I have to date done not more than 5 postings on stocks. The companies mentioned in the postings were :
1. SMB
2. Eastern Asia Technology
3. Kian Ann
4. Foreland
It actually amazed that of the 4 stocks mentioned/posted by me 2 were taken private, one currently in talk (Kian Ann) and Foreland.
The posting I make today is to share with you how I normally choose a stock. I guess the record of my stock picking will speak for itself.
I paste below my past postings for your info :
READERS’ TOP PICKS FOR Q1 Stock 2010
starting price (cts) Mar 31 close (cts) % change since Jan 1 Reader who highlighted stock
1. Techcomp 30 55 83.3 MacGyver
2. Broadway 62.5 95.5 52.8 MacGyver
3. SMB 32 31 -3.1 Josephyeo
4. Eastern Asia 11 11 - Josephyeo
5. Changtian 22 19 -13.6 Morpheus
6. Junma Tyres 16.5 16 - Morpheus
7. Oceanus 44 35 -20.5 happin
8. Design Stu 63.5 62 -2.3 happin
9. Cityspring 59 60.5 2.5 at301273
10. Metro 79 82.5 4.4 Lowsx
Why I like Kian Ann …
1)
Positive Revenue trend
revenue trend
full year june '08
full year june '09
full year june '10
full year june '11
half year dec '12
(in millions)
150.1
134.8
149.4
162.3
86.1
2)
Positive profit/loss trend
profit/loss
full year june '08
full year june '09
full year june '10
full year june '11
half year dec '12
(in millions)
11.1
11.5
13.2
16.7
9.8
3
)Good dividend history
dividend history
full year june '08
full year june '09
full year june '10
full year june '11
half year dec '12
(in cents)
0.7
0.7
1.0
1.1
0.33
4
)Trading below nta
Price at date of posting:
22.5 cts
Nta :
33.7 cts
5
)Good Dividend yield
4% to 5% estimate
Management is committed to distribute 25% of nett profit to shareholders.
Extract from Kian Ann Media Release on 14 Feb 2012.
Committed to Rewarding Shareholders :
In view of its financial performance for 1HFY2012, the Board has declared an interim
dividend of 0.33 cent per share.
Since October 2011, the Group has adopted a dividend policy of paying annual
dividends of at least 25% of the consolidated net profit attributable to owners of the
parent of Kian Ann Group. For its last financial year (FY2011), total dividend amounted
to 1.1 cents per share.
Foreland Fabrictech
When I invest in s-chips I nnormally look at the background of the shareholders. Normally those who are deeply involved in civics, political, economics n political associations/clubs etc are less likely to 'fraud' as it will lead to a big loss of face. Looking at the credentials of the chairman, in that terms, i am comfortable with him. This is one reason I am heavily vested in this company. Just my view only.
China. Tsoi Kin Chit
Executive Chairman
Mr Tsoi is our Founder and Executive Chairman. He was appointed to our Board on 15 November 2006. With almost 20 years of experience in the industry, he is responsible for formulating the strategies and providing the direction for our Group.
Before founding the Group, he served in the army from January 1969 to June 1976, handling clerical work for the 31st Radar Regiment, Shanghai Air Force, the Chinese People Liberation Army. This was followed by a stint as Secretary of the Dongshi Politics and Law Committee, Jinjiang District Dongshi Community, Fujian Province. In June 1979, Mr Tsoi joined Jinjiang Second Welfare Factory, a state-owned shoe-manufacturing enterprise, as Factory Manager responsible for the construction and running of the factory until June 1996.
In October 1988, while still holding his last position as Factory Manager, Mr Tsoi founded Fulian Knitting and has been its Chairman and Managing Director since then.
Besides his role in our Group, Mr Tsoi wears several other hats including:
• Member, Jinjiang City Executive Committee of the Chinese People’s Political Consultative Conference
• Member, Quanzhou City T extile and Garment Chamber of Commerce
• Deputy Chairman, China Chamber of International Commerce, Jinjiang City
• Chairman, Returned Overseas Chinese Federation of Dongshi Township, Jinjiang City
• Deputy Chairman, Jinjiang City Labour Model Association
• Deputy Chairman, Chamber of Commerce and Industry, Jinjiang City
Mr Tsoi is an avid philanthropist who has contributed significantly to charities. In 2006, he was awarded the Quanzhou City
Public Donation Special Contribution Prize by the Quanzhou City People’s Government.
He holds a degree in Enterprise Management from the Fujian Province Radio Broadcasting Television University, China.
Hi Joseph, you have done well. Could it be a bit of luck that helped you too? btw, Foreland is not looking good. I hope it recovers in the future but for now the textile industry isn't looking up.
hi Viviene, as suggested a bit of luck helps. But one cannot be lucky all the time. Luck is when hard work n opportunity meet. Anyway it doesn't matter. About Foreland, I am heavily vested n am suffering from paper lost.I still maintain the view that the stock is undervalued being trading at around 27% of its cash holding n without debts and 88% below its nta. U may call it an asset play. The textile industry in China is in very bad shape n many have wound up n many more are suffering from huge losses. Those companies which survive the shake up will eventually be big winners. How long it take, nobody know. I think given its cash position, Foreland is likely to survive the crunch. Is its cash real? Only the directors will know. But given the credentials of the main shareholders n directors I would want to believe that the cash is real. They have been involved in civic n political activities in their areas for so many years n to be involved in something fraudulant would be a big blow to their prestige n 'face'. or loss of 'face' which nean so much to many Chinese. In my view,Foreland at current price of 3 cts per share should be a good buy as it is at/near bottom. When u buy a stock at its bottom u cannot loose money unless the company go bankrupt. Investing is all about faith .. believing in what you do and patience, willing to wait. Stocks like Kian Ann n SMB were very illiquid when I first went in. It was buyers looking at sellers n vice versa for months .. years before it was finally discovered. Above are just my thoughts n perceptions which come from many years of investing. I wish u and all fellow investors all the best!!!
Thank you for your reply. I find it interesting that you put some weightage to a CEO's background. I agree that it can be a good restraint on him and limits any tendency to be 'naughty'. Of course, it's no 100% guarantee. Just look at the spate of headlines about top guys who should know better than behave badly like that CIA director and another US general, and our ex-CNB director , etc. Financial misbehaviour too is not entirely absent from civic leaders.
Yes Viviene, there is no 100% guarantee. Greed is always a strong factor. In investing, its the same .. u sometime make n sometime loose. Not possible to be able to be right all the time. This is where diligence come in n help to minimise the mistake. I once share w my friends a hardly known company .. Yaan. This company was managed by a husband n wife team, was profitable and capitalised at $6+ millions w only 60mil shares (stand corrected). For months the buyer look at sellers n both refused to move. Buyer wanting a lower price n seller not giving in. So no traded n the situation lasted almost 3 years. My friends wanted to quit .. to sell out. But to me its ridiculous .. a profitable capitalised at 6 mil n giving dividend consistently do not make sense. And yes, the ceo took it private at double the last traded price. He was really fair. The point I am trying to make in this story is .. thru diligence n if you known that you are likely to be right .. do not loose faith. Have faith, patience n believe. Don't waver. - joseph
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