China Minzhong - Fibon Analysis

Based on fibonacci retacement, MZ consolidate at retracement point of 61.8% for sometime but unable to rebound off it. Then come last week sell down by unknown fund house, bring them to 50% (another golden support at S0.92). Given that I had buy in a few times on MZ, my capital has been quite tight after my last avg in at S$0.92. Hopefull, it starts to rebound from here. Else next support point will be S$0.86 which is abit dangerous for me.. Good luck to myself.

China MinZhong - Review

If you track my last post on China Minzhong on Dec 2011. My call for buy was on spot. Within 4 mths, it had already hit my 6 mths target price of S$1.10. However, I did not hold until my own TP.. nevertheless, I still make nice profit from it. Now I am back again into this counter with full force.

During month of April 2012, there were a number of open market buy up of Minzhong. Today, Franklin Resources, Inc. and Templeton Worldwide, Inc. both increase their stake to above 8%. TA looks abit flat, therefore, it might take some more time to starts its rally. But overall its consider bullish on this counter.

S&C call for buy at S$0.995. With initial TP at S$1.05 and 6 mths target at S$1.30.

People's Food Holdings Limited

About People's Food Holdings Limited
Founded in 1994, People's Food Holdings Limited has established a strong market presence and is now a nation-wide provider of meat and meat products in China, with an approximate 2% market share. Over the years, our “Jinluo” (金锣) brand grew in popularity to become a household name and has won numerous awards and accolades in recognition of its top quality meat products and high hygiene standards. 

We produce, process, market and distribute top-quality processed meat products such as High Temperature Meat Products (HTMP), Low Temperature Meat Products (LTMP), Chilled Fresh Pork , Frozen Pork, Pig's By-Products as well as Frozen Chicken in China.

S&C Quick Analysis:
Cash balance: Net Cash of about S$0.40. That is about 70% cash to market share value of S$0.58.
Revenue increase about 23% YOY, however net profit fell 46% due to higher cost of sales. Judging from the initial analysis, Pfood core business remains strong and profitable, some of the cost due to inflation and higher administrative cost erode it profit. Some other negative areas are its losses from its associates companies.


Pfood, fundamental still looks well, technical, its share price is currently trading an multiple support range of S$0.55-0.60 range. RSI oversold plus MACD shows signs of cross over. 12 Mar shows Brandes Investment Partners add more stakes in Pfood. This shows that there is still institutional interest in Pfood. This counter is thinly traded and volume is low. 


S&C saw value at current share of at S$0.58 and had already taken position below the the current share price. Initial target price for S&C is S$0.64. Call for buy at S$0.58.

Wilmar - trading buy

Call for trading buy again. I have been buying in at range S$4.9-4.92 and selling at range of S$4.95-5.04 multiple times. I guess it will still take sometime before it really rebound. Current strategy will still be buying at lower band of trading channel and sell for small profit. Tomorrow will be a nice entry day again. Cheers.

China Paper - Rights Issue Review

About China Paper Holdings Limited (www.chinapaper.com.sg) 
Located in Shandong province in the PRC, China Paper is a vertically integrated paper manufacturing company equipped with in-house production facilities for the manufacture of wheat pulp, paper products and paper chemical products. The Group’s core business is in the manufacture and distribution of mixed-pulp based paper products made from a mixture of wood pulp and wheat pulp, with printing paper being its largest product segment.

Rights
The  Company is proposing a renounceable non-underwritten rights issue of up to 907,922,418 new ordinary shares in the capital of the Company ("Rights Shares") at an issue price of S$0.036 for each Rights Share "Issue Price"), on the basis of 1 Rights Share for every  1 existing  ordinary  share. The Issue Price of S$0.036 for each Rights Share represents a discount of approximately 42.86% to the closing price of S$0.063 for each Share traded on the SGX-ST on 30 March 2012.

CY Executive Chairman & QYG SS both committed to take up their rights issue representing near 40% of the total outstanding shares of CP. 

Rationale and use of proceeds
The estimated Rights Issue proceeds of approximately S$32.27 million (after deducting costs 
and expenses) will be used to fund the Project.

1) expansion initiatives to attaining an annual paper production capacity of 350,000 to 500,000 tonnes. 
2) for the construction, installation and operation of an inhouse power generation facility for the Company's paper production facilities.

S&C Quick Analysis:
Financial position before rights: net cash of about S$0.05 per share.
After rights: net cash about S$0.044 per share.

2011 net profit fell about 40% as compared to 2010 due to increasing cost and lowering of sale pricing to keep competitiveness. Group is cautiously optimistic about its next 12 months. I believe CP will still remain profitable for YR2012. However, shareholders will not like its call for rights issue. Even before rights, CP is sitting on so much cash. 

1) Why didnt the company consider utilizing internal resources to fund expansion and for building energy facility?
2) Being S-chip and penny stock, shareholders would likely dump the shares and bring it down to near S$0.036 per share. 
3) Given net cash of S$0.044 per share, this may not be the case as most part of S$32 million raise may be use for expansion. Assuming all proceeding to be used up, its net cash position will be around S$0.025 per share. Thats about 70% net cash to share price of S$0.036. 
4) Resignation of independent director whom is the chairman of audit committee will not bode well with the company too. It also happen at the time when CP running fund rising activity. There must be something we are not aware of.

This rights issues may be well a chance for CY to accumulate more of CP shares if shareholders are not buying its expansion story. Being still on net cash position, given that if the cash position is real, there is no reason why CY wouldnt use this chance to buy up all un-taken rights offering. Then take the company private. I used to own CP shares, but offloaded it long ago at S$0.12 - 0.16 range because of limited upside and alot of scandal relating to S-chip. Indeed, many S-chips are now trading at super low price and only a few are able to sustain the sell down. 

S&C will likely to buy only when CP is trading below S$0.036. I understand the risk of buying penny S-chip. But worth a bet when the price is right. Sure buy price will be below S$0.03.