1) Post in our forum (thread title is Readers' Top Picks) your top 2 stock picks that you reckon will show significant percentage gain by the end of 1Q2011. (To be able to post, you must first have registered with us. Registration is free
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2) State the % gains expected from the day you post till the end of 1Q2011. (We will use the closing price at the end of the day of your posting to compare with end of the day of 1Q)
3) Give brief reasons for your choice of stocks.
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a) ZIWO, cos now too low a PE of 5X for a high-growth stock. Strong fundamentals - It has patents for its products, enjoys great demand for them in PRC as a substitute for the higher-priced imported versions, and is continuing to expand prodn capacity with TDR money.
Financials are reassuring: low receivables cos the management is able to make clients pay up before delivery of new goods, high operating cashflow, and zero debt.
Possible 50% upside (from 36.5 cts now to 55 cents) by end of march 2011.
b) FUXING, cos its new acquisitions will contribute significntly (or so the managemnt says) next year, ROE will jump as its huge cashpile is put to good use via the acquisitions.
Possible 50% upside (from 17.5 cts now to 26 cents) by end of march 2011.
a) Fuxing (50% Upside)
New product super zipper will contribute significantly to the margins. Also with the recent acquisition, it will consolidate the company's ability to produce more efficiently.
b) Trek (100% upside)
New products to be launched next year. Orders may come in a big way (worldwide) if the products proved to be user friendly and efficient.
a) china fibretech (75% upside) cash of 14.5 cents compare to shares price of 0.08 cents. Textile industry turnabout. A laggard compare to it's china peers. Price to book is 0.43. Earning is poor but I personally believe company is turning around. Reasons: the company has invest in new equipments to handle projected increase in demands. If 4q and 1q 2011 earnings improve, price should move closer to cash value. b) china Hu An cable (35% upside) Public seems not to buy into it's growth stories, yet. with prices hovering around 35 cents although various brokerages houses have TP of 50 - 60 cents. I expect Hu an to exceed the earning forecasts of Philip and CIMB as Hu an 9 mths earning plus last year 4 q profits woul have meet earning targets and I expect this year 4 q to do much better than last year. reasons being the strong momentum of profits and the seasonal strong 4q. That their receivables and inventory is twice of last year bode well for q4 figures. If Hu An manage to exceed the expectations by a large margins, it might prompt a re-eating by thehouses and Hu an will become severly underpriced at current levels
I pick Hu An as well. (50% upside). Reasons: In a good growth area. Energy sector be it green or coal powered is going to do well in china and Hu An is capable of supplying cables to these sector. In addition the mgt drive to move into lucrative UHV cables should move them up the value chain. Hu An mgt looks sound and able to capitalise on the opportunities available to them. I have confidence in them to deliver a good set of FY10 results.
1. FUJIAN ZHENYUM (28.5 cts) – Expected gain of slightly over 100% [to its IPO price of 62 cts]. Stock is illiquid and much out-of-favour with investors. Its share price suffered a severe sell down early in the year following the auditor’s inability to pass its annual accounts because of dissatisfaction over certain business transaction records. The company then appointed Deloitte & Touche as Special Auditor to look into its account problems and the outcome should be known by early 2011. For the past 3 years, the company had reported earnings of around 14 cents(S) and also paying out dividends.. In end-2009, the company embarked on a growth trail by acquiring10 new PVC-M production lines for RMB 52 million to boost its PVC-M water pipes production by about 20,000 tons p.a. starting mid-2010. This is expected to boost its EPS well beyond 14 cts this year. At 28 cts, the stock is selling at PE of just 2x. Fujian has cash and cash equivalents of RMB 273 million and borrowings of RMB 16 million. Its NAV is RMB 4.77 or 95 cts (S). If the Special Auditor reveals no serious misdoings (likely to be the case since no adverse report of any kind has surfaced so far), a significant re-rating of its share price can be expected.
2. QINGMEI (26 cts) – Expected capital gain of 100% to 54 cts at a forward PE of 6x. The stock is currently selling at a 5-cent discount to its IPO price of 31 cts. Its revenue and profits for the last 3 quarters were rather flat as its production capacity had already reached a maximum. From January 2011, its production capacity for high-end shoe soles would increase from 45.6 million pairs to 65 million [up 42.5%]; this will be followed, six months later, by its second capacity expansion raising its capacity to 84 million pairs [up 29%]. Qingmei has Cash & Cash Equivalents of RMB 507M and borrowings of 88.5M.The company has promised to distribute 30% of its nett profits in FY 2010 & FY 2011 as dividends to shareholders; the payout was 2.27 cts (S) for FY 2010. The EPS for 1Q 2011 [Jul – Sep 2010] was 11.2 cts (RMB). Its 3Q & 4Q 2011 results [Jan to Jun 2011 period] should show better earnings because of the benefit of increased production capacity. Full year EPS of at least 45 cts (RMB) [9 cts (S)] can be expected. PE would then fall to 2.9x or less at 26 cts. A significant re-rating of its share price is also expected for this stock early next year.
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