Attended the CN AGM yesterday.
- Biodiesel project on track, I poised a question on the prospects of Biodiesel, and according to Ming DQ, the project is viable, as it is using low quality and recycling waste oil. It should be running by next month
- on why CN continued to spend on Capex although the CB conversion is about 8-9 months away. According to Ming DQ, when they embarked on the plans it was before the financial crisis hit and there was no way they anticapted this. There is no way they could stop/cancel the payment as the projects have already started.
- On the CB (Zai Quan) topic which was a very hot heated topic, CN is still negotiating with banks for refinancing (rong zhi). Overseas banks are short of funds themselves, and although China banks are willingly to lend, the process is quite long, and may require tedious process on endorsement from government/state. They are now discussing and the chockpoints seems to be the valuation of the company to be used for collateral. (eg, roads and capital equipment have less/ little value) , interest rate etc.
They have been instructed to update every month to the SGX on the progress. When prompted further, they seem reluctant to say too much, maybe because they wanted to make a public disclosure first which will be out the next day or so.
The board have been trying different ways to including raising capital (gu ben) through rights, unfortuantely with the share price so low now, that option is absurd. Although this is also in the AGM, this is just going through the motion.
- when asked whether he had pledge his shares, Ming confirmed that he has not done so.
- when asked why he had not bought more, he says that if anybody lend him money now, he will do so...... I think that he has also been affected by the financial crisis, with his money maybe tighted up with some other things (property / other business ventures)
My thoughts: Ming seems to come across as rather an honest person, and sometimes we have to use out gut feeling to sense out the character of a person. If Ming and the other board members are dishonest, they will not have come for the AGM.
I also asked Zhou CN on the protein Milk schedule (dan bai nai), it seems it should be ready by next year end. This product future seems good as there are many Chinese in China, and the milk may not be enough to support the population. Throw in the Milk Scandal, and also Asian who are more lactose intolerant, I think they can penetrate and gain market share in this.
Some thoughts also, I have been looking at Celestial Nutrifood top investors, Cheung Wai Kwok was a major investor previously. ( >5%) and he has presumely sold out. He is also a chairman of Shenzhen Skyto Investment & Development Co, a company engaging in investment in PRC. Presumely, with the financial crisis, he had to cut his stake in this valuable company as well.
As investors, sometimes we have to use certain risk reward ratio and intelligent guessing to see whether it is worth investing when the future is murky and with short term setback. With risk appetite coming slightly back, Celestial price has been going up. The advantage to retail investor is that we can go in right now, but for many funds, they cannot do so unless they can ascertain a bright future for their invested company (and when this is so, the price has already gone up alot)
Showing posts with label celestial. Show all posts
Showing posts with label celestial. Show all posts
Wednesday, April 29, 2009
Tuesday, April 14, 2009
Celestial Nutrifoods Some thoughts
Celestial Nutrifoods reported its FY0809 earnings in Feb 2009.
CN at the point of announcement came from a postive cash to a negative cash balance (after taking into consideration the potential convertible bond 1200+ RMB) . This is mainly due to the heavy investment for the Protein Milk product. Some thoughts here....
Some points
1. China Milk Scandal from Wikipedia
2008 Chinese milk scandal was a food safety incident in the People's Republic of China involving milk and infant formula, and other food materials and components, adulterated with melamine.
By November 2008 China reported an estimated 300,000 victims,[1] six infants dying from kidney stones and other kidney damage, and a further 860 babies hospitalized.[2][3] The chemical appeared to have been added to milk in order to cause it to appear to have a higher protein content. In a separate incident four years before, watered-down milk had resulted in 13 infant deaths from malnutrition.[4]
The scandal broke on 16 July, after sixteen infants in Gansu Province who had been fed on milk powder produced by Shijiazhuang-based Sanlu Group were diagnosed with kidney stones.[cm 1] After the initial focus on Sanlu - market leader in the budget segment - government inspections revealed the problem existed to a lesser degree in products from 21 other companies, including Mengniu, Yili, and Yashili.
Here we see the China milk scandal breaking out in 16 July.
2. In an announcement 28 August, Celestial announced that there are spending 700+RMB in 100k tonnes in protein milk.
Over here, I believe Celetstial has already done its due dilligence for at least last month and has done enough due dilligence to see a great opportunity to go into. So within 2 months after the Scandal broke out, it committed to spending a high capex despite the knowledge of the impending bond conversion.
The CB issue while posts some risk, is in my opinion will be a walk over. Besides the points from my previous posts, lets look abit into its history. In 2005, Celestial was the only soya bean related company to be invited by the Daqing government to invest into the Soya Bean Tech high zone and had a interest free loan. Here it show strong links with the government (at least the last 1-2 years).
It has been going up by virtue of the recent rally. I believe it is apotential big retail consumer giant in China in the making, and with a PE of 1.2 I will continue to hold. It has been shorted heavily and I believe short covering fuel and once the CB issue is over, it will continue to attract stronger hands.
CN at the point of announcement came from a postive cash to a negative cash balance (after taking into consideration the potential convertible bond 1200+ RMB) . This is mainly due to the heavy investment for the Protein Milk product. Some thoughts here....
Some points
1. China Milk Scandal from Wikipedia
2008 Chinese milk scandal was a food safety incident in the People's Republic of China involving milk and infant formula, and other food materials and components, adulterated with melamine.
By November 2008 China reported an estimated 300,000 victims,[1] six infants dying from kidney stones and other kidney damage, and a further 860 babies hospitalized.[2][3] The chemical appeared to have been added to milk in order to cause it to appear to have a higher protein content. In a separate incident four years before, watered-down milk had resulted in 13 infant deaths from malnutrition.[4]
The scandal broke on 16 July, after sixteen infants in Gansu Province who had been fed on milk powder produced by Shijiazhuang-based Sanlu Group were diagnosed with kidney stones.[cm 1] After the initial focus on Sanlu - market leader in the budget segment - government inspections revealed the problem existed to a lesser degree in products from 21 other companies, including Mengniu, Yili, and Yashili.
Here we see the China milk scandal breaking out in 16 July.
2. In an announcement 28 August, Celestial announced that there are spending 700+RMB in 100k tonnes in protein milk.
Over here, I believe Celetstial has already done its due dilligence for at least last month and has done enough due dilligence to see a great opportunity to go into. So within 2 months after the Scandal broke out, it committed to spending a high capex despite the knowledge of the impending bond conversion.
The CB issue while posts some risk, is in my opinion will be a walk over. Besides the points from my previous posts, lets look abit into its history. In 2005, Celestial was the only soya bean related company to be invited by the Daqing government to invest into the Soya Bean Tech high zone and had a interest free loan. Here it show strong links with the government (at least the last 1-2 years).
It has been going up by virtue of the recent rally. I believe it is apotential big retail consumer giant in China in the making, and with a PE of 1.2 I will continue to hold. It has been shorted heavily and I believe short covering fuel and once the CB issue is over, it will continue to attract stronger hands.
Friday, March 27, 2009
Mar09 update
I Have been rather busy the last 2-3 months
1. RT, or reservist training, this requires you to go for a physical mass exercise at the army camp twice a week for phase 1 (total 4 weeks) . If I fail, I need to go for phase 2 - 3 times a week . Having my neck injury last year prevented me from training for my IPPT.
And being not fond of running, I failed my IPPT the first time (after 3 weeks, 1 week was CNY). I passed all my station except my 2.4 km running which was 14:04.
Well running 3 km everytime really trained my physical fitness, and I improve leaps and bound. Finally on the 2nd time (the 2nd week of RT phase 2 - total 5 weeks), I manage to clear my 2.4km at 12:48. I really had to push myself very very hard to pass. I remembered when I ran my 5th round, my timing was ard 11:05, so I almost sprinted throughout my last lap to the extent of vomitting.
There were 2 things which helped me pass IPPT. First, I really trained and push myself during the RT to train up my physical fitness. It is really our own determination and preseverance whether we want to put any effort during the RT. One can just go to RT and waste time, but I prefer to make full use of it.
The 2nd thing, (maybe it worked for me only) I took some red bull before my run. I felt it boosted some of my strength and feel less fatique during the run.
Well the incentive of passing is that I pass last year and this year !
2. My MIL was feeling rather depressed after her ops, and so she came to my place for recuperation. At least over here, she will have less things to think about. So she was here for about 3-4 weeks. And this made me rather busy as I had to take care more of my son with my wife taking care of her.
3. My wife was involved in a car accident and 2 months after the accident, the other party issued a legal letter to us claiming medical fees and legal fees. These people are really greedy and unscruplous. My wife car hit their car from a stationary postition (both cars was stationary before my wife pressed on the accelarator), It was my wife fault (she was really very stressed during that time with work and her mother operations) and we agreed to pay for the car repairs which came out 4k ( their toyotoa corolla) . Our car was only slightly dented.
During the settlement, we agreed that there were no injury. This was also stated in the report filed to the insurance. However 2 months later, they wanted 8K -10K a person (3 person) and 3k of legal fees each !
In the medical report, it just stated there were only soreness detected. No X-ray no MRI. Of the 3 person, only 1 got 1 day MC, the rest went home the day itself !
We could either reject their claims and fight legally or negotiate with them. Our insurance company suggested the best way was to negotiate with them, as the legal fees at the end of the day might be more than the negotiated amount. I agreed with the settlement although I felt rip off because my wife would be the person who has to spend the time if we go to court. At that time, her mother was having depression and her company was going to retrench people. I think the best thing to save hassle is to settle this. If this happened to me, I will go to court against them. Money is not an issue, If they want to play punk I will play along, it is a matter of principals, I do not want to get rip off and stamp upon.
Well at the end, through the insurance company advise we settled this at 4.5 K a person (including legal fees). What a rip off!
4. My company I am in is doing badly. We had a restructuring where our section was badly hit (20%). Then, 1 person left on his own with no replacement coming in. His job responsibility was assigned to me, and effectively I am doing 2 persons responsibility. I had to work several weekends and even during CNY, I had to work till 2-3 am to finish my work. Also to make it worse, with the restructuring many things/personnel heads were new and had to start from scratch (Business reports and Sales incentives calculations)
Things at least came down quite a bit, with some negotiating some of my previous work (1o%) to my manager, and setting up certain guidelines and framework already , I also manage to automate some stuff.
As a result, my shorting of the market was disastrous. I actually wanted to short the market in Jan (860+) when Obama was giving his speech, however I fell asleep as I was really tired out and I missed the opportunity. S&P dropped to 660+ before rebounding. It rebounded 5% when Citigroup announce they are operational profitable, and futures was postive, and I went in to short (721). It was really v emotional and stupid. After shorting, actually I knew I was v wrong, but I was hopeful that it was a short bounce. Wrong, it went up till I finally covered at 771. Actually I should have considered cut loss quick and change to another position (higher reward risk ratio).
Risk reward ratio was not really there shorting. It was a costly mistake.
I have to really learn from my costly mistake, when I do not have time, do not short (trade). Emotion was also running high which made me into an errenous mistake. What was I thinking ? I was thinking maybe S&P may hit 600... but the risk reward was really not there. Really dumb of me.
Is this the bottom ? Nobody knows, but S&P after 2-3 weeks is around 815+ ( a rally of >20% from its low).
Where to go from here ? Obama and the FED are committed to spent and spent their way out. Is it sustainable and will this lead to the recovery ? I believe yes, but at a costly price of hyperinflation with things to come. Oil has already recovered fr a low of 34+ to 53+. A bit late to get inside.
My portfolio has also took a beating down 30% with Celestial dropping fr 37 to 10 cents. Its PE is now less than 1 (0.7) and P/B of 0.1/0.7. A steal and is really a golden opportunity. Why did it hit so low ? Many China companies are facing accounting scandals, inflated cash (FibreChem), receivables cannot be reconcil, suddenly bankrupt although record profit the quarter before (Ferrochina), owners who pledge their shares for loans suddenly have to pay up (beauty China) and they do no have the cash.
Also, it has a convertible bond that they might potentially have to pay back (1200+ Mill RMB) in June 09. With their full-year report, they are net cash of 810+ cash, short of 400+ if we consider full conversion. This risk was also highlighted by PWC auditors.
There are some risk here, however this is what I feel
1. Many scandals in the US lately (Madoff) are caused with dubious/ficticious auditors. At least PWC has audited them and cleared their financial balance sheet.
2. This is the worst scenario of 100% converesion. I will expect prob 60-80%.
3. When they announce their soya bean zone which costs 1bil RMB, they had only 0.1 bill annual profit. They had pulled through risker projects before and I believe they should be able to pull this through
4. Although credit is tight, banks in China are still lending ( recent reports show China banks lending increase last few months). Banks generally will lend you money if you show that you have little issue of paying off. With strong cash flow of 500+ RMB a year, and Net tangible assets of 2-3 bill RMB, I believe banks will lend to them.
5. I have read some forums of the risk of transmitting RMB/other currency overseas. This is overblown as I see it. Many multnational companies have to do business overseas, it will just take longer (some custom declartion) to transmit the legitimately overseas.
All these cause Celestial to become dirt cheap now. Most people are now keeping clear of China companies . I have been buying because at this price it is really a 20-30 bagger in the making.
What are Celestial future plans ? In end Q1 they are rolling out the 100 K tonnes biodiesel business - a opportunistic time with hyperinflation (I expect oil to be the first one to shoot up) coming. They are also rolling out protein nutrional beverages 15K and 5K of powder. With retail products the contributing 56% or revenue and almost 72% of gross profit, I believe with their brand name and distribution scale they can quickly scale this up.
I am formulating some plans now to see my next step.
1. RT, or reservist training, this requires you to go for a physical mass exercise at the army camp twice a week for phase 1 (total 4 weeks) . If I fail, I need to go for phase 2 - 3 times a week . Having my neck injury last year prevented me from training for my IPPT.
And being not fond of running, I failed my IPPT the first time (after 3 weeks, 1 week was CNY). I passed all my station except my 2.4 km running which was 14:04.
Well running 3 km everytime really trained my physical fitness, and I improve leaps and bound. Finally on the 2nd time (the 2nd week of RT phase 2 - total 5 weeks), I manage to clear my 2.4km at 12:48. I really had to push myself very very hard to pass. I remembered when I ran my 5th round, my timing was ard 11:05, so I almost sprinted throughout my last lap to the extent of vomitting.
There were 2 things which helped me pass IPPT. First, I really trained and push myself during the RT to train up my physical fitness. It is really our own determination and preseverance whether we want to put any effort during the RT. One can just go to RT and waste time, but I prefer to make full use of it.
The 2nd thing, (maybe it worked for me only) I took some red bull before my run. I felt it boosted some of my strength and feel less fatique during the run.
Well the incentive of passing is that I pass last year and this year !
2. My MIL was feeling rather depressed after her ops, and so she came to my place for recuperation. At least over here, she will have less things to think about. So she was here for about 3-4 weeks. And this made me rather busy as I had to take care more of my son with my wife taking care of her.
3. My wife was involved in a car accident and 2 months after the accident, the other party issued a legal letter to us claiming medical fees and legal fees. These people are really greedy and unscruplous. My wife car hit their car from a stationary postition (both cars was stationary before my wife pressed on the accelarator), It was my wife fault (she was really very stressed during that time with work and her mother operations) and we agreed to pay for the car repairs which came out 4k ( their toyotoa corolla) . Our car was only slightly dented.
During the settlement, we agreed that there were no injury. This was also stated in the report filed to the insurance. However 2 months later, they wanted 8K -10K a person (3 person) and 3k of legal fees each !
In the medical report, it just stated there were only soreness detected. No X-ray no MRI. Of the 3 person, only 1 got 1 day MC, the rest went home the day itself !
We could either reject their claims and fight legally or negotiate with them. Our insurance company suggested the best way was to negotiate with them, as the legal fees at the end of the day might be more than the negotiated amount. I agreed with the settlement although I felt rip off because my wife would be the person who has to spend the time if we go to court. At that time, her mother was having depression and her company was going to retrench people. I think the best thing to save hassle is to settle this. If this happened to me, I will go to court against them. Money is not an issue, If they want to play punk I will play along, it is a matter of principals, I do not want to get rip off and stamp upon.
Well at the end, through the insurance company advise we settled this at 4.5 K a person (including legal fees). What a rip off!
4. My company I am in is doing badly. We had a restructuring where our section was badly hit (20%). Then, 1 person left on his own with no replacement coming in. His job responsibility was assigned to me, and effectively I am doing 2 persons responsibility. I had to work several weekends and even during CNY, I had to work till 2-3 am to finish my work. Also to make it worse, with the restructuring many things/personnel heads were new and had to start from scratch (Business reports and Sales incentives calculations)
Things at least came down quite a bit, with some negotiating some of my previous work (1o%) to my manager, and setting up certain guidelines and framework already , I also manage to automate some stuff.
As a result, my shorting of the market was disastrous. I actually wanted to short the market in Jan (860+) when Obama was giving his speech, however I fell asleep as I was really tired out and I missed the opportunity. S&P dropped to 660+ before rebounding. It rebounded 5% when Citigroup announce they are operational profitable, and futures was postive, and I went in to short (721). It was really v emotional and stupid. After shorting, actually I knew I was v wrong, but I was hopeful that it was a short bounce. Wrong, it went up till I finally covered at 771. Actually I should have considered cut loss quick and change to another position (higher reward risk ratio).
Risk reward ratio was not really there shorting. It was a costly mistake.
I have to really learn from my costly mistake, when I do not have time, do not short (trade). Emotion was also running high which made me into an errenous mistake. What was I thinking ? I was thinking maybe S&P may hit 600... but the risk reward was really not there. Really dumb of me.
Is this the bottom ? Nobody knows, but S&P after 2-3 weeks is around 815+ ( a rally of >20% from its low).
Where to go from here ? Obama and the FED are committed to spent and spent their way out. Is it sustainable and will this lead to the recovery ? I believe yes, but at a costly price of hyperinflation with things to come. Oil has already recovered fr a low of 34+ to 53+. A bit late to get inside.
My portfolio has also took a beating down 30% with Celestial dropping fr 37 to 10 cents. Its PE is now less than 1 (0.7) and P/B of 0.1/0.7. A steal and is really a golden opportunity. Why did it hit so low ? Many China companies are facing accounting scandals, inflated cash (FibreChem), receivables cannot be reconcil, suddenly bankrupt although record profit the quarter before (Ferrochina), owners who pledge their shares for loans suddenly have to pay up (beauty China) and they do no have the cash.
Also, it has a convertible bond that they might potentially have to pay back (1200+ Mill RMB) in June 09. With their full-year report, they are net cash of 810+ cash, short of 400+ if we consider full conversion. This risk was also highlighted by PWC auditors.
There are some risk here, however this is what I feel
1. Many scandals in the US lately (Madoff) are caused with dubious/ficticious auditors. At least PWC has audited them and cleared their financial balance sheet.
2. This is the worst scenario of 100% converesion. I will expect prob 60-80%.
3. When they announce their soya bean zone which costs 1bil RMB, they had only 0.1 bill annual profit. They had pulled through risker projects before and I believe they should be able to pull this through
4. Although credit is tight, banks in China are still lending ( recent reports show China banks lending increase last few months). Banks generally will lend you money if you show that you have little issue of paying off. With strong cash flow of 500+ RMB a year, and Net tangible assets of 2-3 bill RMB, I believe banks will lend to them.
5. I have read some forums of the risk of transmitting RMB/other currency overseas. This is overblown as I see it. Many multnational companies have to do business overseas, it will just take longer (some custom declartion) to transmit the legitimately overseas.
All these cause Celestial to become dirt cheap now. Most people are now keeping clear of China companies . I have been buying because at this price it is really a 20-30 bagger in the making.
What are Celestial future plans ? In end Q1 they are rolling out the 100 K tonnes biodiesel business - a opportunistic time with hyperinflation (I expect oil to be the first one to shoot up) coming. They are also rolling out protein nutrional beverages 15K and 5K of powder. With retail products the contributing 56% or revenue and almost 72% of gross profit, I believe with their brand name and distribution scale they can quickly scale this up.
I am formulating some plans now to see my next step.
Thursday, January 1, 2009
FY2008 Summary & Review
FY2008 is characterized as a tumultuous year, nothing short of explosive incidents. The Housing bubble in the US and the financial greed in Wall Street caused great mayhem in the Financial Institutions all round the world, with many of them going under. Great names like Bear Sterns, Lehman Brothers and Merill Lynch became nothing but a footnote in history as they went under or forced to seek refuge. Even countries like Iceland (had to be bailed out with loans of 2.1 Bill from IMF and 2.5 from othe Nordic countries) and Turkey need IMF infusion.
Many billions and trillions were lost in this year as we see many stock market crashed in one of the worst financial crisis and looming economic crisis.
DJI 13044 8776 -32.7%
S&P 1447 903 -37.6%
Nasdaq 2610 1557 -40.3%
Nikkei 14691 8860 -39.7%
HangSeng 27560 14387 -47.8%
STI 3461 1761 -49.1%
As we see that even though the Financial crisis emanated from the US, everywhere else is hit as liquidity dries up, and export roriented economies like Japan/China/Singapore gets hits badly.
I had already anticipated the a big downward movement in the stock market last year (see my post in August/September 2007), cashing out most of my stocks. However I was lured in March again when stocks dropped 20% (STI) and some stocks I was eyeing dropped 30-40%.
It was a bad move, as with PE of 5 was not a sufficient buffer, where companies can drop to a PE of 2.5 ~ a 50% drop.
My portfolio in FY2008 is down 5.9%, ending with a 43.5% in stocks, 11% in FD and the rest in cash 44%. However, my performance should not mask my longs which was massacred, down 50% to 80%.
My biggest company 39% Celestial is now priced at 37 cents, at a PE of 2.5. It is fundamentally sound and although it is expected to be hit with the current downturn, I believe it is a multi bagger in the making. It has a strong brand recognition in the retail market for their beverages and nutrifood. With its new investment in candies and protein milk, I believe it can capture greater market share and propel to greater heights. In a downturn, I will probably have to aim for PE of 3 for small caps.
My next company is SMRT 3% now price at 1.65. I was holding it and expecting to average down but did not due to its PE is still high 15 . However it is recession proof which will give me a dividend 4.7%. Some things to consider, tourists numbers are falling, in recession, more people will stay at home in Singapore. Some people may give up their cars for public transport.
Macquerie now consists 0.6% of my portfolio, dropping from 1.02 to now 0.295 . It is indeed a horrible drop. I have thought that with a infrastructure fund, it is relatively recession proof. What went wrong ? This is actually a fund investing in infastructure. Thus, it has a debt of its own + its investment have extra debts of their own. In a credit crisis, it will have a double whamming, where both the parent fund and the subsidary itself will have to face risks of refinancing. Where to go from here ? MIIF has indicated that it will pare down debt and reduce its payout ot 3 cents half yearly. This translates to a dividend of about 20%. I have not made too much movement because by the time I realise this, it is a bit too late. At this price, it is not worth selling. If this goes down further, I may contemplate averaging down. Lets see what 2009 brings.
Darco dropped 83% from my purchase price of 34 cents to 6 cents. It has a high visibility of book orders and have been making inroads in Middle East. What went wrong ? A poisonous convertible which is highly disadvantageous to Darco. The agreement lets the issuer convert shares at a discount at at the market and they can just dump it in the open market. The conseqences shows that the share price plunging with itself a not very liquid stock.
Why did they go into such an agreement ? I have really not much idea, maybe it was hard to raise money. This consists 0.2% of my portfolio.
My strategy this year was to keep most of it in cash, but divered to buying stocks and shorting futures. My latter strategy did not do too well, as my longs was around 60-70%, and shorts around 30-40%. My longs also dropped about 50% while my shorting of indexes only dropped 30-40%. What helped me was a trading strategy and pure luck where I was able to hold my shorts where they made the most movement. It is luck as there were many times I wanted to close my shorts when the stock market went down quite alot. For eg, I was luckly to have a position in place when the FED initially did not approve the 700 billion bailout. The major markets dropped 6-7% that night.
Since last christmas it has been rallying on low volume. I closed my short (from the announcement of the Auto bailout S&P 890) at 868. I expect that stock market should recover after a horrible Aug till Nov. With volume light, stock market might be trending up. Anyway the risk is getting higher for shorting and I have to be careful about shorting.
For 2009, I believe we are not out of the woods yet. It will be another challenging year and expect another volatile season. Obama will be inagurated as President of US on 20 January, and will be expecting Congress to sign the stimulus package.....
Here wishing my family and friends a Happy New Year.... good health and prosperity
Many billions and trillions were lost in this year as we see many stock market crashed in one of the worst financial crisis and looming economic crisis.
DJI 13044 8776 -32.7%
S&P 1447 903 -37.6%
Nasdaq 2610 1557 -40.3%
Nikkei 14691 8860 -39.7%
HangSeng 27560 14387 -47.8%
STI 3461 1761 -49.1%
As we see that even though the Financial crisis emanated from the US, everywhere else is hit as liquidity dries up, and export roriented economies like Japan/China/Singapore gets hits badly.
I had already anticipated the a big downward movement in the stock market last year (see my post in August/September 2007), cashing out most of my stocks. However I was lured in March again when stocks dropped 20% (STI) and some stocks I was eyeing dropped 30-40%.
It was a bad move, as with PE of 5 was not a sufficient buffer, where companies can drop to a PE of 2.5 ~ a 50% drop.
My portfolio in FY2008 is down 5.9%, ending with a 43.5% in stocks, 11% in FD and the rest in cash 44%. However, my performance should not mask my longs which was massacred, down 50% to 80%.
My biggest company 39% Celestial is now priced at 37 cents, at a PE of 2.5. It is fundamentally sound and although it is expected to be hit with the current downturn, I believe it is a multi bagger in the making. It has a strong brand recognition in the retail market for their beverages and nutrifood. With its new investment in candies and protein milk, I believe it can capture greater market share and propel to greater heights. In a downturn, I will probably have to aim for PE of 3 for small caps.
My next company is SMRT 3% now price at 1.65. I was holding it and expecting to average down but did not due to its PE is still high 15 . However it is recession proof which will give me a dividend 4.7%. Some things to consider, tourists numbers are falling, in recession, more people will stay at home in Singapore. Some people may give up their cars for public transport.
Macquerie now consists 0.6% of my portfolio, dropping from 1.02 to now 0.295 . It is indeed a horrible drop. I have thought that with a infrastructure fund, it is relatively recession proof. What went wrong ? This is actually a fund investing in infastructure. Thus, it has a debt of its own + its investment have extra debts of their own. In a credit crisis, it will have a double whamming, where both the parent fund and the subsidary itself will have to face risks of refinancing. Where to go from here ? MIIF has indicated that it will pare down debt and reduce its payout ot 3 cents half yearly. This translates to a dividend of about 20%. I have not made too much movement because by the time I realise this, it is a bit too late. At this price, it is not worth selling. If this goes down further, I may contemplate averaging down. Lets see what 2009 brings.
Darco dropped 83% from my purchase price of 34 cents to 6 cents. It has a high visibility of book orders and have been making inroads in Middle East. What went wrong ? A poisonous convertible which is highly disadvantageous to Darco. The agreement lets the issuer convert shares at a discount at at the market and they can just dump it in the open market. The conseqences shows that the share price plunging with itself a not very liquid stock.
Why did they go into such an agreement ? I have really not much idea, maybe it was hard to raise money. This consists 0.2% of my portfolio.
My strategy this year was to keep most of it in cash, but divered to buying stocks and shorting futures. My latter strategy did not do too well, as my longs was around 60-70%, and shorts around 30-40%. My longs also dropped about 50% while my shorting of indexes only dropped 30-40%. What helped me was a trading strategy and pure luck where I was able to hold my shorts where they made the most movement. It is luck as there were many times I wanted to close my shorts when the stock market went down quite alot. For eg, I was luckly to have a position in place when the FED initially did not approve the 700 billion bailout. The major markets dropped 6-7% that night.
Since last christmas it has been rallying on low volume. I closed my short (from the announcement of the Auto bailout S&P 890) at 868. I expect that stock market should recover after a horrible Aug till Nov. With volume light, stock market might be trending up. Anyway the risk is getting higher for shorting and I have to be careful about shorting.
For 2009, I believe we are not out of the woods yet. It will be another challenging year and expect another volatile season. Obama will be inagurated as President of US on 20 January, and will be expecting Congress to sign the stimulus package.....
Here wishing my family and friends a Happy New Year.... good health and prosperity
Monday, November 17, 2008
Celestial 2008Q3 performance
Key Highliights:
• Sales rose 28.1% to RMB581.7 million
Growth in sales volume of industrial products
Overall increase in selling prices
• Net profit up 54.6% to RMB162.1 million
Due to unrealised exchange gain of RMB63.2 million
• Maintains healthy financial position and cash flow
Net cash provided by operating activities of RMB205.1 million
Cash and cash equivalents of RMB1.4 billion
• Trial run for biodiesel facilities commenced in late October
Singapore, November 14, 2008 - Mainboard-listed Celestial NutriFoods Limited (天圜 营养集团有限公司) (“Celestial” or the “Group”), a leading soybean protein-based food & beverage products manufacturer in the PRC, today announced its results for the three months ended September 30, 2008 (“3QFY2008”).
The Group posted a 28.1% growth in total sales from RMB454.3 million in the three months ended September 30, 2007 (“3QFY2007”) to RMB581.7 million in the quarter under review. Net profit surged 54.6% to RMB162.1 million from RMB104.8 million in 3QFY2007.
In 3QFY2008, the Group maintained a healthy and satisfactory financial position and cash flow, with net cash provided by operating activities of RMB205.1 million and cash and cash equivalents of RMB1.4 billion as at end of this quarter.
Outlook and Future Plans
Due to overall concern on food hygiene, sluggish stock and property markets and the uncertain domestic economy in the PRC resulting from the global economic downturn, the Group believes that retail sentiment will continue to be depressed. In addition, managing the costs of raw materials will remain challenging for the Group despite the fairly stable raw materials market in the quarter under review.
“We will continue to observe market trends and raw material price trends closely, and take necessary actions to sustain our competitiveness and our leading position in the industry. We also hope that the economic stimulus measures announced by the PRC government will boost economic growth in the country, as well as improve consumer confidence, and in turn, induce
higher domestic consumption,” said Mr Ming.
My thots.........
It reported a credible performance of 25 RMB or profit of RMB 162 Mio.....notice the way they made the announcement. They have no intention of hiding that the quarter performance is boosted by foreign exchange rate on their convertible bond.... this is a testament of honest management. Other companies may not even highlight this.
It also reported that no dividend may be given in this Q3. I believe this is prudent, and also shows the candid and honest relation with shareholders . It could have waited for Q4 and just remove the dividend.
I believe all economies and companies will face great challenge ahead in 2009. However, I believe the strong management will manage to continue to deliver satisfactory performance, and will boost strong growth when the upturn comes. China is in one of the best economy to weather this global recession. It has one of the highest foreign reserves, and has the economic power to stimulate its economy with stimulas package on infrastructure and cutting interest rates.
Celestial price is now 36 cents with projected PE of 2.4 . I will continue to hold and add to my holdings at opportunistic down prices. It is now trading at depressed valuations and has the potential of being a multi-bagger with a market cap of 230 Mio (636 Mio shares outstanding). I will compare this vs Want Want which has a market cap of a few billions dollars, and has the potential to reach its height.
Portfolio now down 8% with 44% vested. I have been a good boy, closing my shorts position as I think Oct has been a torrid month. At the same time, I am also going for a short holiday in Gold Coast. This cost me 4-5 %, but bo pian.
I think it is rather risky to short now. However, last week Japan went to recession, Germany also showed a strong downturn. US data is also horrid.... Lets see, I am resisting temptation to short....
What I will do is to wait for a major change, a major bankruptcy and deploy 15 %.
• Sales rose 28.1% to RMB581.7 million
Growth in sales volume of industrial products
Overall increase in selling prices
• Net profit up 54.6% to RMB162.1 million
Due to unrealised exchange gain of RMB63.2 million
• Maintains healthy financial position and cash flow
Net cash provided by operating activities of RMB205.1 million
Cash and cash equivalents of RMB1.4 billion
• Trial run for biodiesel facilities commenced in late October
Singapore, November 14, 2008 - Mainboard-listed Celestial NutriFoods Limited (天圜 营养集团有限公司) (“Celestial” or the “Group”), a leading soybean protein-based food & beverage products manufacturer in the PRC, today announced its results for the three months ended September 30, 2008 (“3QFY2008”).
The Group posted a 28.1% growth in total sales from RMB454.3 million in the three months ended September 30, 2007 (“3QFY2007”) to RMB581.7 million in the quarter under review. Net profit surged 54.6% to RMB162.1 million from RMB104.8 million in 3QFY2007.
In 3QFY2008, the Group maintained a healthy and satisfactory financial position and cash flow, with net cash provided by operating activities of RMB205.1 million and cash and cash equivalents of RMB1.4 billion as at end of this quarter.
Outlook and Future Plans
Due to overall concern on food hygiene, sluggish stock and property markets and the uncertain domestic economy in the PRC resulting from the global economic downturn, the Group believes that retail sentiment will continue to be depressed. In addition, managing the costs of raw materials will remain challenging for the Group despite the fairly stable raw materials market in the quarter under review.
“We will continue to observe market trends and raw material price trends closely, and take necessary actions to sustain our competitiveness and our leading position in the industry. We also hope that the economic stimulus measures announced by the PRC government will boost economic growth in the country, as well as improve consumer confidence, and in turn, induce
higher domestic consumption,” said Mr Ming.
My thots.........
It reported a credible performance of 25 RMB or profit of RMB 162 Mio.....notice the way they made the announcement. They have no intention of hiding that the quarter performance is boosted by foreign exchange rate on their convertible bond.... this is a testament of honest management. Other companies may not even highlight this.
It also reported that no dividend may be given in this Q3. I believe this is prudent, and also shows the candid and honest relation with shareholders . It could have waited for Q4 and just remove the dividend.
I believe all economies and companies will face great challenge ahead in 2009. However, I believe the strong management will manage to continue to deliver satisfactory performance, and will boost strong growth when the upturn comes. China is in one of the best economy to weather this global recession. It has one of the highest foreign reserves, and has the economic power to stimulate its economy with stimulas package on infrastructure and cutting interest rates.
Celestial price is now 36 cents with projected PE of 2.4 . I will continue to hold and add to my holdings at opportunistic down prices. It is now trading at depressed valuations and has the potential of being a multi-bagger with a market cap of 230 Mio (636 Mio shares outstanding). I will compare this vs Want Want which has a market cap of a few billions dollars, and has the potential to reach its height.
Portfolio now down 8% with 44% vested. I have been a good boy, closing my shorts position as I think Oct has been a torrid month. At the same time, I am also going for a short holiday in Gold Coast. This cost me 4-5 %, but bo pian.
I think it is rather risky to short now. However, last week Japan went to recession, Germany also showed a strong downturn. US data is also horrid.... Lets see, I am resisting temptation to short....
What I will do is to wait for a major change, a major bankruptcy and deploy 15 %.
Subscribe to:
Posts (Atom)
