Opportunities In Out-of-favour Stocks

What happened to Qingmei?

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PE now 2.4 X only and stock has sunk to 21.5 cents compard to >30 cents when accumulated by Aussie fund manager.

Qingmei is just one of the many S-chips that has been sold down to ridiculously cheap level during this period. Qingmei’s forthcoming quarterly results may provide useful indications of whether the selling has been unjustified.
The ruling party is widely expected to see a reduction in popular votes on May 7 (Polling Day) and this might have been a major contributory factor to the latest weakness in stock prices.
With the prices of many fundamentally sound penny stocks at their present levels, investors may like to ask themselves – how much lower could their prices fall and what is likely to happen after that?

Hi Observer 2,
What is your current expectation of Qingmei upcoming quarter results, will it be reporting a stronger/weaker quarter earning compared to previous financial year Q3? 

Hi, Mizzart99,
Below are the turnover & nett profits of Qingmei over the last few quarters:
Period  ……….Turnover  ……….Nett Profits
Jan-Mar 2010 ..RMB 305M ……..RMB 61.6M
Apr-Jun 2010 ..RMB 303M ……..RMB 62.9M
Jul-Sep 2010 ..RMB 304M ……..RMB 71.5M
Oct-Dec 2010 .RMB 304M ……..RMB 66.4M
In its last report, Qingmei expected its expanded production capacity of 42% from Jan 2011 and its strong customer base, to lend support to its revenue and profit growth. As the revenue in Jan-Mar 2011 would likely be affected by the traditional Chinese New Year’s holidays with possible labour supply disruptions, I would expect only a small increase to its revenue and nett profits.
Since Qingmei’s EPS for the half-year ending Dec 2010 is already 21.5 cts(RMB), its EPS for 9 months (ending Mar 2011) could be expected to be at least 34 cts(RMB).
 
 

Qingmei went to 20 cents.
Decided to take a leap of faith and accumulate further at 20 cents. Why? dividend is now almost 13% at current price, and its just 3 months away.. 3 quarter of earnings will provide much visibility, and it will be known in 1-2 weeks time.
There is a chance of earning surprise as increased capacity has already kick in. nonwithstanding the fact that jan and march is a traditional weak quarter.
Seems like a worthy punt.
As long as earning holds, or drop no more than 10% in Q3, (weak quarter due to CNY season), I think potential for gains is hugh.
But if earnings super "goyak", then i will suck my thumb and sell at whatever price market opens.
 

Wow how do you get 13% yeild? My calculation was approximately 10-11% at 20,5cents.
Nevertheless I bought some today at 20.5 cents