CHINA FIBRETECH

I sold most of my holdings at a loss. Sometime after they announce Q1 results. The stock has fallen by a further 30% since then. The very small quantity I still have is actually because I promise to absorb the loss for my wife and take over her holdings since it's under my advice that she bought it.
Reasons- First and foremost, I am very uncomfortable with their personnel movement, an independent director choose not to be restated during the AGM, and that director is in the audit committee. Then they appoint their grandson who is only 23 years old to be vice president of an subsidiary. Despite all these, I was still willing to hold on, as I believe they might get a replacement for the independent director soon. But instead of sourcing for 1, they internally promoted or rather assigned someone the job. That's when I gave up and sold everything under m acc.
When the price get bash down to 5 plus cents, I have thoughts of averaging down, as the textile sector and the dyeing sector are both still expanding. But I decide to hold out for their Q2 results. The results was disappointing. There is a QoQ fall in profits. It might not seems a big deal but it does point to it level of competitiveness. The 2 dyeing companies Fuxing bought are able to increase profits when fibreT has reduced profits. And do noted that q1 is supposed t be the weakest quarter. However, fibreT is one of the company that has the highest cash per shares that is above it shares price and the operating cash flow is positive every quarter. If Q3 results is good, I might consider av. Down, if not, then again, I take losses. Not a call to sell, u make your own call. GIven the management pessimestic outlook, I am not too hopeful. But i think as long as the company dun start making losses, the price should be well supported.

I don't know the prospects of China Fibretech but that reminds me of a number of stocks that have not panned out in my several years of investing. One lesson I have learned: Don't get too confident, and don't buy beyond a certain % of my portfolio. Another lesson is stock prices reflect not complete rationality of the market. Too high and too low -- these will happen all the time. Most of us are, to some degree, irrational, inconsistent and incompetent -- and we make lousy decisions and choices during market uncertainty.

If the cash is real, they should just privatise. Now 0nly 4.5 cents.
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[ZEN 28-08-2011]:

Once the insiders or company buys up enough shares from the market .
Future buyers will have to pay higher price if company decides to go private .
Imagine the market cap of China Fibretech now is only about 1/4 of it's cash balance .
 
 

any accounting problems so far? any real reason not to believe the cash is there?

Avoid fiber companies. I am surprised that SGX admitted so many fiber companies from China. This is a super competitive industry with low margin.

we can't make sweeping statements. there are always exceptions, companies that have some competetive edge that allow them to have positive cash flows year after year despite the competetion. But why is china fibretech's stock price so battered? It was like 20 cents not too long ago. It's revenue may be dipping but it is still making profits and cash pile is still going up...why why why???