why china minzhong drop until 69 cts?

Min
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11 years 10 months ago #9501 by Min

Replied by Min on topic Re:why china minzhong drop until 69 cts?

Maybank KE report triggered a jump in Minzhong today

Sell-off overdone, maintain BUY. The recent sell-off of China Minzhong following its announcement of the 3QFY6/12 results appears overdone in our view. To be clear, the company is still exposed to Eurozone headwinds, but our worst-case scenario analysis suggests that the negatives have all been priced in. We would watch its next quarterly results for signs of recovery. While we lower our earnings forecasts in a nod to lingering concerns over its European exposure, we maintain our BUY call with a target price of SGD1.16 based on 4.7x FY6/13F PER (25% discount to historical average of 6.3x PER).

Asset quality unlikely to deteriorate. The sharp increase in Minzhongâs trade receivables in 3QFY6/12 is worrying. After all, seasonality can only be part of the reason. We suspect that the other reason is the difficult financial straits its European end-customers are in. That said, we do not think its asset quality will necessarily be adversely affected any time soon.

Cut earnings forecasts for FY6/13 and FY6/14. Our base-case scenario assumes that Minzhong will be able to collect its receivables over time. However, it is also possible that the financial position of its European counterparts continues to worsen, thus leading to a decline in its export orders. We lower our revenue forecasts by 15% for FY6/13F and 20% for FY6/14F, with the net profit forecasts correspondingly cut by 18% and 22%.

Long-term outlook still intact. Vegetable consumption will stay resilient through the economic cycles and we remain confident that Minzhongâs cost advantage will serve as a long-term shield against domestic producers in the European market. The companyâs gradual shift towards higher-margin produce such as asparagus, king oyster mushroom and black fungus will also help to mitigate some cost pressures.

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cheongwee.
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11 years 10 months ago #9503 by cheongwee.

Replied by cheongwee. on topic Re:why china minzhong drop until 69 cts?

Bought yesterday, enjoy the ride up, hope you buy too.

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Hector
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11 years 10 months ago #9508 by Hector

Replied by Hector on topic Re:why china minzhong drop until 69 cts?

questionable receivables management... the other issue is that management has missed a few earnings forecasts...so credibility issue at stake too.

are there other ways for temasek to dispose of its stake without alerting shareholders...but my feeling is that being Temasek they may buy some more...and if it collapses, they will write it off as "risk of doing business" and move on.

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Guest
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11 years 10 months ago #9513 by Guest

Replied by Guest on topic Re:why china minzhong drop until 69 cts?

It's GIC not Temasek
And if you dig up their history in CMZ, they won't suffer a sizeable loss even if CMZ falls all the way to zero per share

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Vege seller
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11 years 10 months ago #9518 by Vege seller

Replied by Vege seller on topic Re:why china minzhong drop until 69 cts?

My friend Kit said: "Don't see any good news. Prudential already reduce its stake below 5%. Directors are buying to instill confidence. But financially, the company is not fantastic. RMB 580M of its borrowings is maturing within the next 12 months."

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Bruno
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11 years 4 months ago #12451 by Bruno

Replied by Bruno on topic Re:why china minzhong drop until 69 cts?

Hey Hisey, you started this thread and the stk is up from 69 cents to 80 cents = 16% gain in 7 months.

Cool, but only on 20/20 hindsight does one wish one has bought during the crash. I have some shares but don't particularly like this one because I have no clue whether the accounting is real or not.

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