Tuesday, November 25, 2014

[SGX Portfolio] Buy: China Fishery

China Fishery? Wth company is that? Good question. It's a fishing company.


Simple business model: Buy boat, catch fish, sell fish.

If you are wary of "China companies", so am I. But I find this company quite professional and clean-cut actually. Their sustainability report is also damn chio.

This is really more of an asset play if you ask me. Their NAV is USD $0.59. If you want to be conservative and use a rate of 1.2, their NAV in SGD is $0.708. At $0.30, it is now selling at a discount of 57% to NAV.

But okay, what else? EPS is 3 cents USD. Again, using a rate of 1.2, their PE is 8.3. I wouldn't say that it is really cheap, but a multiple of 8.3 seems all right, considering that stocks like SGX are trading at PE multiples of 25. Really? That much growth? Hokay, if you say so.

Using the lower USD/SGD exchange rate of 1.2 (which we are at 1.3 now), I think my NAV and PE values are on the more conservative side. It seems like this stock has lost a lot of faith from investors, hence it's poor valuations in the market.

The 2 things that bothers me is the fact that revenues are increasing, but overall net income is not. They are also intending to redeem the senior notes to stem off the bleeding on interest expense that is eating into their profits. I wonder how they can secure good financing options, but I don't rule out they asking for more equity.

On the plus side, equity has been consistently rising over the years while dividends have been paid every single year. Two ticks in my book.

However, with the need to redeem their debt, who knows if they can afford a dividend this time around. It will be very interesting to see how they manage this situation.

No one said investing in cheap companies is gonna be easy. They are cheap for a reason, but a 10% drop on the day feels a bit like an overreaction to me. Could get lower, but hey I can't see the future. All I see is something that looks like a good deal to me right now.

3 comments:

  1. To risk investing in China Fishery, better in Indonesia

    ReplyDelete
    Replies
    1. There's risk everywhere, just gotta know your odds that you're taking.

      Delete
  2. Nice SGX recommendation to trade in china fishery group ltd., but can I get some SGX Hot Stock Picks to trade?

    ReplyDelete

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