China Saite (HK:153) Breaking Out of Consolidation

China Saite (HK:153) closed at 59 cents today, 10 Aug 2017, breaking out of its "comfort zone" after 1.5 months of consolidation. I have invested some money in this company and I predict it will soon hit 67 cents which should be its next resistance.

(1)    About China Saite Group Company Ltd  (153:HK)

China Saite Group Company Limited ("China Saite") is an integrated steel and prefabricated construction solution provider headquartered in Yixing, Jiangsu Province, the PRC with an operation history of approximately 15 years. Their integrated construction solution services are customised to meet the technical specifications and requirements of different projects, and span from fabrication and assembly of steel structure parts and prefabricated construction materials at our workshops to the installation of these materials onsite, based on the secondary design (as to our steel structure projects) provided by them or their customers. 
China Saite is one of the 70 Grade One Steel Structure Engineering Professional Contractors in the Jiangsu Province. Grade One Steel Structure Engineering Professional Contractors is the highest national qualification in this aspect, awarded by Ministry of Housing in November 2005, which enables the Group to undertake all kinds of steel structure projects without limitation in span, contract sum, construction area or total weight of construction in the PRC. 

(2)    Solid Financials

Rolling p/e is very low at 3.944x even though the profit declined 19.4% in FY2016.

The One-Belt-One-Road initiative by the China government should benefit the company for the next few years.

(3)    Technical Analysis

The prices have consolidated well in the tight range between 56 to 58 cents in the past 1.5 months and it just broke out of that range to 59 cents and this was achieved remarkably amidst the weak sentiment of the HK broad market.   

China Saite (HK:153) daily chart

Superphang
http://superphang.blogspot.sg

AEM Stellar 2Q2017 Performance Should Continue

(1)     Estimation of the fair market value of AEM:

AEM just announced a solid 2Q2017 result and its earnings per share for 2Q2017 is 12.5 cents, 196.5 percent better than that for 1Q2017. The net profit for 1H2017 is 682.1 percent better than that for the same period in 2016. To reward its shareholders, the management is also declaring an interim dividend of 2.5 cents, payable on 20 Oct 2017.

The management has also estimated the EPS for FY2017. And if we put EPS of 1Q, 2Q and the estimated values for 3Q and 4Q together, we have

EPS 1Q2017 = 6.36 cts

EPS 2Q2017 = 12.5 cts

Estimated EPS 3Q2017 = 6.07137348 cts

Estimated EPS 4Q2017 = 6.07137348 cts

                       

Forward EPS 2017 = 31.00274696 cts

                       

Given the closing price of 286 cts on 7 Aug 17,

p/e = 9.2249890x

If p/e = 10x then p = 310.0274696 cts

p/e = 11x then p = 341.0302166 cts

p/e = 12x then p = 372.0329635 cts

So, when I said “No $3.50, no sell” before the release of the 2Q2017 result, I think I was spot-on if Mr Market is to take the p/e of the company as between 11x to 12x. However, from past experience we know that the management has been very cautious in giving forecast and I strongly believe that EPS for 2H2017 should be better than the figure forecasted by them.

(2)     Confidence displayed by both Chairman and CEO

Mr. Charles Cher, AEM’s Group CEO, commented, “With our improving financial performance, we are declaring an interim dividend of S$0.025 per share to reward our shareholders. With our half-year performance and the sales orders recorded, we expect to achieve revenue and operating profit before tax of at least S$200 million and S$24.0 million respectively for FY2017.”

Mr. Loke Wai San, the Group’s Chairman, added, “The global semiconductor outlook for 2017 and 2018 looks positive. We continue to invest in improving our technical capabilities, delivery and field service support to better serve our main customer’s longer term roadmap and global footprint requirements. At the same time, we continue to be on the lookout for possible acquisition targets that are synergistic to our business.”

I think Mr Market has been slow to recognize the intrinsic value of AEM but I have the patience to wait for him to do so.  

Superphang
http://superphang.blogspot.sg 

Time to Invest $ into HK ETFs

I bought H-Share Index ETF (HK:2828) at $94.5 on 9 Nov 2016, immediately after Donald Trump won the US Presidential Election, and my target price is when its p/e reaches about 11x which happens to be an auspicious number of $138! I will buy more of it if there is a significant pullback of its share price.

I noticed most Singapore investors do not buy stocks from the HK Stock Exchange (HKEx). But I seriously think that the time has come for us to park some money or increase our investment in some gems listed on HKEx. If you are not familiar with HK stocks or have no time to do your due diligence to sieve out the gems there, buying index ETFs can be a good option and it is good to know that you need not pay stamp fees when you purchase HK ETFs.

Why buy stocks or ETFs from HK market now? 

(1)    The inclusion of 222 large cap A-shares into MSCI Emerging Market index in next June and this will make both A-shares listed on Shanghai and Shenzhen bourses hot 6 to 9 months before that. 

(2)    As of today, A-shares listed on Shanghai and Shenzhen bourses are still on average 27 percent more expensive than H-shares listed on HK Stock Exchange. 

(3)    The recent depreciation of the US$ against RMB has made Shanghai and Shenzhen fund managers very busy in moving their funds to HK market to grab the relatively cheaper and cheaper blue chips like big banks, insurance companies and tech stocks, as HK$ has been pegged to the US$ and has been weakening in tandem with the US$. This is really no brainer to the China fund managers and the Shanghai-HK Stock Connect and Shenzhen-HK Stock Connect have provided the convenience for them in doing so.

(4)    The p/e of Hang Seng Index is at 13.1x, Singapore STI is at about 15.1x, and H-share ETF 2828 is only at about 9.1x. Value investors simply cannot ignore this undervalued ETF!

Below is my compilation of all major ETFs listed on HK Stock Exchanges:            

                                                                Price            Mkt Cap        Expense

Name of ETF                    Listed on      on 4 Aug     (b HK$)          ratio (%)

HS H ETF (2828)              12/10/2003    112.8             40.1              0.64

Tracker Fund (2800)         11/12/1999     28.25            96.3                0.1

CSOP A50 (2822)             11/8/2012      13.7               24.1              1.08

ISHARES A50 (2823)        11/18/2004    13.2               28.7              0.99

CAM CSI300 (3188)          10/26/2012    44.1              12.6               0.83

199 component stocks, out of a total of 300, of CAM CSI300 (3188) belong to the 222 selected large cap A-share which will be included into MSCI EM index. These 199 stocks jointly constitute about 80.1% of the total value of the CAM CSI300 (3188) portfolio.

I like 2828 the best for its acceptable yield (1.77%), low p/e, low expense ratio, big market cap and negative premium to A-shares. I also like 3188 for its closeness to the basket of 222 large cap A-shares which are soon to be included into MSCI EM index. 2800 is also on my radar for its large market cap and its lowest expense ratio.

I am aboard the fast-moving train and have been enjoying the ride. I believe it will accelerate before next June when the 222 large cap A-shares are included into MSCI EM index.

Superphang
http://superphang.blogspot.sg

Federal's 2Q2017 earnings are10.1 percent up

Federal just released its 2Q2017 quarterly result: As of 24 July 2017, the Group’s committed order book was S$42.0 million, including the procurement contract for the Zawtika Development Project Phase 1C.  Basic 2Q2017 EPS is 0.87 cents, an increase of 10.1% over the same quarter in 2016.

I think the recent sell-off of Federal shares was overdone and the good result should bring back the confidence of its shareholders to buy more or hold their shares while waiting for more good news to come with the many initiatives launched by its management.

           

I agree with what Executive Chairman and CEO, Mr Koh Kian Kiong, of Federal has shared on the company’s positive set of financial results and its business outlook: Even though the offshore marine and oil and gas sectors continue to face difficulties, our Group is heartened to maintain our profitability in face of such a tough operating environment. Our management will continue to employ a prudent approach in growing our order books by setting up strategic partnerships with strong partners to co-bid for more valuable projects in the region especially in Indonesia. We are very delighted to sign-up partners that have excellent track record in the business like CMIH, COOEC and PT Timas etc. Our Group is hopeful that these strategic partnerships will soon bear fruits for all parties involved and enhance shareholder value moving forward.

I know Federal will have a solid quarterly result in its 4th quarter if history is anything to go by and I believe Mr Koh will start its accumulation of Federal's shares again as the barring period for him to buy has been lifted with the release of the quarterly results. 

Superphang

http://superphang.blogspot.sg