Author Archive

Posted on July 22, 2010 - by Alen

Bull or bear, where market going to next?

As this juncture, the direction of the market is less clear to most of the people. Some are still fearful for the Europe problem or the double dip situation. They haven’t happen yet, but there is still posibility.

As fundamental investor, I am less concern on the market direction. If you know the company you are investing in is doing well. Naturally, sooner or later, the share price will reflect that. However, I am more mindful nowadays on the market direction. I don’t want to being caught off guard like the credit crisis time. There is no guarantee it won’t happen again and you will escape unhurt, I think it taught me to be careful.

I recognize the direction of the market for coming 3-5 years is up. I am not so worried about the short term fluctuation. Again, there is no guarantee the market will definitely go up, but we have suffered for two years. It is time market adjust back to normal. Overall, I remain positive on the general direction. Read more…

Posted on May 23, 2010 - by Alen

Great volatility

US market had a rough week, the index keep plunging, caused by Euro problem. The global economy is a complex web of problem and the memory of Lehman credit crisis certainly hasn’t go away. The market is discounting the likely hood of euro fall out now.

It will take sometime for europe to sort this out – the debt problem and deficit. What this mean to the long term investor? The stock sales is back. So many of your favourite stocks have plunged to an attractive level. Just like you cannot predict the top, you also cannot predict the bottom. It might take a few wave for the market to stablised. Who knows?

What I do know is stick to fundamental in investing. If the company has a strong balance sheet, little debt, great prospect and cheap valuation, it is time to buy. Read more…

Posted on May 11, 2010 - by Alen

Market might just continue the slide next week

Last Friday, Dow dropped another 100 plus points. The bad news is one after another. After the strong rebound last year, we are hitting the first speed bump. No one could tell how the market will play out.

1. China cramp down on property speculation. Although in the short term, this has dragged down the market performance, but it is an essential step for China to prevent the price bubble. Some might argue it is already in the bubble stage. I don’t think China government want to kill the growth and market. We just need to cool it down.

2. Greece chaos. It will take sometime for them to find the solution, instead of dragging on the problem

3. Dow plunging 1000 points. Common sense tells us, if the situation is too extreme, it might not be true. Be it computer error or human error. Although confidence shaken, market will take sometime to recover. Read more…

Posted on March 22, 2010 - by Alen

Hongguo offer closing soon

The major shareholder of Hongguo has received more than 90% of the company share. It looks like the delisting will become a reality soon. The offer is a generous one, considering the premium they are willing to pay.

However, looking at it in the long term perspective, it is cheap for them to take the company private. Who knows? Once the business turn around in 1-2 years time, they can float it in hong kong and fetch higher price.

Through these years of holding the stock, I have learned

1. Being third doesn’t mean you are going to be first soon. There is a big gap between the first and second/third place shoe brand. It takes a lot more effort for the company to catch up. In another word, it is better to buy the market leader, which can outgrow the smaller player. Read more…

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…