For the benefit of other followers of my blog who have been asking me similar questions in general:

hello Kit,

Any news update on Jiutian? The share price is keep on drop until 0.155 as I write to you. Are you still holding it? Would it be a long term investment? would you optimist to this company future? How do you think about this Company basis fundemental? Would be grateful you could let us know when you are free to find out.

Thank & Regards,

Roden

Kit said...

Hi Roden,

If you are looking to buy and hold short term, I suggest that you stay away from the current market. In my view, I think the bottom is still a long way to go. I personally expect the STI to drop to 2,000 and Dow 8,000. As a rule of thumb, have a good margin of safety. You may want to set the entry level at 50% lower from current levels and add 20% to every 20% drop in price from there onwards, assuming the fundamentals of the company is still sound by then. Remember averaging down is only useful if the investment is sound.

Jiutian's lower than expected FY07 results and the plant shut down plus slower start of the new plant make it a perfect target for kateks to short. Personally, I made more than 50% from Jiutian before the share splits. The current shareholdings I have are just a fraction of the realised profit. Therefore I have little to lose in this sense. I will only be seriously adding more shares if it goes below 10 cents. In the longer term, the production expansion plan is still intact and industrial demand will continue to be strong amid the strong China economy. It is also encouraging to know that the insiders have been buying of late as a vote of confidence.

On a separate note, I feel that the previous accountant is really smart. If he does return after his long holiday "break", then things should be looking up for Jiutian.