Since my last posting the price has gone up from 3.3 to 5.0 cts per share giving a capital gain of 51%. I hope some of you have benefitted from it too. Am still holding as there is still alot of momentum on penny stocks. Will probably sell when its closer to the placement price of 5.8 cts or before end January 2013 when the "Capricorn" effects comes in.
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[josephyeo 16-11-2012]:
I like Foreland for the following reasons :-
1. closing price on 16 nov 2012 is 3.3 cts. Its nta is 24 .95. It is trading at only 13.2% of its nta.
2. it has no debts and a cash holding of 11.4 cts per share against its share price of 3.3 cts. meaning .. it is trading at only 28.9% of it's cash holding. (Source : ShareInvestor)
3. Mr. Tsoi accepted script dividend valued at 8.6 cts per share at a time when the share was trading at around 7 cts. This compares to friday closing of 3.3 cts.
4. On 7 sept 2012 Mr. Tsoi sold 53 million shares to 3 investors at a price of 5.8 cts per share. Compare this to friday (16 nov 2012) closing price of 3.3 cts.
5. The company is still profitable. It has a profit of S$8.7 mil up to 30th sept 2012 though it register a loss of $185,000. on its 3rd quarter result. On 3.3 cts the company is capitalised at only $17.9 mil. Assuming that the company make a loss of another $200,000. on the 4th quarter it would still show a profit of S$8 mil. for the full year. This gives it a p/e of around 2. (pls note that the last quarter loss is only a wild guess. I am not able to know how much it will make or loose. I am using the 3rd quarter as a guide).
6. After the sale of shares Mr. Tsoi still 239 mil shares or 44.18 of the company's total shares. He is still heavily vested. Keep in mind too that his son is an employee of the company.
7.Year ending 2011 the company gave a dividend of 0.8019 cts per share. Based on 3.3 cts the dividend yield is a ridiculous 24.3%. The company does give dividend on and off and I am unable to tell whether they will give or not for this financial year.
8. Mr. Tsoi is quite involved in the civic, political n commercial activities in the Jinjiang and the Quanzhou City area. Personally I quite like his credential.
9. Finally the share price is at or near bottom. If you buy a share at its bottom, you can never loose money except when the company go bankrupt or some fraudulent activities.
10. The textile/fabric business in China is in very bad shape. There is a shake up going on. Those who survived the shake up will eventually be big winners. Based on its cash holding Foreland is likely to survive the shake.
Above are just my views and ways of looking at things. Its not intended to ask you to buy or sell. You are advise to do your own diligent before you make a decision.
Based on the above I like the counter and am heavily vested.
I wish all of you all the best.
Since my posting on 16 nov 2012 the stock had a good run. It reached a high of 6.3 cts on 7 Jan 2013. Unfortunately on the 9th Jan the company came out w a profit warning .. that there would be a significant drop in revenue and that the company would show a loss in the 4th quarter.
Normally I invest on a story line. The original posting was my story line and so long as the story line stay my investing decision stay and change if the story line change. In the case of Foreland my original view was that they would incur the same level of loss as in their 3rd quarter in which case the company would still be grossly under-valued. Unfortunately the profit warning on the 9th Jan 2013 seems to imply that the situation is going to be alot worse than in the 3rd quarter. So the story line has shifted to the negative. In view of the perceived shift in profitability I had decided to dispose of all my shares at 5.2 cts per share.
I hope that some of you who had followed me earlier do make some profit. I will contimue to watch this counter and wait for the full year result and if the cash level, nta and management comments are positive I may put my money back into this counter.
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