very patient accumulator for the company.
New stocks to look out for:
Tat Hong...Major laggard, ready for a jump very soon.
Hwa Hong...I know...alot of Hongs, but this company has shown a lot of positive initiatives. A sleeping giant awakening. Selling their insurance business is a good step forward and transforming into a full fledged investment company. One to look out for in 2010. Special dividend could be in the offing here. NAV of $0.55 but I think it could trade at a premium.
Hong Leong Asia...Good news, good news and more good news. The past 2 months have been great for this company. I think this will continue into 2010. Flushed with cash and another special dividend candidate in the making. Promising and strongly backed by the Kweks. What else can you ask for?
Have many more picks but typing is very tiring...having a stiff shoulder right now.
I never run out of ideas, but I just feel that if I had to write it all at once, I will need a symphony pillow and the newest Osim chair. So for those of you who have made money from the picks and decided to buy me these items, please feel free to let me know. Thanks in advance.
SVI
Thursday, December 17, 2009
Christmas, a time to be jolly and cautious...
Those people who know me, will know that Christmas is my favourite time of the year. Not because I am a religious person, just that I grew up loving the thought of the existence of Santa Claus and lots of presents. Many people are now asking me whether Christmas will bring about a rally in the markets to deliver the greatest gift of all...money. Just like how I grew up to realise that Santa Claus is nothing more than a fairy tale, I am afraid that the market is going to disappoint everyone this December. Why? Simple...The USD is rebounding, this will lead to some unwinding of the carry trade and will cause markets to weaken. The downgrading of sovereigns in Europe is causing weakness in the Euro and this gives Dollar bulls some hope. Just as long as the dollar remains strong, we will see the market remaining weak or tepid. Lets hope this rebound in the dollar is just a technical bounce and not a bottom.
The market is reaching a point where it looks a little lethargic and peakish. Of course, we cannot ask for too much as the market has performed admirably this year. I believe that we are at a point of cross roads. Saying this makes me fear the coming year even more.
The time has come for us to become more defensive. To position our portfolios into more defensive stocks that have strong fundamentals, low downside or have an impending deal that is going to go through. My picks for defense would be Hwa Hong, Novena (yes I am sticking my neck out for this), Hong Leong Asia, Tianjin Zhongxin etc. I am really mentally too tired to explain my picks but I think that you will have to trust me on this.
I had a really bad day so I am just going to leave it here.
SVI
The market is reaching a point where it looks a little lethargic and peakish. Of course, we cannot ask for too much as the market has performed admirably this year. I believe that we are at a point of cross roads. Saying this makes me fear the coming year even more.
The time has come for us to become more defensive. To position our portfolios into more defensive stocks that have strong fundamentals, low downside or have an impending deal that is going to go through. My picks for defense would be Hwa Hong, Novena (yes I am sticking my neck out for this), Hong Leong Asia, Tianjin Zhongxin etc. I am really mentally too tired to explain my picks but I think that you will have to trust me on this.
I had a really bad day so I am just going to leave it here.
SVI
Saturday, December 12, 2009
I am BACK! MyView for 2010
Before I start, I need to apologize for not writing for so long. Things just kept coming up and have been traveling too much over the past 3 weeks. Until I got an msn msg from a friend asking why I have not updated my blog with new ideas, only then did I realise that time has flown by over the past weeks. I would just like to say that I am here to stay with this blog and I hope you all will get more of your friends to follow it. Trust me, readers will definitely get more insights and truths here than most other websites or investment gurus as you will be getting unbiased views with no vested interests.
Suddenly, we are at the end of the year and let us take a look at how things have panned out over the year. Overall, global markets hit a low in March this year and rebounded very strongly for the rest of the year. We have continued to rally with strength till now and the markets are all near their year highs at this time. It is easy for us to get carried away with this year's rally. But it is always good for us to stop and re-evaluate things before going into next year.
Have things changed?
Things seem to have gotten better, with all the economic data showing us that the economic situation is improving in most countries and the worst looks like its behind us. While writing this, I would like to point out that "less bad" does not mean "good". Lets take for example, exports globally are still weak, employment has been weak (except in Australia, those aussies are really solid, I guess kangaroos have strong legs), deflation is still cited as a worry, asset bubbles forming in emerging markets etc, protectionism is rising and MOST IMPORTANTLY....sovereign ratings are dropping, just look at Greece, Spain, Portugal..this is definitely not the end. Over the next year, debt levels in the US and UK are only going to rise, with tax revenues falling as unemployment continues to plague global economies and stimulus spending continues to be used to substitute for private consumption, more developed economies may start to face credit downgrades.
Yesterday, the great Mohammad El Erian (possibly the most brilliant mind in my view) commented that too much hope is placed on China to lead the world out of this global crisis, this may be too hopeful on investors and economist's part. How can we expect a country with an average per capita income of US$6,000 to lead the global recovery? Developed countries like the US and UK are averaging US$40,000 or more per year, how is China going to replace the consumption lost by these nations? What he said woke me up to reality. Things are not that great....
Don't get me wrong, I am not entirely bearish, but before we turn on the music and put the champagne on ice, I really think we have to be realistic and keep our feet on the ground. If you are expecting markets in 2010 to deliver returns like this year, I would say that it is wishful thinking. But I do believe with prudence and good research, we will be able to bring back decent returns.
2010 Strategy
Country bias: Japan...I am a contrarian, it is the worst performing market this year and did almost nothing, so I am actually very bullish on Japan next year. This is a country that has done nothing wrong during this financial crisis and their companies have been languishing for the past 2 decades. They have been prudent and hold very strong balance sheets so they are going to be relatively safe investments. Expect Jap companies to consolidate more because many of them are flushed with cash.
Sector bias: Shipping, Hospitality and Agriculture
Trade should start to pick up next year and shipping stocks are still trading at very reasonable levels. However do pick those that have low gearing and not expecting too many ship deliveries. Tourism will pick up too, this will spell better times for hotels, casinos, airlines etc.
Why Agriculture? I believe that Agri is going to be the sector to watch for the next decade. Arable land is falling in supply, farm workers are starting to urbanize with fewer people willing to work on farms, technology although improving is not going to make up for the drop in labor supply. Demographic changes are going to be the main drivers for this sector; larger population, growing affluence, excess liquidity..all are compelling arguments for this sector.
This is how I am going to position my portfolio and stay tuned for more. It the middle of the night already and I am falling asleep, so will not say much more. Christmas is approaching and expect markets to remain strong till 2010, but let us cross our fingers that its going to be more than just the usual capricorn effect.
Truly,
SVI
Suddenly, we are at the end of the year and let us take a look at how things have panned out over the year. Overall, global markets hit a low in March this year and rebounded very strongly for the rest of the year. We have continued to rally with strength till now and the markets are all near their year highs at this time. It is easy for us to get carried away with this year's rally. But it is always good for us to stop and re-evaluate things before going into next year.
Have things changed?
Things seem to have gotten better, with all the economic data showing us that the economic situation is improving in most countries and the worst looks like its behind us. While writing this, I would like to point out that "less bad" does not mean "good". Lets take for example, exports globally are still weak, employment has been weak (except in Australia, those aussies are really solid, I guess kangaroos have strong legs), deflation is still cited as a worry, asset bubbles forming in emerging markets etc, protectionism is rising and MOST IMPORTANTLY....sovereign ratings are dropping, just look at Greece, Spain, Portugal..this is definitely not the end. Over the next year, debt levels in the US and UK are only going to rise, with tax revenues falling as unemployment continues to plague global economies and stimulus spending continues to be used to substitute for private consumption, more developed economies may start to face credit downgrades.
Yesterday, the great Mohammad El Erian (possibly the most brilliant mind in my view) commented that too much hope is placed on China to lead the world out of this global crisis, this may be too hopeful on investors and economist's part. How can we expect a country with an average per capita income of US$6,000 to lead the global recovery? Developed countries like the US and UK are averaging US$40,000 or more per year, how is China going to replace the consumption lost by these nations? What he said woke me up to reality. Things are not that great....
Don't get me wrong, I am not entirely bearish, but before we turn on the music and put the champagne on ice, I really think we have to be realistic and keep our feet on the ground. If you are expecting markets in 2010 to deliver returns like this year, I would say that it is wishful thinking. But I do believe with prudence and good research, we will be able to bring back decent returns.
2010 Strategy
Country bias: Japan...I am a contrarian, it is the worst performing market this year and did almost nothing, so I am actually very bullish on Japan next year. This is a country that has done nothing wrong during this financial crisis and their companies have been languishing for the past 2 decades. They have been prudent and hold very strong balance sheets so they are going to be relatively safe investments. Expect Jap companies to consolidate more because many of them are flushed with cash.
Sector bias: Shipping, Hospitality and Agriculture
Trade should start to pick up next year and shipping stocks are still trading at very reasonable levels. However do pick those that have low gearing and not expecting too many ship deliveries. Tourism will pick up too, this will spell better times for hotels, casinos, airlines etc.
Why Agriculture? I believe that Agri is going to be the sector to watch for the next decade. Arable land is falling in supply, farm workers are starting to urbanize with fewer people willing to work on farms, technology although improving is not going to make up for the drop in labor supply. Demographic changes are going to be the main drivers for this sector; larger population, growing affluence, excess liquidity..all are compelling arguments for this sector.
This is how I am going to position my portfolio and stay tuned for more. It the middle of the night already and I am falling asleep, so will not say much more. Christmas is approaching and expect markets to remain strong till 2010, but let us cross our fingers that its going to be more than just the usual capricorn effect.
Truly,
SVI
Sunday, November 22, 2009
"Shipping" the laggards
As investors, we tend to be led by the market and we try to follow everything that moves and not touch anything that doesn't. Well lets look at something has been lagging behind all the other movers.
Of course, the hottest stocks in the market have been the financials and commodity related plays. Amazingly, the banking stocks in Singapore are getting close to their previous highs, especially UOB (my personal fave). Noble has hit a new all time high. So is there any more upside for these stocks? I think its hard to bet against it. But what about the next leg? One interesting sector which I have been looking at is the shipping sector. Did a global screening of stocks over the weekend, filtering and scything out the stocks that are still very close to their 52 week lows. Interestingly, majority of stocks that are close to their 52 week lows are shipping stocks.
It makes me think about the possibility of shipping being the next big mover as laggards start to play catch up. I understand that there are many reports stating that global shipping capacity is rising and spare capacity is going to hit the baltic dry index going forward. However, this is old news. From my experience, the prices of shipping companies have been hit for some time, the downside is limited. Many shippers are still trading at 5 times P/E or less. The only worry is the gearing levels. Many of the shippers ordered new ships during the global boom and are not suffering from financing woes. Take NOL for example, raising money through rights and loans. But now, its financing woes have subsided, I believe its once again time to look at the shippers. NOL is a natural choice for Singapore stock lovers. I believe it will come back with a vengeance. Look at the Baltic dry index, it has risen for 11 straight sessions, breaking out of a neckline, looks like the trend is going to be strong.
So do pay attention to shipping, there seems to be value there.
Personally, I like STX and NOL. ONAV for oil tanking shippers.
Well lets hope we can make a ship load of money here.
Best,
SVI
Of course, the hottest stocks in the market have been the financials and commodity related plays. Amazingly, the banking stocks in Singapore are getting close to their previous highs, especially UOB (my personal fave). Noble has hit a new all time high. So is there any more upside for these stocks? I think its hard to bet against it. But what about the next leg? One interesting sector which I have been looking at is the shipping sector. Did a global screening of stocks over the weekend, filtering and scything out the stocks that are still very close to their 52 week lows. Interestingly, majority of stocks that are close to their 52 week lows are shipping stocks.
It makes me think about the possibility of shipping being the next big mover as laggards start to play catch up. I understand that there are many reports stating that global shipping capacity is rising and spare capacity is going to hit the baltic dry index going forward. However, this is old news. From my experience, the prices of shipping companies have been hit for some time, the downside is limited. Many shippers are still trading at 5 times P/E or less. The only worry is the gearing levels. Many of the shippers ordered new ships during the global boom and are not suffering from financing woes. Take NOL for example, raising money through rights and loans. But now, its financing woes have subsided, I believe its once again time to look at the shippers. NOL is a natural choice for Singapore stock lovers. I believe it will come back with a vengeance. Look at the Baltic dry index, it has risen for 11 straight sessions, breaking out of a neckline, looks like the trend is going to be strong.
So do pay attention to shipping, there seems to be value there.
Personally, I like STX and NOL. ONAV for oil tanking shippers.
Well lets hope we can make a ship load of money here.
Best,
SVI
Saturday, November 14, 2009
Time flies and where are we now?
My god, time really flies. It seems like forever when I last wrote a post on this blog. It is not because there is nothing to say but time has not permitted me to do so.
I had a close friend ask me recently, why have I not written up on any stocks recently. I told her, good stocks are hard to come by and that we should only come out with them as an when they pop up.
Patience is a key virtue for investing. This applies to picking stocks and also waiting for a stock to perform. Remember, identifying stocks that have value and quality is the easy part. Having the patience to wait for it to deliver its value is the hard part.
Lets review my picks so far. Ziwo has done well, the performance for the stock has been decent, hitting past 40 cents since my call but the market pull back has stifled its performance. Results were pretty decent, so this is one to keep on the screen.
Trumpy Dragon...yes..my personal favourite. Reporting poor results over the weekend, a steep fall in revenue and profit. Do I still like it? Do I still have conviction...what do you think? I still believe in this counter because it has a vision. Stock has been stuck at 70 cents for a few weeks now. It may even fall below 70 cents, but remember, a pull back is a buy signal for those that has not gotten in since the beginning. Festive season is coming, alcohol consumption should pick up. Company is looking to move into more medium range products which will cater to the growing middle class in China. Rationalisation of brands and range of products may allow the company focus more on their branding and marketing. The future of this firm will be determined mainly by their acquisition going through.
Reyoung has been so well held at 30 cents, makes me have even more conviction that something is happening to it. Pay attention to this one. Results were also very decent.
Lion Asia Pac has not done that well, that is because they have been dragged into a bidding war for Polaris metals. But the value of the stock is still firmly there. So the downside is very very limited from here. I still stand by this call firmly. Remember patience?
So anything new? Do keep a look out for ONAV Omega Navigation. I like this stock for its value, a small cap with a very strong book value. Waiting for it to report earnings soon, do not expect them to deliver huge profits but it will be interesting to see if they are able to obtain financing for their oil tankers. US$3.72 looks like a bargain.
Like I said before, the rally was not over....I am right again on this. The USD weakness is fueling the market and that is something that will come back to haunt us in the future. But sticking to value will prevent you from getting burnt too badly should the market turn around suddenly. However, ride this rally as long as you can because the risk is on the upside and not on the down.
I promise I will try to write every week but a lot depends on the boss...hahaha
Take care and do feel free to post questions for me. Any stocks which you need an opinion on.
Best,
SVI
I had a close friend ask me recently, why have I not written up on any stocks recently. I told her, good stocks are hard to come by and that we should only come out with them as an when they pop up.
Patience is a key virtue for investing. This applies to picking stocks and also waiting for a stock to perform. Remember, identifying stocks that have value and quality is the easy part. Having the patience to wait for it to deliver its value is the hard part.
Lets review my picks so far. Ziwo has done well, the performance for the stock has been decent, hitting past 40 cents since my call but the market pull back has stifled its performance. Results were pretty decent, so this is one to keep on the screen.
Trumpy Dragon...yes..my personal favourite. Reporting poor results over the weekend, a steep fall in revenue and profit. Do I still like it? Do I still have conviction...what do you think? I still believe in this counter because it has a vision. Stock has been stuck at 70 cents for a few weeks now. It may even fall below 70 cents, but remember, a pull back is a buy signal for those that has not gotten in since the beginning. Festive season is coming, alcohol consumption should pick up. Company is looking to move into more medium range products which will cater to the growing middle class in China. Rationalisation of brands and range of products may allow the company focus more on their branding and marketing. The future of this firm will be determined mainly by their acquisition going through.
Reyoung has been so well held at 30 cents, makes me have even more conviction that something is happening to it. Pay attention to this one. Results were also very decent.
Lion Asia Pac has not done that well, that is because they have been dragged into a bidding war for Polaris metals. But the value of the stock is still firmly there. So the downside is very very limited from here. I still stand by this call firmly. Remember patience?
So anything new? Do keep a look out for ONAV Omega Navigation. I like this stock for its value, a small cap with a very strong book value. Waiting for it to report earnings soon, do not expect them to deliver huge profits but it will be interesting to see if they are able to obtain financing for their oil tankers. US$3.72 looks like a bargain.
Like I said before, the rally was not over....I am right again on this. The USD weakness is fueling the market and that is something that will come back to haunt us in the future. But sticking to value will prevent you from getting burnt too badly should the market turn around suddenly. However, ride this rally as long as you can because the risk is on the upside and not on the down.
I promise I will try to write every week but a lot depends on the boss...hahaha
Take care and do feel free to post questions for me. Any stocks which you need an opinion on.
Best,
SVI
Monday, November 2, 2009
Young? Or ReYoung? $0.29
Its me again. Finally after completing a very big project in my thankless job, I am finally able to find time to look at a stock which has been on my shortlist for some time. It is rather unfair that I did not manage to make the call at a lower price because I have been meaning to do so.
Many people are very worried about the current sell down and they are calling me all the time to ask if this is the end of the rally for the year. From my experience, as long as there is skepticism the market will defy it. Is the rally over? Nope. Is there going to be weakness? I think so.
I am not going to reveal how much conviction I have in this rally because I may be committed to an asylum if I told anyone. But I have my own reasons for believing in it. All I can ask for is for you to believe in me.
Ok now to the stock in mind, Reyoung Pharma. I know...many of my friends think that I like to find needles in a haystack. Why can't I just buy stocks that are hot? Novena? Biosensors? Haha. I am like that. I do not like what is popular. I like things that are obscure.
Reyoung is engaged in the manufacture and sale of pharma products and personal hygiene products for women and infants. This is one of the few pharma companies left listed in Singapore. Gone are those like Sihuan and Asiapharm. This is one company that is still trading at a cheap price. It has quietly been bought up over the past 2 weeks. Just go look for yourself. Low volume and not many sellers.
The company generates good positive cash flow and sits on good cash levels. It is leveraged but gearing levels are comfortable. For the first half of 2009, the company made 1.44 cents. That is a potential 10 times p/e which is very reasonable for a Chinese Pharma company.
What I like is not the medicinal business segment for the company, but more of the personal hygiene side of its business. I have to say I love consumer staples and to me nothing is more beautiful than stable recurring income.
The fact that the company bought back almost 20 million shares at 11-12 cents and placed them as treasury shares was even more impressive. Buying back shares at such low prices has helped to raise the company's EPS and benefited its shareholders.
Company is still trading below its book value of 31 cents and that makes it attractive to me. A company that trades below its asset value, highly profitable, strong operating cashflow, manageable leverage and lastly a defensive business.
It could be the next pharma stock to be taken private. Look at the performance of the chinese pharma stocks, Sihuan taken private, Asiapharm bought by private equity, Tianjin Zhongxin doubling...So could Reyoung be the next one?
We shall see.
Best,
SVI
Many people are very worried about the current sell down and they are calling me all the time to ask if this is the end of the rally for the year. From my experience, as long as there is skepticism the market will defy it. Is the rally over? Nope. Is there going to be weakness? I think so.
I am not going to reveal how much conviction I have in this rally because I may be committed to an asylum if I told anyone. But I have my own reasons for believing in it. All I can ask for is for you to believe in me.
Ok now to the stock in mind, Reyoung Pharma. I know...many of my friends think that I like to find needles in a haystack. Why can't I just buy stocks that are hot? Novena? Biosensors? Haha. I am like that. I do not like what is popular. I like things that are obscure.
Reyoung is engaged in the manufacture and sale of pharma products and personal hygiene products for women and infants. This is one of the few pharma companies left listed in Singapore. Gone are those like Sihuan and Asiapharm. This is one company that is still trading at a cheap price. It has quietly been bought up over the past 2 weeks. Just go look for yourself. Low volume and not many sellers.
The company generates good positive cash flow and sits on good cash levels. It is leveraged but gearing levels are comfortable. For the first half of 2009, the company made 1.44 cents. That is a potential 10 times p/e which is very reasonable for a Chinese Pharma company.
What I like is not the medicinal business segment for the company, but more of the personal hygiene side of its business. I have to say I love consumer staples and to me nothing is more beautiful than stable recurring income.
The fact that the company bought back almost 20 million shares at 11-12 cents and placed them as treasury shares was even more impressive. Buying back shares at such low prices has helped to raise the company's EPS and benefited its shareholders.
Company is still trading below its book value of 31 cents and that makes it attractive to me. A company that trades below its asset value, highly profitable, strong operating cashflow, manageable leverage and lastly a defensive business.
It could be the next pharma stock to be taken private. Look at the performance of the chinese pharma stocks, Sihuan taken private, Asiapharm bought by private equity, Tianjin Zhongxin doubling...So could Reyoung be the next one?
We shall see.
Best,
SVI
Saturday, October 31, 2009
Another week..but with volatility
Ok, it was another hectic week for me, once again this week threw up more reasons for me to quit my job however that is another story altogether.
Ok back to the stock markets. This week, I had a good friend who came to me asking for yield plays. He said he was looking for yields that were in excess of 10%. Now that is just mad. Where are you going to find sustainable yields of 10%? Most of the stocks have rallied so much, even the REITs no longer offer such yields. He mentioned that First Shipping Leasing Trust offered such a yield, but I need to remind all my readers that this is probably looking at the world through the rearview mirror. The yields cannot be sustained because FSLT will probably be raising money through rights or units creation to meet their debt obligations. That means that no new value is created while your current earnings will need to be divided by even more units.
Now lets look at yield plays. I am not criticizing people who are looking for yields, I know my Grandma loves yield. So if you are my grandma's age, please do look out for yields. As for those who are still young, pls pls pls never never never look for yields. IF a company starts to pay you good dividends compared to their stock price...that means they have stopped growing. That means capital appreciation is going to be mediocre. If you want to be defensive and not want to take risk, get out of the MARKET! Do not go for yields. If the market tanks, your yields are going to get higher because that stock price is dropping like a hot rock...
Look for sustainable businesses that has the vision to find other channels to grow! That is the best way to invest.
The market has shown a lot of weakness over the past week and I am pretty sure many technical chartists are going to come out over the next couple of weeks telling you how weak the market is going to be. I agree, it is probably not going to be strong, but I believe that this could be the buying opportunity for many investors that did not manage to get into the market to benefit from the recent rally. Look for cheap entries.
I know I will be. Stay tuned for more. But lets first hope I can get my pesky boss off my behind. I really have not had time to do as much research on my stocks as I would have liked. But I do see some interesting stocks...not going to say much now because I have not really found out enough.
Have a good week ahead..and remember...the market is just in a bad mood, but moods will change. Do not let the daily gyrations determine your long term vision.
Best,
SVI
Ok back to the stock markets. This week, I had a good friend who came to me asking for yield plays. He said he was looking for yields that were in excess of 10%. Now that is just mad. Where are you going to find sustainable yields of 10%? Most of the stocks have rallied so much, even the REITs no longer offer such yields. He mentioned that First Shipping Leasing Trust offered such a yield, but I need to remind all my readers that this is probably looking at the world through the rearview mirror. The yields cannot be sustained because FSLT will probably be raising money through rights or units creation to meet their debt obligations. That means that no new value is created while your current earnings will need to be divided by even more units.
Now lets look at yield plays. I am not criticizing people who are looking for yields, I know my Grandma loves yield. So if you are my grandma's age, please do look out for yields. As for those who are still young, pls pls pls never never never look for yields. IF a company starts to pay you good dividends compared to their stock price...that means they have stopped growing. That means capital appreciation is going to be mediocre. If you want to be defensive and not want to take risk, get out of the MARKET! Do not go for yields. If the market tanks, your yields are going to get higher because that stock price is dropping like a hot rock...
Look for sustainable businesses that has the vision to find other channels to grow! That is the best way to invest.
The market has shown a lot of weakness over the past week and I am pretty sure many technical chartists are going to come out over the next couple of weeks telling you how weak the market is going to be. I agree, it is probably not going to be strong, but I believe that this could be the buying opportunity for many investors that did not manage to get into the market to benefit from the recent rally. Look for cheap entries.
I know I will be. Stay tuned for more. But lets first hope I can get my pesky boss off my behind. I really have not had time to do as much research on my stocks as I would have liked. But I do see some interesting stocks...not going to say much now because I have not really found out enough.
Have a good week ahead..and remember...the market is just in a bad mood, but moods will change. Do not let the daily gyrations determine your long term vision.
Best,
SVI
Saturday, October 24, 2009
Things are getting expensive
I have to say that it has been really a tiring week for me, all the strenuous activities which I had to go through prevented me to put in any postings. I would have liked to write more often but to be honest, there was also nothing much to write about. Basically, the market did not really move throughout the week and with the exception of a few stocks, the rest of the market remained status quo.
One observation I have made is that it is harder and harder to find value. Most of the stocks have rallied to great heights and valuations are looking stretched. Earnings are coming in slowly but nothing has really looked interesting so far. As a value investor, I am finding it harder and harder to find stocks that demonstrate value at these prices.
Was doing my screenings last evening and I was really not impressed with all the valuations that came out. I continue to be bullish on my previous calls, but I am not able to come out with any other ideas as of now because it is really looking a little expensive.
Will keep you guys posted!
SVI
One observation I have made is that it is harder and harder to find value. Most of the stocks have rallied to great heights and valuations are looking stretched. Earnings are coming in slowly but nothing has really looked interesting so far. As a value investor, I am finding it harder and harder to find stocks that demonstrate value at these prices.
Was doing my screenings last evening and I was really not impressed with all the valuations that came out. I continue to be bullish on my previous calls, but I am not able to come out with any other ideas as of now because it is really looking a little expensive.
Will keep you guys posted!
SVI
Saturday, October 17, 2009
I give you $0.36, you give me $0.44. Thats what Lion AsiaPac is....
First of all, before I start, I would like to say that I do not believe in giving exact numbers because I am not anal retentive. The numbers I get are from the latest quarterly financial statements and I like to round them off, so specifics are just not my cup of tea.
Okay, lets get back to this company. So what is the big deal about a company that has not done much over the past 3 years? It is exactly why I think there is something about it that is intriguing.
Lion Asiapac does not do much...basically they are engaged in the manufacturing of electronics and automotive components and limestone processing. Limestone is used as a catalyst in the process to extract iron from iron ore. Scrap metal processing is also a part of their business. Ha! That is a real mouthful! So it is really quite a bit...
I know...it confused me too. They are so diverse...Did I mention that they also held a 6% stake in a chinese automobile maker Anhui JiangHuai Automobile Ltd which is listed in Shanghai.
Now instead of talking about the business, lets talk about their investment. Currently, they are in the process of selling the stake and at current price this will net Lion Asiapac around Rmb 600 million. At current exchange rate it should net about S$129 million. The latest balance sheet shows the company holding S$69 million with S$20 million in liabilities. So netting off all the cash and liabilities, the company will hold S$178 million in cash.
Cash alone will account for $0.44 cents per share. That is value by my definition.
Oh yes, I need to talk about the risk in investing this company! The company is looking to buy Polaris Metals at an offer of A$0.70 per share, which will cost them S$115 million. This is a loss making company, however it is very important to note that mining companies are not profitable for years till they bring the mine online. Polaris is targeting 2011 to start producing iron ore.
This acquisition will be beneficial for LAP if they do not pay too much but it does look like this is unlikely because they seem to be pulled into the bidding war right now. If they should raise their bids to a level that is not realistic, jump ship!
But at this moment, acquisition or not acquisition, we should focus on the cash balance of the company. Remember, we have only valued the cash balance of the company, that means that we have not looked at the future possible earnings or the value of the rest of the company.
I know a good deal when I see one. I do not mind swapping $0.36 for $0.44.
Have a good week ahead!
Best,
SVI
Okay, lets get back to this company. So what is the big deal about a company that has not done much over the past 3 years? It is exactly why I think there is something about it that is intriguing.
Lion Asiapac does not do much...basically they are engaged in the manufacturing of electronics and automotive components and limestone processing. Limestone is used as a catalyst in the process to extract iron from iron ore. Scrap metal processing is also a part of their business. Ha! That is a real mouthful! So it is really quite a bit...
I know...it confused me too. They are so diverse...Did I mention that they also held a 6% stake in a chinese automobile maker Anhui JiangHuai Automobile Ltd which is listed in Shanghai.
Now instead of talking about the business, lets talk about their investment. Currently, they are in the process of selling the stake and at current price this will net Lion Asiapac around Rmb 600 million. At current exchange rate it should net about S$129 million. The latest balance sheet shows the company holding S$69 million with S$20 million in liabilities. So netting off all the cash and liabilities, the company will hold S$178 million in cash.
Cash alone will account for $0.44 cents per share. That is value by my definition.
Oh yes, I need to talk about the risk in investing this company! The company is looking to buy Polaris Metals at an offer of A$0.70 per share, which will cost them S$115 million. This is a loss making company, however it is very important to note that mining companies are not profitable for years till they bring the mine online. Polaris is targeting 2011 to start producing iron ore.
This acquisition will be beneficial for LAP if they do not pay too much but it does look like this is unlikely because they seem to be pulled into the bidding war right now. If they should raise their bids to a level that is not realistic, jump ship!
But at this moment, acquisition or not acquisition, we should focus on the cash balance of the company. Remember, we have only valued the cash balance of the company, that means that we have not looked at the future possible earnings or the value of the rest of the company.
I know a good deal when I see one. I do not mind swapping $0.36 for $0.44.
Have a good week ahead!
Best,
SVI
Friday, October 16, 2009
Trumpy Dragon...Lets hope everything goes according to plan....$0.75
After a very hectic week, I really do not have the energy to go into too much detail. I have liked Trumpy as I love to call it for some time.
Why? I think that there is nothing better than vice to invest in. One of the core tenets of value investing is to find a business that you would start yourself if you had enough capital. So as a big fan of the vice business, I want to introduce to you my favorite....Alcohol.
Ok Trumpy has had a good run up and its up 170% for the year. Impressive? I think so too. Is it too high? I think that it may be pricing in some optimism. Do I like it? I LOVE IT!
Lets see. First of all, this is a Baijiu distiller, holding 6% of market share in Hebei which apparently houses China's most notorious alcoholics. Secondly, if you are an Emil Chau fan, you have to buy it, cos apparently he drinks it to sooth his throat.
Ok jokes aside. Many market watchers are attributing this move up in Trumpy to the acquisition of the 2 Dukang distilleries. They are definitely wrong on that. Trumpy currently trades at close to 20 times historical P/E. It is not expensive because its trading at a significant discount to all its Chinese listed peers. The average P/E for Chinese Distillers is current 36 times. So are we expensive? I think not...
Now lets move to the acquisitions...first the shocker, both distillers have gone through bankruptcy over the past 8 years. Both were poorly managed. So there you are...the key risk.
This is information that is not going to be revealed by analysts.
Now to the good part. This acquisition is going to more than double Trumpy's capacity. Both brands are very famous and it allows Trumpy to break into the rest of the chinese market. Currently, the full year revenue for Trumpy is RMB700 million. The largest listed Baijiu distiller is Sichuan Swellfun and it's revenue is RMB 1.5 billion. If Trumpy is able to generate more revenue from it's doubled up capacity....it will be comparable to Swellfun. How much do you think Trumpy is worth? If it is going to double its revenue, double their profits and trade at 30 odd times P/E?
The acquisition is at book value. All the listed distillers are trading at 3 to 4 times book value so this can be considered a bargain, but combining the 3 entities is going to be a real challenge to the management.
I guess I have given you a picture of how things can be great if everything goes according to plan. Of course the risks are also high.
Lastly....Baijiu is most popular liquor in China....so do you think vice is a good business?
All hail Trumpy! Cross our fingers and hope things work out.
Have a good weekend ahead!
Best,
SVI
Why? I think that there is nothing better than vice to invest in. One of the core tenets of value investing is to find a business that you would start yourself if you had enough capital. So as a big fan of the vice business, I want to introduce to you my favorite....Alcohol.
Ok Trumpy has had a good run up and its up 170% for the year. Impressive? I think so too. Is it too high? I think that it may be pricing in some optimism. Do I like it? I LOVE IT!
Lets see. First of all, this is a Baijiu distiller, holding 6% of market share in Hebei which apparently houses China's most notorious alcoholics. Secondly, if you are an Emil Chau fan, you have to buy it, cos apparently he drinks it to sooth his throat.
Ok jokes aside. Many market watchers are attributing this move up in Trumpy to the acquisition of the 2 Dukang distilleries. They are definitely wrong on that. Trumpy currently trades at close to 20 times historical P/E. It is not expensive because its trading at a significant discount to all its Chinese listed peers. The average P/E for Chinese Distillers is current 36 times. So are we expensive? I think not...
Now lets move to the acquisitions...first the shocker, both distillers have gone through bankruptcy over the past 8 years. Both were poorly managed. So there you are...the key risk.
This is information that is not going to be revealed by analysts.
Now to the good part. This acquisition is going to more than double Trumpy's capacity. Both brands are very famous and it allows Trumpy to break into the rest of the chinese market. Currently, the full year revenue for Trumpy is RMB700 million. The largest listed Baijiu distiller is Sichuan Swellfun and it's revenue is RMB 1.5 billion. If Trumpy is able to generate more revenue from it's doubled up capacity....it will be comparable to Swellfun. How much do you think Trumpy is worth? If it is going to double its revenue, double their profits and trade at 30 odd times P/E?
The acquisition is at book value. All the listed distillers are trading at 3 to 4 times book value so this can be considered a bargain, but combining the 3 entities is going to be a real challenge to the management.
I guess I have given you a picture of how things can be great if everything goes according to plan. Of course the risks are also high.
Lastly....Baijiu is most popular liquor in China....so do you think vice is a good business?
All hail Trumpy! Cross our fingers and hope things work out.
Have a good weekend ahead!
Best,
SVI
Tuesday, October 13, 2009
Ziwo Holdings ($0.325) - Rubbing its way to the top
This is my first stock call and ironically, I am going to call for an ipo.
Honestly, it is against my principles to go for ipos but this is a company that has impressed me and caught my eye with its easy to understand business.
I have to admit that I have my reservations on new stock offerings because they tend to price at very high valuations and unrealistic premiums to that NTA. Bearing all this in mind, I will go on to say why I like this company.
Ziwo Holdings Ltd : is engaged in the research and development, manufacture and sale of SBR and other foamed materials (comprising foamed SBR, foamed EVA and high foamed PE), 30D terylene filament yarn, and sandwich mesh fabric, which are used mainly as raw material in the production of lifestyle consumer products, furniture upholstery and automobile interior lining.
In simpler words...it makes synthetic rubber.
Having so many uses for synthetic rubber, it does not take a genius to figure out that this is a very stable business.
Many people are under the impression that this is a fibre related stock like fibrechem and sinotech fibre but this is something very different. The revenue mix shows that the company derives 62% of its revenue from SBR Foam (synthetic rubber). The margins are expanding and currently stands at 40%. The company has expanded their margins for all their products over the past 4 years.
(Remember that we are basing all this on numbers that have been provided in the prospectus so lets hope the management is not lying)
The company registered a diluted EPS of 4.6 cents for FY2008. At ipo price, it is trading at 5.11 times, current price of 32.5 cents it is only 7 times historical. If that is still not impressive enough, the company grew their 1st quarter profit by more than 1oo% YOY. Assuming that it can grow even close to this amount, the forward earnings could be only 4 times. So we can possibly see much higher prices for this stock. A lot still depends on the sentiment right?
Grew its client base from 41 in 2005 to 439 in 2009. Impressive growth. Management targets to grow their production capacity by 2 times within the 2 years.
I do not like to do long analysis. Basically, the business is easy to understand, good track record, very low valuations, strong cash flow and zero gearing. Lots of opportunity to grow.
So it gets my thumbs up. Of course all caveats remain. The ipo rule......lets hope it does not haunt me.
Best,
SVI
Honestly, it is against my principles to go for ipos but this is a company that has impressed me and caught my eye with its easy to understand business.
I have to admit that I have my reservations on new stock offerings because they tend to price at very high valuations and unrealistic premiums to that NTA. Bearing all this in mind, I will go on to say why I like this company.
Ziwo Holdings Ltd : is engaged in the research and development, manufacture and sale of SBR and other foamed materials (comprising foamed SBR, foamed EVA and high foamed PE), 30D terylene filament yarn, and sandwich mesh fabric, which are used mainly as raw material in the production of lifestyle consumer products, furniture upholstery and automobile interior lining.
In simpler words...it makes synthetic rubber.
Having so many uses for synthetic rubber, it does not take a genius to figure out that this is a very stable business.
Many people are under the impression that this is a fibre related stock like fibrechem and sinotech fibre but this is something very different. The revenue mix shows that the company derives 62% of its revenue from SBR Foam (synthetic rubber). The margins are expanding and currently stands at 40%. The company has expanded their margins for all their products over the past 4 years.
(Remember that we are basing all this on numbers that have been provided in the prospectus so lets hope the management is not lying)
The company registered a diluted EPS of 4.6 cents for FY2008. At ipo price, it is trading at 5.11 times, current price of 32.5 cents it is only 7 times historical. If that is still not impressive enough, the company grew their 1st quarter profit by more than 1oo% YOY. Assuming that it can grow even close to this amount, the forward earnings could be only 4 times. So we can possibly see much higher prices for this stock. A lot still depends on the sentiment right?
Grew its client base from 41 in 2005 to 439 in 2009. Impressive growth. Management targets to grow their production capacity by 2 times within the 2 years.
I do not like to do long analysis. Basically, the business is easy to understand, good track record, very low valuations, strong cash flow and zero gearing. Lots of opportunity to grow.
So it gets my thumbs up. Of course all caveats remain. The ipo rule......lets hope it does not haunt me.
Best,
SVI
Sunday, September 27, 2009
Value investing not an exact science!
Value investing was meant to be simple and basically built around common sense and logical thinking. On the surface, it is easy to understand and anyone who has read any books on value investing or Warren Buffett would agree with me. However, is it really that easy to put to practice. I have to be honest, there were times when my patience was tested. Stocks that have been picked on the merit of having value underperformed those of absolutely no value, tempted me to go with the herd and invest in the "hottest stocks". To be able to overcome this temptation takes great conviction and belief. So for those aspiring to adopt value investing as your investment strategy, you need to first build some confidence in yourself and your stock picking skills.
Investing was never meant to be rocket science or confined to people who have CFAs or financial backgrounds. You do not need to be able to calculate complicated ratios or do advanced financial modeling to invest. Over time you will realise that investment research is often a laggard and by the time the research has been released to the retail market, the stock has already lost most of it's upside potential.
I am not going to write a whole page on how to invest in value stocks, all I am going to do will be to give you ideas and maybe breakdown the rationale for you. I am no Warren Buffett or Franklin Templeton, I am just a Simple Value Investor who is trying to give small retail investors like you and me, a level playing field as institutional, high net worth and corporate investors.
So stay tuned for more ideas and tips from SVI.
Investing was never meant to be rocket science or confined to people who have CFAs or financial backgrounds. You do not need to be able to calculate complicated ratios or do advanced financial modeling to invest. Over time you will realise that investment research is often a laggard and by the time the research has been released to the retail market, the stock has already lost most of it's upside potential.
I am not going to write a whole page on how to invest in value stocks, all I am going to do will be to give you ideas and maybe breakdown the rationale for you. I am no Warren Buffett or Franklin Templeton, I am just a Simple Value Investor who is trying to give small retail investors like you and me, a level playing field as institutional, high net worth and corporate investors.
So stay tuned for more ideas and tips from SVI.
A Starting Point
For those reading this blog, remember that the opinions which I put into writing here are solely my own and for your reading pleasure only. Similar to all things in life, there is no guarantee. There is no guarantee that I will be right on every call but I believe that by following this blog, most budding investors will find it beneficial to take note of the age old principles of value investing. I welcome comments and any queries which anyone has, however do bear in mind that I have a full time job (very very tough one) that takes up a whole bulk of my time. So the turnaround time could be delayed.
I would prefer to remain anonymous because of my job commitments. Some of you will know who I am and I beseech you to not mention my name or any salutations that may be linked back to me in your comments to me.
Investing is a passion of mine and I am looking to share my experiences and whatever I have learnt over the years with all of you readers. Once you start to invest, you will understand what I mean by falling in love with investing.
Hope all of you will have reap great benefits from this blog going forward. All the best and good luck!
Yours Truly,
SVI
I would prefer to remain anonymous because of my job commitments. Some of you will know who I am and I beseech you to not mention my name or any salutations that may be linked back to me in your comments to me.
Investing is a passion of mine and I am looking to share my experiences and whatever I have learnt over the years with all of you readers. Once you start to invest, you will understand what I mean by falling in love with investing.
Hope all of you will have reap great benefits from this blog going forward. All the best and good luck!
Yours Truly,
SVI
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