sino grandness - undervalued stock

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11 years 11 months ago #10070 by radiant_legend
i ve bought in into this counter twice previously already. once during that nice run from .4 to .6 =) considering it again once it falls near to its resistance. that said, i got burnt a bit by other S-Chips and am more wary of them at the moment. but like ethan pointed out, this one seems to behave differently.

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11 years 11 months ago #10072 by ethan999
I don't sell based on target prices for individual stocks. 
I sell based on target prices for general indexes. In this case I will sell when the Shanghai Composite returns to at least 4000-5000 level in the future (may adjust according to circumstances) Note that its previous high was >6000 back in 2007, or when the FT ST China index reaches 600-700 or more (may adjust according to circumstances). 
I base my target price on indexes because the vast majority of stocks tend to move in strong correlation with market cycles - bull and bear market. Sino Grandness has been relatively unscathed in this Chinese bear market and has outperformed.
Nevertheless I expect that when the Chinese bull market returns one day, the rising tide will lift all stocks (that are at least showing decent fundamental performance), including those that have outperformed, such as Sino Grandness. I average purchase price for Sino Grandness is about 40 cents, it is at 48 cents even in a Chinese bear market, so the sky's the limit as to far it would have gone up by the time the Shanghai Composite returns to a bull market. 
At current levels I would prefer to accumulate China Minzhong which I believe is severely undervalued. 
Chinese stocks have been probably one of the worst performing since March 2009. The Shanghai Composite is currently at its lowest levels since March 2009. Despite all the trouble that Europe is in, even European stocks have outperformed Chinese stocks over the last few years.
The Shanghai Composite, and by extension the FT ST China index is clearly in a severe bear market, and I like buying during bear markets. But let me warn that no one knows for sure when the bull market will return to China. It could be next year, it could be 5 years time. No one knows for sure. Great patience is required. 

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  • Value Investor
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11 years 11 months ago #10126 by Value Investor
Replied by Value Investor on topic Re:sino grandness - potential undervalue stock
ethan999,

UOB Kay Hian has a report today. U think it's over bullish?


Valuation

• We re-iterate our BUY recommendation on Sino Grandness Food (SGF) with a higher target price of S$0.64. This translates into 3.0x 2013F PE, pegged to Singapore-listed peers’ average.

• We note the potential upside of S$1.12/share if Garden Fresh (Garden) obtains approval from an exchange to list assuming a holding company discount of 20% to SGF’s Garden stake and a 3.0x PE valuation to its remaining business.

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11 years 11 months ago #10135 by ethan999
Replied by ethan999 on topic Re:sino grandness - potential undervalue stock
Hi Value Investor,
As I've said I think stocks tend to move with market trends. Chinese stocks, not just in the mainland but including those listed in Hong Kong and Singapore are now in the midst of a bear market. Chinese stocks have underperformed even European stocks since the March 2009 global stock market lows. 3 of the world's biggest banks in ICBC, Bank of China and China Construction Bank, which annually produce net profits in hundreds of billions of RMB, are trading at P/Es of 6 or less, with dividend yields of 5%-6%. 
Can Sino Grandness reach $1.12 while China remains in a bear market? Very unlikely, unless there's a takeover offer at that price. 
Can Sino Grandness reach $1.12 if China returns to a bull market and the Shanghai Composite reaches >=5000? Easily. 
Don't forget that smaller stocks like Sino Grandness also tend to exaggerate market trends. If the Shanghai Composite doubles (its peak in 2007 was triple what it is now), many smaller stocks will probably move up in multiples of that. 
Let me give you an example. Sino Grandness wasn't listed in March 2009 but in March 2009 when the Shanghai Composite was at about 2100, Eratat Lifestyle was at a low of about 6.5 cents. 6 to 8 months later in that same year the Shanghai Composite recovered in what has now proven to be a bear market rally, to exceed 3k.
This was a 50% or so increase in the Shanghai Composite. During this same period Eratat Lifestyle recovered from a low of 6.5 cents to hit a high of 30 cents in October 2009, an increase of almost 500%. This is simply because smaller stocks tend to exaggerate the movements of indexes, which usually consists of larger stocks. Similarly when the indexes falls back down, smaller stocks fall by much larger percentages than larger ones. 
By May 2010 the Shanghai Composite had fallen back down to the 2500+ levels, and Eratat Lifestyle similarly fell to a low of 12.5 cents in May 2010, before recovering together with the Shanghai Composite much later on in the year. 
Now of course this thread is about Sino Grandness not Eratat, and I'm not telling anyone to buy Eratat, it's just an example of the volatility of smaller stocks and how they exaggerate market movements. Currently I'm much more impressed with China Minzhong and Sino Grandness. I also think that China Fishery is a good 'catch' (excuse the pun) at below 80 cents.
Anyway so my answer to you if you're asking me can Sino Grandness reach $1.12 one day? My answer to you is yes, but barring a miraculous performance or takeover offer, it is much more likely to happen when Chinese stocks return to a bull market and the Shanghai Composite recovers significantly from its currently abysmally low levels. 

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11 years 11 months ago #10346 by yeng
Ethan999, your pick of China Minzhong at the bottom was good ... But this Sino Grandness refuses to soar despite amazing results in 2Q.
www.nextinsight.net/

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11 years 11 months ago #10349 by ethan999
Replied by ethan999 on topic Re:sino grandness - potential undervalue stock
Hi Yeh,
Well it depends on what price one bought Sino Grandness at right? I bought at 40 cents and there are people out there who bought at 35 cents towards the end of last year and are now sitting on 25-30% gains despite the Shanghai Composite languishing at 2150, deep in bear market territory. 
Sino Grandess has outperformed other Chinese stocks for the last couple of years and it will hae to take occasional breaks and pullbacks here and there. Patience is key my friend, I'm a long term investor, not a 1-3 months swing trader. 
Besides, the projected IPO of Garden Fresh in Hong Kong is at end 2014. This gives you an idea of the frame of time we're looking at, one has to be prepared to wait for the long term.
Just as importantly, Chinese stocks are still in a bear market, the Shanghai Composite is at 2150 - barring any unforeseen circumstances in the development of this company, I will only consider selling when the Shanghai Composite returns to a bull market. The only question is whether to sell when the Shanghai Composite is at least 4000+ or to even wait as far as for it to exceed its 2007 peak of 6000+, which is admittedly a bit ambitious, but you never know because earnings and balance sheets for Chinese companies are now actually stronger than they were in 2007. 
When the bull market returns to China one day, stocks could potentially rise so quickly you won't believe it, just look back at what happened in 2006-2007. What would be ideal for Sino Grandness is if this happens roughly at around the same time that Garden Fresh lists in Hong Kong to achieve maximum valuation and maximum capital gains for the parent company. 
But always remember there's no such thing as a risk-free investment. If Garden Fresh HK fails to achieve its targets, the cost of redemption by Goldman Sachs would amount to few hundred million RMB for the parent company and guarantor, Sino Grandness. The stakes are high so the question is if you believe Garden Fresh can continue to achieve phenomenal growth and if the Hong Kong market will be stable enough at the intended time of IPO in 2014 for Garden Fresh to achieve IPO valuations that will make Goldman Sachs rather convert to shares than redeem the bond. As for me, I believe in this company's management. 
Another company I also like is China Fishery, which I had been accumulating at below 80 cents. Very resilient business with high barriers to entry. High enough beta to recover with the market when China recovers. 

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