Opportunities In Out-of-favour Stocks

Observer2, any idea when Fujian zy will announce it's full year results?

Fujian ZY released its full year results on 25 February last year. The likelihood of it releasing again, the results towards the last few days of February this year is there.

Significant corrections are expected in every bull market cycle and the Singapore market is currently undergoing another big correction after the last one in May 2010. The latest accounting woes of China Hongxing and Hongwei have damaged the recovery of confidence for S-chips and also compounded the selling pressure on S-chips causing many of them to drop to unrealistic levels once again. For those willing to take calculated risks and having a sharp eye for picking good under priced stocks, they could expect another rewarding season if they believe that the market is still in a bull cycle.
Among the many S-chips that have fallen significantly, I prefer to bet on the 2 out-of-favour penny stocks below that I believe, have very low downside risks but high potential capital gains over the next six months.

1. Eratat – PE of 3x at 21 cts. Earnings visibility till June 2011.
2. Qingmei – Forward PE of 3x at 27 cts. Growth to come from ramping up newly completed production capacity. Dividend of 2.7 cts(S) expected for current FY.

observer 2,
I have been wanting to ask, the 30% profits to be given as dividends, is it a dividend policy or is it a promise made by the mangement for this year only?
Regards

Hi, Greenrookie,
The management had made a promise to pay 30% of the nett profits to shareholders as dividends for the first 2 years. The first year payment was made last November and the happiest recipient was undoubtedly the Chairman, Su Qingyuan, who received RMB 48+ millions for his 65% stake in the company - [makes one wonder whether this is the reason for a generous payout].

The panic selling seems to have disappeared and opportunists are coming in to buy -- once again history repeats itself. People buy in a herd, and sell as a herd.

My picks are:
a) Ziwo - excellent results trend, only thing is the TDR has been postponed because of market condition.

b) Techcomp - another excellent result but liquidity still not great.