Holdings as at 31 Dec 2007:
Cash
Cacola Furniture
Changtian Plastic & Chemical
China Fishery
China Energy
ChinaWheel
ChinaXLX
Jiutian Chemical
Sihuan
Sinotechfibre
STX Pan Ocean
CPF
Asia Enterprise
Midas
Raffles Education
Monday, 31 December 2007
Performance of Virtual Fund for Dec 2007
Holdings as at 31 December 2007
China Fishery 40,000 @ $1.79, Unrealised Profit = $2,400
China Hongxing 100,000 @ $1.27721088, Unrealised Loss = -$31,721.09
Raffles Education 15,000 @ $3.06, Unrealised Loss = -$300
Sino Techfibre 90,000 @$1.03222, Unrealised Loss = -$2,900
STX Pan Ocean 80,000 @ $3.354875, Unrealised Gain = $22,810
Sum invested = $606,511.09
Cash holding = $4,830
Realised profit = $111,341.09 = 22.27%
Unrealised Loss = -$9.711.09
China Fishery 40,000 @ $1.79, Unrealised Profit = $2,400
China Hongxing 100,000 @ $1.27721088, Unrealised Loss = -$31,721.09
Raffles Education 15,000 @ $3.06, Unrealised Loss = -$300
Sino Techfibre 90,000 @$1.03222, Unrealised Loss = -$2,900
STX Pan Ocean 80,000 @ $3.354875, Unrealised Gain = $22,810
Sum invested = $606,511.09
Cash holding = $4,830
Realised profit = $111,341.09 = 22.27%
Unrealised Loss = -$9.711.09
China Wheel's Visionary Leader
Written by Sim Kih
Monday, 31 December 2007
China Wheel executive chairman Zang Ligen wants to double capacity with a new plant in Tianjin. About 80% of new Chinese automobiles from world No.1 automaker Toyota come fitted with wheels made by SGX-listed China Wheel.The wheel maker produced about 10 per cent of the 30-odd million wheels installed on Chinese automobiles in 2006.
Monday, 31 December 2007
China Wheel executive chairman Zang Ligen wants to double capacity with a new plant in Tianjin. About 80% of new Chinese automobiles from world No.1 automaker Toyota come fitted with wheels made by SGX-listed China Wheel.The wheel maker produced about 10 per cent of the 30-odd million wheels installed on Chinese automobiles in 2006.
One of the largest OEM or original equipment manufacturer wheel suppliers in China, China Wheel raked in 446.5 million yuan (S$87 million) for the first half ended June 2007. Net profit leaped 81% year-on-year to 55.4 million yuan, consistent with its 97 per cent compounded annual growth rate since FY2002. Return on equity improved 6.8 percentage points to 33.9 per cent. All this has translated into strong cash flows as well, with cash from operations improving 71 per cent to 57.4 million yuan for FY2006. The company also had a cash pile of some 89.6 million yuan as at June 30, 2007. And the good times are not about to end. “The industry is expected to grow up to a hefty 30 per cent annually,” says its 49-year-old executive chairman, Zang Ligen in a 90-minute telephone interview from his office in China.
China Wheel is seizing the golden opportunity afforded by the Chinese auto boom: it is more than doubling existing capacity to 8.6 million wheels over the next two to three years. Some RMB 780 million has been budgeted for a new plant in Tianjin, which sits on a gigantic plot of land equivalent to 40 FIFA-sized football fields (285,000 square meters).
Farmer turned smelter moves into manufacture of alloy wheelsChina Wheel’s business was founded by Mr Zang and his two brothers: Lizhong, 45 and Liguo, 42. They turned to manufacturing wheels as an extension of their successful business of manufacturing aluminum alloy ingots, which they had started in 1984. The trio come from a farming background. After 11 years in the aluminum alloy business, Mr Zang had a treasure trove of smelting technology and management expertise for producing raw materials for aluminum wheels. At that time, they were supplying alloy to China’s first aluminum wheel maker. Aluminum alloy is mainly used in the automotive industry for making engines and wheels. From supplying raw materials, Mr Zang embarked on making wheels in 1995. Demand for aluminum alloy wheels then was less than 10 per cent of what it is today.
Aluminum wheels are safer, conserve energy, more environmentally friendly and visually appealing than steel wheels.Recognizing the strong advantages – namely, product safety, energy conservation, environmental friendliness and aesthetic flexibility – aluminum alloy had over steel, Mr Zang was convinced car owners would switch to aluminum alloy wheels. He also decided to take advantage of the fact that large wheel manufacturers back then supplied only original equipment make to carmakers. There were no wheel makers catering to the retail aftermarket. Mr Zang decided to enter that segment.“We wanted a business that adds more value compared to smelting,” explains Mr Zang.Wheel-making’s gross margins can be as high as 3 to 4 times that of aluminum production.
Aluminum wheels are safer, conserve energy, more environmentally friendly and visually appealing than steel wheels.Recognizing the strong advantages – namely, product safety, energy conservation, environmental friendliness and aesthetic flexibility – aluminum alloy had over steel, Mr Zang was convinced car owners would switch to aluminum alloy wheels. He also decided to take advantage of the fact that large wheel manufacturers back then supplied only original equipment make to carmakers. There were no wheel makers catering to the retail aftermarket. Mr Zang decided to enter that segment.“We wanted a business that adds more value compared to smelting,” explains Mr Zang.Wheel-making’s gross margins can be as high as 3 to 4 times that of aluminum production.
Transition challenges
His first challenge was to assemble a team experienced in casting wheels, a far more complex task than smelting alloy. Key supporter was state-owned wheel-maker Dicastal Wheel, who was also Mr Zang’s aluminum alloy customer then. Dicastal Wheel seconded its machining and sales head, Zhang Jianliang, to develop the new business segment. Mr Zhang, 41, designed the China Wheel’s first production lines.Mr Zhang, incidentally, is an industry pioneer who brought German technology into China’s aluminum casting industry. He has risen to become China Wheel’s chief executive officer. Raising capital was Mr Zang’s next challenge. Capital expenditure for wheel production was five to six times that of smelting.
Steady output increase has doubled net profit annually since FY02. To make a million aluminum alloy wheels, the smelter only needs to invest 20-30 million yuan in a factory with capacity to smelt 10,000 tonnes of alloy raw materials. In comparison, the wheel maker needs to invest 100-120 million yuan for his factory to have capacity to die-cast 10,000 tons of alloy into a million wheels. Lack of financing was the reason why China Wheel’s first production line, completed in 1996, had capacity for 50,000 wheels a year only.
Steady output increase has doubled net profit annually since FY02. To make a million aluminum alloy wheels, the smelter only needs to invest 20-30 million yuan in a factory with capacity to smelt 10,000 tonnes of alloy raw materials. In comparison, the wheel maker needs to invest 100-120 million yuan for his factory to have capacity to die-cast 10,000 tons of alloy into a million wheels. Lack of financing was the reason why China Wheel’s first production line, completed in 1996, had capacity for 50,000 wheels a year only.
Fast forward to today: capacity has risen more than six-fold in the past decade to 3.6 million wheels currently.Mr Zang’s vision is for China Wheel to be the leader in China’s wheel making industry through economies of scale in production capacity. Economies of scale will also help the company maintain its gross margins, already one of the highest among Chinese aluminum wheel makers. Self-confessed workaholic with a penchant for touring factories
Over the last 20 years or so, Mr Zang has kept up more or less the same punishing pace of work.He works almost every day, including weekends. And it’s 12 to 14 hours a day. “It would appear strange if a company’s senior management does not clock overtime,” he says. Zang has a penchant for touring factories. He recounts how he has toured Japanese, German and South Korean factories to check out their highly advanced aluminum wheel technology and see for himself their much-vaunted operational efficiency. Some of these visits were done surreptitiously, he says with a chuckle, adding that he has “imported” factory operational procedures after those visits.
The company lays claim to being one of the most efficient among Chinese aluminum wheel makers. “Our net margins are one of the highest in the industry,” he says.Net margins of China Wheel have held above 10 per cent since its October 2005 listing.Shenzhen-listed aluminum wheel maker Zhejiang Wanfeng Auto fades in comparison with net margins at a mere 3 per cent for the first nine months ended September 2007.
A gentle leader
Zang is the eldest son in the family, a position which he says comes with a heavy responsibility. He feels the pressure to uphold the family’s prestige by continuing to achieve success in business. He also recognizes the challenge of providing for the growing number of old guards in the company.
All these drive his business ambition.
People who know him well say he is refined and courteous – not exactly someone who likes to reprimand workers. Not surprisingly, he will come up with persuasive devices, such as a cartoon character, to make a point to his workers.
People who know him well say he is refined and courteous – not exactly someone who likes to reprimand workers. Not surprisingly, he will come up with persuasive devices, such as a cartoon character, to make a point to his workers.
When they carelessly handled “wheel separators” – which are placed between wheels on a stack - the company designed a friendly cartoon character and used it on a sticker on the separator to graciously remind them to “cherish factory property,” says Mr Zang. He is a simple man when it comes to leisure. He says he enjoys catching up on news in newspapers and over radio. He also likes to chat with board members, colleagues and strategic investors about historical and urrent social trends in China and Singapore. Accompanying his wife, Liu Xia, 49, on shopping trips to the supermarket is another simple pleasure Zang delights in.
The couple have a daughter, Zang Na, 26, who holds a degree from Japan’s Kyorin University. Their son, Zang Yongxing, 23, is a third-year undergraduate in the UK. In any business, gracious treatment of clients can turn them into faithful customers for life. Such an approach has resulted in 60 per cent of Zang’s customers for aluminum alloy staying with him for 15 years or more, a rarity in the industry. And many wheel customers have been with China Wheel since day one.
This article was recently published in Pulses magazine and NextInsight.
Friday, 28 December 2007
STX Pan Ocean to allow share moves between Singapore and Seoul
Reuters News:
- SINGAPORE, Dec 28 - STX Pan Ocean , a South Korean shipping firm whose stock is listed in Seoul and Singapore, said investors will be able to shift their shares between the two markets from 2008 after regulatory changes.
"We'll work on details of the share migration process and make them available to investors soon," an STX spokesman said on Friday.
"The legal barriers in migrating shares have been lifted but investors will have to bear risks associated with foreign exchange moves and the time required to make such migration."
STX's Singapore-listed shares, which were halted from trading prior to the announcement, soared 25.4 percent to a five-week high of S$3.65 when the shares resumed trade at 0830 GMT, before closing 21 percent higher at S$3.51. [ID:nSIN287314]
The stock is still trading at a 32 percent discount to the Korea-listed stock, which closed at 2,990 won or about S$4.62. (Reporting by Daryl Loo and Melanie Lee in Singapore; Additional reporting by So Eui Rhee in Seoul; Editing by Jan Dahinten)
- SINGAPORE, Dec 28 - STX Pan Ocean , a South Korean shipping firm whose stock is listed in Seoul and Singapore, said investors will be able to shift their shares between the two markets from 2008 after regulatory changes.
"We'll work on details of the share migration process and make them available to investors soon," an STX spokesman said on Friday.
"The legal barriers in migrating shares have been lifted but investors will have to bear risks associated with foreign exchange moves and the time required to make such migration."
STX's Singapore-listed shares, which were halted from trading prior to the announcement, soared 25.4 percent to a five-week high of S$3.65 when the shares resumed trade at 0830 GMT, before closing 21 percent higher at S$3.51. [ID:nSIN287314]
The stock is still trading at a 32 percent discount to the Korea-listed stock, which closed at 2,990 won or about S$4.62. (Reporting by Daryl Loo and Melanie Lee in Singapore; Additional reporting by So Eui Rhee in Seoul; Editing by Jan Dahinten)
Wednesday, 26 December 2007
Monday, 24 December 2007
Transactions of My Portfolio and Latest Holdings
Bought:
Sinotechfibre
Cacola Furniture
Changtian Plastics
Sold:
ChinaHongxing
Latest Holdings:
Cash
Cacola Furniture
Changtian Plastics
China Fishery
China Energy
ChinaWheel
ChinaXLX
Jiutian Chemical
Sihuan
Sinotechfibre
STX Pan Ocean
CPF
Asia Enterprise
Midas
Raffles Education
Sinotechfibre
Cacola Furniture
Changtian Plastics
Sold:
ChinaHongxing
Latest Holdings:
Cash
Cacola Furniture
Changtian Plastics
China Fishery
China Energy
ChinaWheel
ChinaXLX
Jiutian Chemical
Sihuan
Sinotechfibre
STX Pan Ocean
CPF
Asia Enterprise
Midas
Raffles Education
Thursday, 20 December 2007
Transactions of Virtual Fund
Switching of counters:
Sold:
47,000 China Hongxing @ $0.86, Buy price = $1.27721088, loss = -$19,608.91
25,000 Fibrechem @ $1.33, Buy Price = $1.35, loss = -$500
50,000 Sihuan @ $0.76, Buy Price = $0.76, no gain no loss
Sale Proceeds = $111,670
Bought:
China Fishery 20,000 @$1.83 = $36,600
Sino Techfibre 40,000 @$0.935 = $37,400
STX Pan Ocean 13,000 @ $2.66 = $34,580
Cost of investment = $108,580
Sum invested = $606,511.09
Cash holding = $4,830
Realised profit = $111,341.09 = 22.27%
Sold:
47,000 China Hongxing @ $0.86, Buy price = $1.27721088, loss = -$19,608.91
25,000 Fibrechem @ $1.33, Buy Price = $1.35, loss = -$500
50,000 Sihuan @ $0.76, Buy Price = $0.76, no gain no loss
Sale Proceeds = $111,670
Bought:
China Fishery 20,000 @$1.83 = $36,600
Sino Techfibre 40,000 @$0.935 = $37,400
STX Pan Ocean 13,000 @ $2.66 = $34,580
Cost of investment = $108,580
Sum invested = $606,511.09
Cash holding = $4,830
Realised profit = $111,341.09 = 22.27%
My thoughts on current market sentiments, China Fishery and Sinotechfibre
It has been raining whole morning. The mood is similar to the recent share market sentiments. It would be a miracle if STI could hit 4,000 mark with only few trading days to go. It was like Liverpool's fate this morning when it was a goal down to Chelsea and Peter Crouch lost his head. There was no coming back since then.
Despite all the doom and gloom, values do emerge every now and then. Instead of being too pessimistic, one should take this opportunity to reassess his/her share portfolio and be better prepared when the bull returns. Think about it, why should we be so bothered by the 30-component stocks Dow performance? Why should we let the Ang Mohs control our fate and dictate our well being?
Unfortunately China and Asian have not risen fast enough to decouple from the Ang Mohs influence. China may have half of the ten largest companies by market cap but the quality of their earnings and valuations are still a long way off. What to do? Just accept the stupid fact and move on. For serious investors, this should be a good time to accumulate some quality stocks that the Ang Mohs dump to the market. To be fair, they are the ones who buy up these counters and rightfully they have the power to sell them down if they wish to.
Sinotechfibre - Undervalued Synthetic Leather Player
Not long ago it was China Fishery Group where its price dropped more than 50% in a short few days after reporting a slightly disappointing set of Q3 results. Profit margin eroded due to higher operating costs in Peru and softer fishmeal prices. These 2 elements are the perfect ingredients to send the share price plummeting. The situation was probably made worse by the alleged selling by Angmoh funds. These Angmoh funds may have no choice but to sell out some good investments to bail out their good friends at their backyard exposed to the subprime losses.
It was a good bargain and probably still is at current prices. Even our kiasu value investment friend Muzicwhiz scooped up few lots at an average price of S$1.54. I first bought some CFG at S$1.75 and later average down to about S$1.60. The short term negative news aside, the Company has delivered on profitability with increasing capacity. Dividend yield was also very decent at more than 3%.
Sinotechfibre is deja vu of CFG where share price suddenly dropped for bo tai zi. The delay in PMP equipment was widely published in the past and technically should be factored into the share price. The doubling of microfibre production lines should bode well for the Company. The growth in PMP production lines should also further boost its already impressive revenue and profit growth. Sinotechfibre has the first mover advantage in the PMP sector which commands better margins.
Sinotechfibre has been generating high profit margin of above 40% and high ROE of more than 30%. Valuations are at a significant discount to China Sky and Fibrechem eventhough their market values are somewhat very close. At current price of <$1.00, Sinotechfibre trades at a very undemanding FY08 PE of < 8x.
The robust customer demand for synthetic leather which accounted for two-third of its revenue will continue to propel growth in the coming years. The secured orders from People's Liberation Army is a good endorsement of its products and provides stable income stream.
In my opinion, I believe the current share prices present good entry point for investors who wish to participate in the growth story of Chinese companies. When the Ang Moh return from their rescue mission, they will furiously snap up these S-shares with good earnings.
Good luck my friends and have a blessed holiday break!
Despite all the doom and gloom, values do emerge every now and then. Instead of being too pessimistic, one should take this opportunity to reassess his/her share portfolio and be better prepared when the bull returns. Think about it, why should we be so bothered by the 30-component stocks Dow performance? Why should we let the Ang Mohs control our fate and dictate our well being?
Unfortunately China and Asian have not risen fast enough to decouple from the Ang Mohs influence. China may have half of the ten largest companies by market cap but the quality of their earnings and valuations are still a long way off. What to do? Just accept the stupid fact and move on. For serious investors, this should be a good time to accumulate some quality stocks that the Ang Mohs dump to the market. To be fair, they are the ones who buy up these counters and rightfully they have the power to sell them down if they wish to.
Sinotechfibre - Undervalued Synthetic Leather Player
Not long ago it was China Fishery Group where its price dropped more than 50% in a short few days after reporting a slightly disappointing set of Q3 results. Profit margin eroded due to higher operating costs in Peru and softer fishmeal prices. These 2 elements are the perfect ingredients to send the share price plummeting. The situation was probably made worse by the alleged selling by Angmoh funds. These Angmoh funds may have no choice but to sell out some good investments to bail out their good friends at their backyard exposed to the subprime losses.
It was a good bargain and probably still is at current prices. Even our kiasu value investment friend Muzicwhiz scooped up few lots at an average price of S$1.54. I first bought some CFG at S$1.75 and later average down to about S$1.60. The short term negative news aside, the Company has delivered on profitability with increasing capacity. Dividend yield was also very decent at more than 3%.
Sinotechfibre is deja vu of CFG where share price suddenly dropped for bo tai zi. The delay in PMP equipment was widely published in the past and technically should be factored into the share price. The doubling of microfibre production lines should bode well for the Company. The growth in PMP production lines should also further boost its already impressive revenue and profit growth. Sinotechfibre has the first mover advantage in the PMP sector which commands better margins.
Sinotechfibre has been generating high profit margin of above 40% and high ROE of more than 30%. Valuations are at a significant discount to China Sky and Fibrechem eventhough their market values are somewhat very close. At current price of <$1.00, Sinotechfibre trades at a very undemanding FY08 PE of < 8x.
The robust customer demand for synthetic leather which accounted for two-third of its revenue will continue to propel growth in the coming years. The secured orders from People's Liberation Army is a good endorsement of its products and provides stable income stream.
In my opinion, I believe the current share prices present good entry point for investors who wish to participate in the growth story of Chinese companies. When the Ang Moh return from their rescue mission, they will furiously snap up these S-shares with good earnings.
Good luck my friends and have a blessed holiday break!
Sunday, 9 December 2007
Transactions of Virtual Fund
Switching of counters:
Sold:
Courage Marine 100,000 @ $0.41 = $41,000 Loss = -$6,500
KS Energy 20,000 @ $3.26 = $65,200 Loss = -$10,800
Bought:
Sino Techfibre 50,000 @$1.11 = $55,500
STX Pan Ocean 17,000 @ $2.93 = $49,810
Sum invested = $629,710
Cash holding = $1,740
Realised profit = $131,450 = 26.29%
Sold:
Courage Marine 100,000 @ $0.41 = $41,000 Loss = -$6,500
KS Energy 20,000 @ $3.26 = $65,200 Loss = -$10,800
Bought:
Sino Techfibre 50,000 @$1.11 = $55,500
STX Pan Ocean 17,000 @ $2.93 = $49,810
Sum invested = $629,710
Cash holding = $1,740
Realised profit = $131,450 = 26.29%
Thursday, 6 December 2007
Monday, 3 December 2007
Sihuan Acquires New Subsidiary
Sihuan Pharmaceutical Holdings Group Ltd. (the "Company") wishes to announce that the Company has acquired a new wholly-owned subsidiary, SUN MORAL INTERNATIONAL (HK) LIMITED (the Sun Moral) in Hong Kong, The People's Republic of China (hereinafter referred to as Acquisition) with a share capital of 1(One) share of HK$1 each on 23rd November 2007.
Sun Moral would be an investment holding company. Following the aforesaid Acquisition, the Company's entire shareholdings in HAINAN SIHUAN PHARMACEUTICAL CO., LTD will be transferred to Sun Moral (hereinafter referred to as the Proposed Transfer).
The above Acquisition was funded by internal resources and is not expected to have any material impact on the earnings per share and net tangible assets per share of the Group for the financial year ending 31 December 2007. A leading pharmaceutical company in the field of cardiocerebral vascular drugs in the PRC, Sihuan Pharmaceutical Holdings Group Ltd focuses on the research and development (R&D), production as well as sales and marketing of cardiocerebral vascular (CV) and noncardiocerebral vascular (NCV) drugs in different forms and dosages.
Sun Moral would be an investment holding company. Following the aforesaid Acquisition, the Company's entire shareholdings in HAINAN SIHUAN PHARMACEUTICAL CO., LTD will be transferred to Sun Moral (hereinafter referred to as the Proposed Transfer).
The above Acquisition was funded by internal resources and is not expected to have any material impact on the earnings per share and net tangible assets per share of the Group for the financial year ending 31 December 2007. A leading pharmaceutical company in the field of cardiocerebral vascular drugs in the PRC, Sihuan Pharmaceutical Holdings Group Ltd focuses on the research and development (R&D), production as well as sales and marketing of cardiocerebral vascular (CV) and noncardiocerebral vascular (NCV) drugs in different forms and dosages.
China Energy to triple its production capacity
Rising PRC energy consumption propels China Energy on US$443 million expansion plans
· Triple Methanol production capacity from existing 250,000 metric tons per annum (“mtpa”) to 750,000 mtpa by end 2008
· Increase in internal Methanol production to enhance operating margins and mitigate future price volatility from external Methanol sources
· DME capacity expansion plans to progress in tandem with internal Methanol production growth to enhance profitability
· Total planned DME capacity of 3.6 million mtpa by end 2009, up from initial target of 3.2 million mtpa
· Triple Methanol production capacity from existing 250,000 metric tons per annum (“mtpa”) to 750,000 mtpa by end 2008
· Increase in internal Methanol production to enhance operating margins and mitigate future price volatility from external Methanol sources
· DME capacity expansion plans to progress in tandem with internal Methanol production growth to enhance profitability
· Total planned DME capacity of 3.6 million mtpa by end 2009, up from initial target of 3.2 million mtpa
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