Hi, Greenrookie,
When I started accumulating Qingmei last year, my expectation was that Qingmei should have little difficulty achieving at least a doubling in its share price by early 2012, at the latest, taking into account its growth potential and earning prospects. March 2009 was seen as the start of a new bull market and under normal circumstances, the share price of good growth stocks in a bull market, would usually perform well as their earnings improve. However, in exceptional circumstances, such as what has happened for the past several months, good growth stocks could fail to bear fruit just like crops in the fields encountering an unexpected natural disaster like very severe drought, flood, earthquake, etc. This is a risk factor that can be expected to occur from time to time. However, one can always reduce the severity of any “damage” arising from such a risk by buying, in the first instance, good growth stocks that are considered undervalued or having very attractive valuation - with some margin of safety, if possible.
You have rightly pointed out that Qingmei has competitors that are also expanding capacity and risks facing overcapacity and intense competition - the usual result of any line of lucrative business. By the time Qingmei’s second expansion line is fully operational, I envisage the possibility of an increase in its business risks profile, as a slowdown in demand for shoe soles can be a real possibility. My practice is to always get out of a stock whenever it has reached its target price or when it is not growing or performing according to expectation; and to shift to another stock(s) having lower risks and higher potential capital gain. This has worked well for me in the past and I also do not risk getting bogged down waiting for any “lame or sick duck to recover”.
[hr]Hi Observer2, Hmm I am also vested in Qingmei. Would u see now as a good time to continue accumulating as I also share the same view that qingmei has a good future especially if they can shed the scandals surrounding S-Chips. If any S-Chip is going to shed that bad name it has to be Qingmei.
[observer2 23-09-2011]:
Hi, Greenrookie,
When I started accumulating Qingmei last year, my expectation was that Qingmei should have little difficulty achieving at least a doubling in its share price by early 2012, at the latest, taking into account its growth potential and earning prospects. March 2009 was seen as the start of a new bull market and under normal circumstances, the share price of good growth stocks in a bull market, would usually perform well as their earnings improve. However, in exceptional circumstances, such as what has happened for the past several months, good growth stocks could fail to bear fruit just like crops in the fields encountering an unexpected natural disaster like very severe drought, flood, earthquake, etc. This is a risk factor that can be expected to occur from time to time. However, one can always reduce the severity of any “damage” arising from such a risk by buying, in the first instance, good growth stocks that are considered undervalued or having very attractive valuation - with some margin of safety, if possible.
You have rightly pointed out that Qingmei has competitors that are also expanding capacity and risks facing overcapacity and intense competition - the usual result of any line of lucrative business. By the time Qingmei’s second expansion line is fully operational, I envisage the possibility of an increase in its business risks profile, as a slowdown in demand for shoe soles can be a real possibility. My practice is to always get out of a stock whenever it has reached its target price or when it is not growing or performing according to expectation; and to shift to another stock(s) having lower risks and higher potential capital gain. This has worked well for me in the past and I also do not risk getting bogged down waiting for any “lame or sick duck to recover”.
Hi, Darknight,
Qingmei’s IPO price was 31 cts. Its record high & low were 36.5 cts and 15.5 cts respectively. With FY10 earnings of 39.1 cts(RMB) per share and dividend payout of 11.72 cts(RMB); and FY11 earnings of 43.1 cts(RMB) per share and dividend payout of 12.92 cts(RMB), there are very few stocks that can match such performance. At the current price of around 19.5 cts (close to its bottom), there is very low downside risk but high potential upside capital gain -(provided the bull market returns and rotational interest comes into the penny stocks). I added more to my holdings recently at the current price level and bad market sentiments.
As to whether it has a good future, I would prefer to see its performance and business outlook first, on a quarter to quarter basis, as economic or market conditions can change rapidly as to affect business prospects and profitability.
May you have a profitable experience with this Ah Mei, Darknight.
Hi Observer2,
Thank you for your summary of Qingmei. I am also looking to accumulate further for this counter with a longer term view.
As I am essentially a more TA based person. Your summary has helped to add to my decision making process especially when I am seeing a very nice accumulation pattern from TA point of view.
I hope its not too much to ask for, can you post your review and summary of Ah Mei on a quarterly basis so I can reference the Fundamentals with relation to Technicals.
Lastly I wish every success to your investment on Ah Mei as well, Observer2.
May our investment go all the way north very very soon.
Darknight
[hr]
[observer2 24-09-2011]:
Hi, Darknight,
Qingmei’s IPO price was 31 cts. Its record high & low were 36.5 cts and 15.5 cts respectively. With FY10 earnings of 39.1 cts(RMB) per share and dividend payout of 11.72 cts(RMB); and FY11 earnings of 43.1 cts(RMB) per share and dividend payout of 12.92 cts(RMB), there are very few stocks that can match such performance. At the current price of around 19.5 cts (close to its bottom), there is very low downside risk but high potential upside capital gain -(provided the bull market returns and rotational interest comes into the penny stocks). I added more to my holdings recently at the current price level and bad market sentiments.
As to whether it has a good future, I would prefer to see its performance and business outlook first, on a quarter to quarter basis, as economic or market conditions can change rapidly as to affect business prospects and profitability.
May you have a profitable experience with this Ah Mei, Darknight.
Hi Observer2,
Thank you for your summary of Qingmei. I am also looking to accumulate further for this counter with a longer term view.
As I am essentially a more TA based person. Your summary has helped to add to my decision making process especially when I am seeing a very nice accumulation pattern from TA point of view.
I hope its not too much to ask for, can you post your review and summary of Ah Mei on a quarterly basis so I can reference the Fundamentals with relation to Technicals.
Lastly I wish every success to your investment on Ah Mei as well, Observer2.
May our investment go all the way north very very soon.
Darknight
[hr]
[observer2 24-09-2011]:
Hi, Darknight,
Qingmei’s IPO price was 31 cts. Its record high & low were 36.5 cts and 15.5 cts respectively. With FY10 earnings of 39.1 cts(RMB) per share and dividend payout of 11.72 cts(RMB); and FY11 earnings of 43.1 cts(RMB) per share and dividend payout of 12.92 cts(RMB), there are very few stocks that can match such performance. At the current price of around 19.5 cts (close to its bottom), there is very low downside risk but high potential upside capital gain -(provided the bull market returns and rotational interest comes into the penny stocks). I added more to my holdings recently at the current price level and bad market sentiments.
As to whether it has a good future, I would prefer to see its performance and business outlook first, on a quarter to quarter basis, as economic or market conditions can change rapidly as to affect business prospects and profitability.
May you have a profitable experience with this Ah Mei, Darknight.
