(12-03-2012, 08:50 AM)dydx Wrote: [ -> ]In fact, as an investor, there are many ways to verify things and risks in a listed company. You can talk to the management or CFO by attending the AGMs or result briefings or making a company/plant visit; you can give a call to an ID; and you can talk to the internal/external investor relations manager or analysts, who have written a press release or report on the company and have visited the plant before and have been talking to the management/CFO on a regular basis.
I believe the risk is not really whether the company/plants/business is real, but the account is real.
a lot of other s-chip fraud, they are all real companies, they have physical plants and real business on-going.
However, real company/plants and real business does not really tell whether the revenue is real, the profit is real or the cash is real.
(12-03-2012, 10:26 AM)freedom Wrote: [ -> ]I believe the risk is not really whether the company/plants/business is real, but the account is real.
a lot of other s-chip fraud, they are all real companies, they have physical plants and real business on-going.
However, real company/plants and real business does not really tell whether the revenue is real, the profit is real or the cash is real.
That's why I said we need to talk to the management/CFO to assess their competence/character/integrity first-hand, visit the company/factory to check that the business and assets are real and running properly/well, and talk to others who who have a role in, contact with, or doing reporting on, the business. By taking the touble to do a 360-degree assesment and focus on the risk aspects, hopefully we can avoid - and I believe we can at least minimize - the risks of the business and its accounts being fakes, and the people involved being cheaters.
But if a business is indeed nicely profitable and supported by good and especially long-term customers, then I suppose the management or controlling shareholders would not want to destroy it by cheating on the company's assets and other shareholders big-time.
Not that I am saying the managements are con-men, but judgement of a character is not really easy, especially for con-man(if it is easy, it will not be con-man for long).
IIRC, there was a recent case(or an old case) of the same assets being sold twice, one to a PRC company, the other to ipo in US? Even if we can verify the company, factories, asset and business, still we are relying on its internal/external auditors to help us.
Hope auditors can have tighter audit standard to clear the cloud surrounding all these s-chips.
dydx,
Today's meteoric rise in Ocean Sky's share price draws my attention to Foreland.
Foreland has a far better balance sheet; far stronger earnings per share as compared to Ocean Sky. Considering that both the firms are kind of in the same industry (Textiles though they do perform very different functions) Foreland appears dramatically undervalued by the market.
Interestingly both firms have declared the same dividend of S$0.008 for FY 2011. As of today Ocean Sky closed at S$0.21 while Foreland closed at less than half the price of S$0.1. Would appreciate your thoughts on this apparent anomaly.
(12-03-2012, 10:46 AM)dydx Wrote: [ -> ] (12-03-2012, 10:26 AM)freedom Wrote: [ -> ]I believe the risk is not really whether the company/plants/business is real, but the account is real.
a lot of other s-chip fraud, they are all real companies, they have physical plants and real business on-going.
However, real company/plants and real business does not really tell whether the revenue is real, the profit is real or the cash is real.
That's why I said we need to talk to the management/CFO to assess their competence/character/integrity first-hand, visit the company/factory to check that the business and assets are real and running properly/well, and talk to others who who have a role in, contact with, or doing reporting on, the business. By taking the touble to do a 360-degree assesment and focus on the risk aspects, hopefully we can avoid - and I believe we can at least minimize - the risks of the business and its accounts being fakes, and the people involved being cheaters.
But if a business is indeed nicely profitable and supported by good and especially long-term customers, then I suppose the management or controlling shareholders would not want to destroy it by cheating on the company's assets and other shareholders big-time.
sgmystique,
I don't think we can just put Foreland and Ocean Sky together and make a direct comparison on their different share price levels and movements. I believe most holders of Foreland shares may be asking themselves this question: There are buyers and sellers of Foreland shares everyday, how come the share price doesn't go up? My own simple answer: Every good horse will choose to run its own race, and try to win in its own way!
On Foreland, I think it is very clear that based on financial numbers the counter is grossly under-priced by Mr Market. However, we must also bear in mind that Foreland is a S-chip, and nowadays few investors are prepared to just commit into a S-chip as a long-term investor, even though it may have all the desirable qualities similar to a good Singapore-based company (e.g. Adampak) listed on SGX. Going forward, Foreland will release its FY11 AR soon for the AGM which will be held by 30Apr12, to be followed by payment of the declared RMB0.015/share Final dividend. So there are 3 identified catalyst events that may hopefully lift/move the share price?!
dydx,
As always, thanks a lot for your thoughts.
My personal belief is that as long as there are no nasty surprises as far as their reported financial numbers are concerned, Foreland should be one of the best performing stocks on the Singapore bourse in times to come.
I did visit the websites of their reported clientele for both apparel and umbrella's and they all appear to be genuine organisations. Of course some of them are well known names like Anta & Li Ning. Have listed down their websites for our consumption.
Apparel
•Anta 安踏 (
www.anta.com.cn)
•Edenbo 爱登堡
•Li Ning 李宁 (
www.lining.com)
•Peak 匹克 (
www.peaksport.com)
•Sepwolves 七匹狼 (
www.septwolves.en.china.cn)
•Lilang 利郎 (
www.lilanz.com)
•Fordoo 虎都 (
www.fordoo.cn)
Umbrella Manufacturers:
•Hangzhou Paradise 天堂 (
www.en.ebumbrella.com)
•Susino 梅花 (
www.susino.com)
•Jin’ou 金欧
•Yuzhongniao 雨中鸟
•Angel 天使
It was a little more difficult to get the websites for the umbrella manufacturers. Maybe somebody with knowledge of Chinese can help complete the list.
Eagerly look forward to their 1Q2012 results which should be out sometime in May.
you need to know in context that textile S-chips in the past have been hit with many frauds..
no doubt Foreland has an amazing fundamental qualities - assuming in the first place it is true - but the poor fact is that Mr Market does not think so.. can you convince that Mr Market is wrong?
you can be right but I think for the 'truth' to set in, the time horizon of this investment has to be long-term.
I think the best catalyst will be for Foreland to just pay straight cash dividend, no partial cash & scrip or whatsoever.. unfortunately, they have not done so..
Well with Mr. Tsoi Kin Chit being happy to pick up stocks at rock bottom prices instead of taking his dividends in cash I feel he is happily increasing his stake at cheap in the company. You need to realise that the amount of shares he gets in lieu of his dividends would be difficult to get at the same prices on the stock exchange.
(28-03-2012, 11:03 AM)dzwm87 Wrote: [ -> ]you need to know in context that textile S-chips in the past have been hit with many frauds..
no doubt Foreland has an amazing fundamental qualities - assuming in the first place it is true - but the poor fact is that Mr Market does not think so.. can you convince that Mr Market is wrong?
you can be right but I think for the 'truth' to set in, the time horizon of this investment has to be long-term.
I think the best catalyst will be for Foreland to just pay straight cash dividend, no partial cash & scrip or whatsoever.. unfortunately, they have not done so..
Foreland has hit S$0.09 a share. Again one of those cases where the share price seems to have absolutely no connection to the reported performance of the company.
Just to reiterate the financial numbers for Foreland in FY2011:
Turnover: RMB756.5 million
Net Profit: RMB140.6 million
NPM: 18.6%
No. of shares: 530,735,229
Current Market Cap (@S$0.09 per share): S$47.77 million
EPS: S$0.053 (Fully Diluted)
NAV: RMB1.24 (S$0.2455)
Cash on hand: RMB228.055 million (S$45.16 million)
Dividend: S$0.0081 for FY2011
If the numbers reported are without any minefields, this is probably one of the most undervalued and unloved stocks on the SGX today. And BTW they have already stated that Q12012 results are also expected to be quiet good.
I will be going to the AGM this Friday (27th April) and hope to meet up with Mr. Tsoi Kin Chit. Am getting my questions ready for the AGM. Any queries from fellow forumers are most welcome. Will add them to my list.