China Minzhong

China Minzhong in good mood +2 cents today, 99.5 cents still below $1, hahaha... cheap

29 March 2012: Templeton Worldwide, Inc. increased its deemed interest in China Minzhong with the purchase of 6.611 million shares.

DBSV Research is downgrading China Minzhong from BUY to
HOLD due to cost challenges, lower margins outlook and
muted growth prospects. Target price reduced to S$ 0.60 (Prev
S$ 1.45). Weak fundamentals are set to persist. China
Minzhong is entering a consolidation phase.

On the back of
higher costs and the less exciting outlook, we assume
declining gross margins from 38% in FY12 to 35.3% in FY14F,
and this will lead to muted growth of 3%/8% for
FY13F/FY14F.

 
Very glad they downgraded it. Gives me a chance to continue accumulating this severely undervalued counter. 
People ask when will s-chips recover. The answer is when the motherland itself recovers. There is actually a very strong correlation among the Shanghai Composite, H-chips and s-chips. S-chips are down not just because of a lack of trust, they are down because they are following the trend of Chinese stocks being in the midst of a long term bear Market. 
The Shanghai Composite peaked at over 6000 in October 2007 (merely 2100 right now). Similarly the FT ST China Index peaked at over 1000 in 2007 (merely 227 now). Since then China has been in a long term bear market. 
If you are young like me, you know that bull and bear markets come in cycles. It is certain that the former peak of 6000 will be exceeded one day when the bull returns, one just has to be patient. It may take years. 
 

One more thing to add, it's not just s-chips that are suffering from low valuations.
The 3 biggest banks in China, which according to a CNBC article the other day, contributed to about 30% of global banking profits, and are each producing net profits 150 billion - 200 billion rmb a year, guess what their P/Es are? About 6!
We're talking about ICBC, Bank of China and China Construction Bank. 
These are companies worth over a trillion rmb and trading at all time low valuations in terms of P/E and P/B.
When the 3 biggest banks in China are trading at P/Es of 6, what do we have to complain about when our s-chips are trading at P/Es of 2-3? 
These are all just symptoms of a bear market in Chinese stocks. Continue accumulating until the bull returns.
(Vested in all 3 Chinese banks too)
 

this type of price, hard to come by. accumulate for old age