erelation,
Ya, i agree with your anaylsis on gaoxian, on hindsight, should not be greedy, and let go when its trading at 40 cents range, well, I take it as a good lesson learnt, since I am a rookie in shares investment and still learning. It has breach 2 tarets i have set and i just keep hoping for more, well its really a lesson for me.
Regarding fuxing, I stand corrected if my anaylsis is wrong. As the deal is sealed in january, the profits of these companies will be booked in 1q2011 onwards but some of the admin expenses will be booked in q4. I emphasis non-discerning investor might then see the results as not as spectatcular as they hoped. Not that i think its not a value company, oherwise i wouldn't invest in it at the first place, now that it has fallen so much from its height of 20.5cents, guess nothing much i can do but to wait.
I am worried though, for holding the s-chips for too long, as we don't know for sure how much tigtening central government of PRC will impose, if there is a successive string interest hikes, then s-chips will be more or less hit again. However, I think the recent fall in prices in s-chip in general is the "pricing in" effect of the impending 1.
erelation, thank you for your wonderful analysis of China Fibretech. It's true the stock is grossly undervalued at 10 cents. Should be attractive to buy up to 15 cents.
Your analysis brought to my mind another bargain stock with the following sexy features:
a) Net Cash of S$36 million (no bank borrowings) vs market cap of S$22 million.
b) Positive operating cashflow for 9M2010 of about rmb8.5 m
Did the same, sold off China Gaoxian & increased my holdings in China Fibretech. China Gaoxian continued to disappoint today, so decided to move on to greener pasture (hopefully).
Thanks yeh. Previously hold that counter long time ago... but after their majority shareholder sold their stake without any reason, i cash out too and don't play much attention on that counter any more. Do not have confidence on their management team.
Lucky to have cut losses at Gaoxian. It drop further today... China Fibertech may not shoot up now.. but at least there is always large buy order to support at 9 cents and 9.5 cents. Unless cash is not real or something unforseeable happened.... else better bet than placing at Gaoxian now until the result of their 4th qtr result. Gaoxian management however done a good job from the shareholder perspective. Their KDR effort have make the share price shoot up from 20 cents level all the way to 46 cents and place out large amount of shares (600mil) at a good PE @40.5 cents. While it is not good for short term investors... it benefit the long term shareholders and the majority shareholders in trying to maximize value for the company. Instead of looking it at a way to increase share price, it is actually more like a fund raising exercise.
It is disclosed that revenue for the full year was RMB162.1 mil. We note from the previous quarter’s financial results that the revenue for the 9 months ended 30 September 2010 was RMB62.7 mil. Effectively, revenue for the fourth quarter ended 31 December 2010 had surged 158% from the third quarter. In relation to this:
(i) Please explain the sudden surge in demand in relation to the type of services rendered and whether the surge in demand was attributed to new customers;
(ii) Please also provide a discussion on the factors which resulted in the increase, how the Company’s production was able to cater to the sudden increase or how the Company had catered to the increase in capacity
requirements, with details on the capacity utilization before and after the surge in revenue. Company’s response
(i) The Group engaged in fabric processing and there was no change in the type of services rendered in fourth quarter ended 31 December 2010 (“4Q2010”). The surge in demand was attributable to the increase in demand for our fabric processing services from existing customers.
(ii) As disclosed in the Company’s profit guidance announcement released on 17 January 2011, the surge in demand in 4Q2010 was due to the recovery of demand for our fabric processing services from existing customers and 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. The surge in revenue was a result of the aforesaid factors as well as a
result of the higher prices charged due to the product mix processed as compared to third quarter ended 30 September 2010 (“3Q2010”).
Capacity utilisation for the nine months ended 30 September 2010 was 27% and capacity utilisation for 4Q2010 was 85%. On a whole year weighted average basis, capacity utilization was 44% for FY2010.
As the Group was operating well below the Group’s existing production capacity before the surge in demand in 4Q2010, the Group was able to cater to the increase within the Group’s existing production capacity as disclosed
above.
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