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Posted on February 7, 2010 - by Alen

My Feb view

Expect the unexpected, I guess all the investor should aware of this. Just like we are roaring ahead with the new year. Obama’s proposal to regulate US banks and potential China tightening have brought the long overdue correction.

The once high flying IndoAgri food and Wilmar crash back to earth from recent high. Second and third liner are even worst. The position that I have built slowly over the past few months is like back to square, some gain, some loss. However, I remain optimistic, regardless of the fear and rumour around.

This is going to be Asia golden era, at least for the next 10 years, this is the place where the growth will be. US consumer will not recover just yet, until they build up the saving and correct the excess. Asia governments will continue to stimulate the domestic consumption to counter the decline of export sector. Read more…

Posted on January 7, 2010 - by Alen

My quick review on 2009

Year 2009 was a meaningful year for Singapore stock market. In the first 3 months of the year, market continue to drift lower. Basically, I was not in the market at all, watching from the sideline, hoping to see the light at the end of tunnel. Nobody knows, stock market took a dramatic turn since Mar and has never look back.

I missed the chance to make some sure win money. However, like I say always, nobody can foresee the top and bottom. It might be better to wait for definite signal of turn around. Beside that, bull market would not move in straight line. Investors have many chance to get back into the game. The continuous strength of stock market surprised many people. This was supported by steady stream of good news.

Since September, I am back in the game, bought some counters that could offer further upside when economy growth returns. Despite the China stock market has gone up substantially, S-chips are still being ignored by investor. Many small cap stocks are simply not in the investor’s radar. I bought into Hsu Fu Chi which turn in very good result despite weak consumer spending. The stock is no longer cheap in PE terms. This also shows market pay premium to good performing company. Read more…

Posted on October 5, 2009 - by Alen

Market weakness in October

Last Friday, US market dropped again. The new set of numbers do not look good, especially unemployment rate rose. This could be the trigger point to a mild correction which bring all the market back to ground. The market rebounded from Mar low base on the green shoot theory, but economy recovery would not be straight line most of the time.

US numbers
The numbers do not look good. After the financial and subprime crisis, the American is unlikely to go back to old way of spending. Now thrift is the in thing among the people. This would means the demand is unlikely to pick up fast enough for us to return to strong growth. Other countries need to participate more in the consumption to drive growth. Read more…

Posted on September 16, 2009 - by Alen

FJ Benjamin FY09 full year result

Turnover -12%
Gross profit -15%
Rental +10%
Operating profit -65%

Net loss of 2,661 compare to profit 14,804 of previous year. Report highlight the underlying profit is 4,065 excluding the one off item and forex loss.

Fixed deposit 14,008
Cash on hand 19,346
Borrowing 53,505
Net borrowing is 20,151

Net cash from operating activities 21,781

Cash at end of FY is 14,823, after minus off the bank overdraft 18,531. I suppose the overdraft has been included in the current borrowing. The cashflow is a bit tight, after comparing the real cash on hand vs net borrowing. The group has to watch over the cost tightly. However, if the operating cashflow remain stable, it should be able to pay off the borrowing. Read more…

Posted on August 11, 2009 - by Alen

Hongguo FY09 half year result

Revenue +19.31%
Cost of sales +29.31%
Gross profit +6.2%

Selling and distribution expenses +42.5%
Profit after tax 38,022 (-38.69%)

Cash and equivalent 208,097
Current liabilities 182,456
Amount repayable in one year 14,426 + 41,008

Cash generated from operation 95,753
EPS 9.58 RMB cts (from 15.63 last year same period)

Revenue continue to increase, the company still on the growth track. Gross margin decreased to 38.5% from 43.3%. The retail competition is fierce. Expenses increased because of continue store expansion. But the cost escalation is at alarming level. Read more…

Posted on May 30, 2009 - by Alen

Celestial, no more in heaven

The eventual has happened. The bond holder is calling for redemption and the group issued the statement that they are unlikely to be able to meet the obligation.

It is quite unfortunate that a company with a well known and growing brand, ended up in this kind of situation. The problem started when a small company is trying to expand rapidly and borrow aggressively. The convertible bond was issued with early redemption option, when people don’t expect the bond holder would ever call for early redemption. You never know, when crisis strike.

This highlight the risk with small cap stock. The company is small, so you can afford to grow quickly. But, at the same time, the more leverage you have, it is increase the risk. Compare a company with little borrow, you know which one is more stable. Therefore, never bet big on one single small cap. You never know what would happen next.

There could be three outcomes: Read more…

Posted on May 25, 2009 - by Alen

At the cross road

Recently, the market has ran up quite a fair bit and set to correct soon. The optimism comes from the fact that some indicator is turning up and investor who is itchy for some actions all jump into the bandwagon. The million question now is whether this is a bear rally or sustainable recovery?

I read a lot recently, about the various expert’s view and research report. Just like the expert didn’t forecast the severe downturn we are having now, the opinion now is also divided. Some say we are poised for recovery, some say beware.

I recognised that the “very worst” might be behind us now, because the credit is flowing again, albeit slowly. We saw many S-chip belly up, due to the worsening credit condition. Share being forced sold and growth went into negative territory. Read more…

Posted on March 4, 2009 - by Alen

Hongguo FY08 financial result review

Hongguo just release the FY08 financial result. Let’s look at whether the consumer spending is slowing down and what are the challenges ahead.

All amount in RMB ,000

Revenue + 19.6%
Cost of sales +21.9%
Selling and distribution expense +35.6%
Loss in joint venture +595% (6,247)
Profit of the year -3.39%

Cash and equivalent 115,376
FD 24,793
Inventories 343,805 (quite a lot)
Amount repayable in a year 65,801 (cash on hand should be able to service this)

Profit before income tax 126,099 (Cashflow quite flat)
Operating cashflow before working capital 156,575
Net cash from operating activities 33,589 (less than last FY)
Cash after adjust investing and financing 115,376

EPS 26.82 RMB cts (a drop compare to last year 27.76)

The revenue continue to grow, as the group open more store. However, the cost is running ahead of the sales. Gross profit margin drop from 40.6% to 39.4%, reverse the past year trend. The reality bites now, as consumer cut back spending, and more promotion activities is being carried out. If not the JV loss, the group might post slight profit growth. Quarter 4 figure got hit after more tax provision is provided. Cashflow wise, the group is generating enough cash for the debt repayment, this should not be a cause of concern. Read more…

Posted on February 13, 2009 - by Alen

FJ Benjamin FY09 Q2 result

Turnover -10%
Gross profit -14%
Other income -66%
Rental +10%
Operating profit -53%

>> Retailer seems to be caught in situation where there is plunge of sales but rental keep going up.

Forex loss of 2,345,000
Net profit -93% to 611,000 only

>> The luxury sector really get hit when economy turns bad.

Current liabilities (in ‘000)
Trade and other creditors 74,183
Bank borrowing 58,358

Debt repayable within one year 58,389
Minus cash on hand, outstanding debt 37,392

Cash before working capital 3,500
Cash used in operation 13,332
Cash at end of period 11,150

>> Cash are locked out in two items – increase in debtors and stocks. The negative cashflow is really a cause of concern.

EPS for Q2 0.11 Read more…

Posted on January 22, 2009 - by Alen

MIDAS in focus again

The market took a turn quickly after RBS announced the big loss. Like I say before, market might have more bad news awaiting us. The reason being that we are still in the process of deleveraging. The untangling of all the complex leverage would take sometime to clear. Loss get snowballed because of lack of credit, sellers forced to sell at fire sales price.

Today, Philips release a report recommending a buy on MIDAS. If I remember correctly, recently other broker also have the same recommendation. The past issue of The Edge also feature the company again. Read more…