China Environment's 52-week trading range is 15-68 cents. Chart: Bloomberg.MANY S-CHIPS face illiquidity because investors view them warily as a result of accounting issues that, over the years, many their peers have been found guilty of.
But China Environment is spared the illiquidity problem.
Maybe it's because the company is in the environment sector which gets a lot of press these days.
China Environment designs and constructs industrial waste gas treatment systems.
Its Singapore-listed shares are very heavily traded, and trading is exactly what investors seem to have in mind, instead of buying and holding for long-term gains.
In the past 12 months, the stock has gone from 15 cents to 68 cents and then started on a relentless slide to as low as 26 cents last week before recovering to 28 cents.
The average volume traded in the past three months was 4.5 million shares, according to Yahoo Finance. Frequent trading of the stock is made possible by the big quantity -- about 56% of the company's issued shares -- that is in the hands of the public.
-- Huang Min, Executive Chairman of China Environment, in May 2014 press release. |
His current stake stands at 24.79%, or 182.3 million shares.
Substantial shareholder Ma Ong Kee joined in the buying in May, acquiring 1.795 million shares at 41 cents apiece. His updated holding: 117.3 million shares, or a 15.94% stake.
Given that these two insiders bought at the 40-cent level, the current share price of 28 cents might appear to be a safe entry level for other investors.
The trailing PE of the stock is 11X but there is no dividend yield to talk about.
The Net Tangible Assets (NTA) stood at 110.5 RMB cents or 22 Singapore cents as at the end of 1Q -- ie, the stock price is at a premium to NTA.
The prospect statement in the 1Q results announcement was positive.
The company cited China's tougher environmental measures and a bigger national budget for improving the environment, concluding that "the Group expects the demand for our products as experienced from 2013 to stay robust, with increased opportunities for us to expand our market presence."
And Chairman Huang in a 1Q results press release said: "As our capacity has expanded by almost 400% from the middle of last year, we should continue to ride on the strong demand for our products in the coming quarters."
With expanded production capacity you need more working capital too to support the greater workload.
For that, China Environment has secured RMB250 million in new credit facilities this year. See press release.
You may wish to read NRA Capital's report dated Dec 2013 which was released after its analyst made a plant visit to Anhui.
For more investor views, and a particularly worrying one by 'chasingvalue' in June this year, go to Valuebuddies.com and NextInsight's forum.
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Comments
can someone ask the analysts or company directors to address all the Red Flag raised at Value Buddies?
Think they were valid points.