This counter caught my attention because of a recent posting by 'greenrookie' as follows:
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.
On top of that, CIMB has been highlighting this stock aggressively. U read:
Press release today by China Fibertech
In anticipation of the announcement of the unaudited financial results for the fourth quarter and full year ended 31 December 2010 (“4Q2010/FY2010”), the Board of Directors of China Fibretech Ltd. (the “Company”) deems it appropriate to issue a profit guidance announcement in respect of the financial results of the Company and its subsidiaries(the “Group”).
The unaudited financial results of the Group for the 4Q2010 is expected to report materially higher revenue due to the strong growth in the demand for our fabric processing services as a result of recovery of demand for our fabric processing services and higher prices due to product mix processed as compared to 3Q2010. This increase in demand is also partly due to spilled over orders from customers who brought forward some of their orders in anticipation of Chinese New Year being celebrated in early February 2011.
Accordingly, the Group expects to show a materially higher net profit before taxation for the 4Q2010 as compared to 3Q2010 as well as compared to net loss in fourth quarter ended 31 December 2009. Further details of the Group’s performance will be released when the Company announces its unaudited financial results for the 4Q2010/FY2010, on or before 28 February 2011.
China fibreT gain 20% to 10cents from 8 cents in a day on news that it is expecting a stronger quarter. The compAny still has potential to run in the months ahead. Why? First, valuation still attractive with it's 14.5 cents per shares and even more attractive price to book. Second, I predict correctly the earnings is turning around and it happens actually earlier than I expected it ti be. I only expect marginal improvement in q4 and more significant improvement in 1q 2011 as the company takes in orders for the whole year and the contract price and deal is somewhat locked for the whole year. That the company turnaround earlier bode well for the demand in it's services. Secondly, the company mentioned that they are phasing out some of the labour intensive and polluting equipments in replacement of new ones. This Shows the confindence the management has for the future. However , I expect short term profit taking to set in as and when the counter runs, as this penny stock is dirt cheap and a good counter for speculation to make quick bucks. So don't rush in and chase the stock. Vested at 8 cents and went in for more at 9 cents when the news broke. Good luck to others who are vested and may this stock bring you a bountiful Chinese new year
I read this CIMB recommendation a few Xs:
Of the incumbents in the Chinese textile industry, we would like to highlight China Fibretech as a potential outperformer. 4Q10 performance is expected to pick up. At S$0.085, the stock’s net cash per share of S$0.145 is 1.7x higher than its existing share price. China Fibretech is also trading at 0.43x P/BV. The strong net cash per share offers a high margin of safety for investors, as China Fibretech will be able to withstand external shocks with a strong cash balance. At such attractive valuations, we expect China Fibretech to receive strong interest from the market going forward.
There is a risk to investing in textile stocks as the industry is competitive with many players and there is probably a relatively low barrier to entry. At this moment, I disagree with anyone who says the business is cyclical..... That perception arose from the sharp downturn of 08-09 when every industry died.
The fact is S-chip textile stocks are recovering srtrongly and there is good money to make if we are able to enter at the right time - which is now for some textiles like China Fabritech and Hongwei and Taisan and even Gaoxian (which is going to be a big boy).
No point investing in stable boring businesses like the banks or conglomerates if you are interested in big capital gains.
For China Fibretech, it appears to be at the point when its profit is ready to rocket. I am not sure if it can continue to do so in q1 this year but ..... it does look very undervalued on FA even tho
tis price has jumped from abt 8ct to 10ct.
For China Fibertech, i think it is a much smaller player as compare to Taisan and Gaoxian. Although it is currently cheap on valuation but for myself, I will not likely to hold it for long term.
One of the way to identify market leaders or future market leaders will be looking at their profit margin. So far, China Gaoxian is one of the few players who managed to maintain their margin during the last 1-2 years despite bleeding by other competitors. Hence long term investor may look at Gaoxian more then China Fibertech.
As for smaller player like China Fibertech, it's profit and loss will swing more... hence the volatile price movement. Its current price is definitely undervalued but once it reaches fair value or close to the cash value per share... the question next will be... what happen?
For Gaoxian, more capacity has already come online in their 4th qtr and more to come.... and for China Taisan its future look promising too. Their client have indicated more sales order coming their way... Hence they have to rush to buy RMB 200 million of machinery before the new capacity from their new plant come online.
Personally, I have more investment in China Taisan and Fuxing as compare to China Gaoxian and China Fibertech. China Fibertech is my small and short term lottery.... I am having a smaller holding in China Gaoxian because price may have already factor in some of the good news (may not be fully but at least partially)
For China Taisan, market still haven't really take into consideration of the better results as well as new capacity coming online this year. Their clients are among the top domestic brand in China. The release of result in End Feb will likely give a re-rating on this counter. Currently trading at forward earning of about 4-5x PE.
For Fuxing, the 4th quarter result expected to be very good as well with the new higher margin product (super durable zipper) as well as increasing volume for their new plant... The approval for their acquisition of 3 new firm will likely to get people interested again. This will significantly increases their earning. All the lazy cash laying in bank is now deployed to work.
Last edit: 13 years 10 months ago by erelation. Reason: formating of posting
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