Dongyue Group (189.HK) --- a potential multibagger

Dongyue Group (189.HK) is principally engaged in the manufacture, distribution and sale of refrigerants, polymers, organic silicone and dichloromethane, polyvinyl chloride (“PVC”) and liquid alkali and others.

I started accumulating Dongyue shares since mid-August 2022 for its solid sustained earnings growth and my average price for it is HK$8.796. It closed on 27 Jan 2023 at HK$9.73. Given the solid growth and its very low forward price-earnings ratio of about 4.5x, I believe it can be a multibagger within 2023.

The earnings per share in RMB since FY 2020:

2H2022           1.004 (estimated)
1H2022           0.76        

2H2021             0.69
1H2021             0.29           

2H2020             0.17
1H2020             0.2

Weekly chart showing price has moved above 20w MA after about 1-year consolidation. Bullish!

 

Two latest articles written in Chinese which may be of interest to you:

https://cn.investing.com/news/stock-market-news/article-2170427 业绩持续爆发，东岳集团有望成为最闪耀的星？

https://finance.sina.com.cn/wm/2023-01-27/doc-imycrfmq0588609.shtml?cref=cj  左手锂电右手光伏！氟化工小巨人，今年能爆赚吗？ 

My target price for Dongyue is at $25.9 which is when its P/E hits about 12x based on the current price of $9.73. 

Prescientsuper
http://superphang.blogspot.sg

Xinte Energy (HK.1799) --- a multibagger

I accumulated more Xinte Energy (1799.HK) shares during December of 2022 in anticipation of a solid FY2022 earnings announcement and at a time this stock was overly punished by Mr Market. The bear trap starting from 21 Dec 2022 to 5 Jan 2023 signalled that this stock would have a solid run before some good news like a profit alert.

Yes, Xinte Energy just issued a profit alert on 19 Jan 2023 that the earnings per share of the company is likely to be HK$10 for FY2022 ending 31 Dec 2022. With this news, the stock price shot up 8.85% to reach HK$17.22 on the last trading day of  the Year of the Tiger and just before the start of the Year of the Rabbit!

The dividend payout ratio was 30%. This will mean the company will give HK$3 as dividend for FY2022 when they announce their result in end February or early March, and this will translate to a dividend yield of 17.4% based on the current price.

Price-earnings ratio is still at an irreproachable 1.63 now. You just need 1.63 years to get back your capital? Yes, just too cheap lah!

新特你最牛
个中有缘由
国策加环保
产能往上溜
顾客下早单
业绩立上游
闷声发大财
兔年不保留

A very good ending to the Year of the Tiger. Here is wishing my followers a very prosperous Year of the Rabbit!

Prescientsuper
http://superphang.blogspot.sg

LVJI Tech (1745.HK)

LVJI Tech (1745.HK) is engaged in the business of providing online tour guide in China. As the stock market moves ahead of the economy by around 6 months, the share price of LVJI Tech should surge explosively soon with China’s opening up and the recent insider’s sizable open market purchase of the company shares. 

1. Perfect Timing from my Technical Analysis

From my technical analysis, the stock should hit its first resistance at around $1.10, which means an upside of 35.8% from the current price of $0.81. 

2. Supported by Chairman, Founder and Executive Director

The Chairman Zang Weizhong bought 2.246 m shares on 14 Dec 2022 at an average price of HKD0.8334 apiece, increasing his stake to 38.10%. The subsequent pullback and consolidation from his purchase price gave me the confidence that the stock is ready to go through the roof to hit my target price soon. 

3. Earnings Returing to Black in 1H2022

Earnings per share for 1H2022 was 2.12 HK cents amid zero-Covid policy, reversing the loss in FY2021.  

I have amassed quite an amount of the shares in anticipation of the coming BIG surge before CNY.

 

Prescientsuper
http://superphang.blogspot.sg

Adios 2022, a more prosperous 2023

My simple reflection on my investment performance on the last day of 2022: 2022 is generally a solid year for me as I could catch a multibagger in Excelpoint which I put in substantial amount of money. I have also accumulated few potential multibaggers --- China’s businesses listed on HK Exchange --- at relatively cheap price due to the market crash and I believe they will blossom in 2023.

I put in some cash in T-bills earning an average cut-off yields of close to 4%. Also, I put in a sizable amount of my CPF ordinary account funds in 6-month T-bills issued on 13 Dec 2022. The cut-off yield was 4.4% per annum, beating the breakeven yield of 2.92% for my CPF OA return by 148 basis points. These funds from T-bills will be my war chest in the later part of 2023.

What with the T-bills at above 4+%, and with the Fed likely to raise the Fed Funds rate by at least another 50 basis points in 2023 and thereafter maintain the rate for a protracted period till at least end of 2023, it is getting more and more difficult to find investment targets with an ROI that beats T-bills cut-off yields.

Going forward, it is likely that 4+% fixed deposit rates will be the norm for many years to come and the usual risker investment strategies that once worked well over the past decade may not be the ones that can outperform in coming years.

With their central banks’ resolve to combat the stubborn inflation through high interest rates, the US, the UK, and Europe are almost certain to face a protracted recession at the later part of 2023. Even after these central banks have raised the interest rates to a lofty level, they will still have to maintain it at the level for a protracted period for fear of fighting back of the inflation.

I reckon that recession is the inevitable corollary of the protracted lofty interest rates set by these central banks. The recession is likely to coincide with deterioration of corporate earnings and lower price-earnings ratios --- Davis double-killing effect --- and the stock markets in these countries will bear the brunt.  The likelihood for a black swan event to take place will be higher in 2023. Smart investors will patiently keep their war chests safely locked and be ready to buy the dips when a black swan event arrives.

On the contrary, China’s opening up from their zero-Covid policy will boost its GDP and its stock market performance in the beginning of 2023 and hence the start of my accumulation of some potential multibaggers.

I look forward to a more prosperous 2023.

Prescientsuperphang
http://superphang.blogspot.sg

Risk-free T-bills

From what I have estimated, it is highly likely that the Federal Reserve will hike the interest rate till about at least 5.25% and hold it till end of 2023. The interest rate hikes will inevitably plunge the US economy into a recession with high jobless rates and only then will the Fed be ready to cut rates.  

It is very challenging this time to stop the hikes in wages and the Fed has no choice but to bring in a protracted and deep recession to tame the inflation.

Where can we get some bargains at this time? Invest in T-bills if you still have some spare cash or some idling funds in your CPF ordinary account.

Imagine mortgage interest rates are currently around 4%, and you can get the cut-off yields at 4.4% from the result of the last auction of T-bills closed on 8 Dec 2022, your ROI can match, if not better than, that of the commercial banks. And MAS is the one issues the T-bills, so it is AAA rated and risk-free.

Some important points in using your CPF OA to invest in T-bills:

1. Do leave $20k behind so that you can still enjoy the 5% interest rate for this minimum amount in your CPF OA.

2. Do it in the first auction of the month as the breakeven yield is about 2.92%, about 41 basis points more than that of 3.33% if you are to apply for the T-bills in the second auction of the month.  

3. Go for competitive bid with a low-enough rate (make sure it is higher than the breakeven yield) so that you can be allotted all that you intend to invest in should there be an oversubscription for the T-bills.

4. Remember to get your CDP account number ready for filling in the form at the bank counter.

I invested the bulk of my CPF OA funds in the last auction of T-bills with the cut-off yield at 4.4%. I believe the money that will be returned to my CPF OA in mid-Jun 2023 will be ready to be reinvested at a much higher cut-off yield then.

Prescientsuperphang
http://superphang.blogspot.sg

Excelpoint and knack for catching multibaggers

Refer to my three previous posts on Excelpoint:

http://superphang.blogspot.com/2021/05/excelpoint-potential-multibagger.html of 22 May 2021

http://superphang.blogspot.com/2021/08/excelpoint-up-29609-in-day.html of 7 Aug 2021

http://superphang.blogspot.com/2022/04/acquisition-of-excelpoint-technology-by.html of 13 Apr 2022

 

I just received this evening, 15 Sep 2022, the final payment of my shareholding, at $1.93 apiece, in Excelpoint Technology Ltd by the offeror of the company and the sum was deposited into my bank following the closing date of the takeover bid by WT Semiconductor Holdings Pte Ltd and my ROI of 188% was solid within a span of 16 months. The absolute amount is equivalent to a few years of the living expenses of my family.

This success again reinforced the importance of correct strategies, knowledge, skills and patience deployed for every successful value investing venture.

I bought Excelpoint in a few tranches before I wrote the post made my estimation in InvestingNote on 12 May 2021. The reasons for buying the stock then were: a capable and hardworking management, company starting to have good growth, company has been paying good dividend, and they were operating in a booming China’s market. I gave a target price of $2.33 within a year then.  

The chart showing a few important milestones for my investment

 

 

My prescient chart reading allowed me to accumulate more shares on 25 Mar 2022

 

The company board confirmed my belief after the market close of 25 Mar 2022 

This was not the first time some of my friends and my InvestingNote’s followers suspected that I was privy to some insider information of the companies, and I jolly well know that it was my knowledge and skills that enabled me time and again to make the prescient judgements and decisions.

I could have sold all my shareholding after xd on 28 April but I held on to my shares as I calculated that if I could wait for slightly less than 5 months and my annualised extra return will be 6.38% and I need not pay brokerage commission. What a good yield not to be missed!

The current markets in the US, Europe, Japan, South Korea, Taiwan and China are all facing some problems and I strongly believe that therein lies a lot of golden opportunities for those who are armed with the correct strategies, knowledge, skills and patience to either catch some multi-baggers along the way or buy the dips when others are fearful.

  

Prescientsuperphang
http://superphang.blogspot.sg

Fasten Your Seatbelts

 A currency carry trade is a strategy that involves borrowing from a low interest rate currency and to fund purchasing a currency that provides a rate. A trader using this strategy attempts to capture the difference between the rates, which can be substantial depending on the amount of leverage used.

USD Index on 4 Feb 2022 was 95.48 and it has gone up by 8.11% in just about 3 months. The USD index measures the dollar value against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Singapore dollar has weakened against USD relatively lesser within the same period due to the MAS' stance in deliberately appreciating the Singapore currency to combat inflation.

US 10-year Treasury yield was 1.916% on 4 Feb 2022 and it is now 3.142%.

This is a double whammy to those speculators who did a USD carry trade 3 months ago. They stand to lose more from the strengthening of USD than from the surge in interest rates. And the loss will be more if there is leverage. Look at the gradient of both charts from 4 Feb till now, the speed of surge is just too fast for them and all stock markets in the world to swallow.

This also explains why USD is flowing back to the US due to the fear and this is only the start. Those countries who are slower in raising interest rates will have more exodus of funds to the US. 

Both stock markets and property markets will bear the brunt. I estimate that Nasdaq can go down to 6094 in this impending market crash. 

NASDAQ: 6094 is waiting

I estimate Singapore Property Index will be down by 30% from now to 2024. This is almost certain that it will come if history is anything to go by. Singapore Government cannot help as the whole world will suffer when the US government and the Fed raise interest rates. The Fed has to do it so as to purchase back the old bonds at a great discount to the prices they sold to sovereignty funds and rich investors. In so doing, they can reduce their debts and the money they make through this interest-rates-hike exercise can be used to support the US economy again.

What about other countries like Singapore? Too bad, they can no longer print money to prop up their economy like what they did during the initial Covid-19 pandemic stage from mid-2020 to end 2021 now that the US stops printing USD or their countries will have even higher inflation and more exodus of funds. Jacking up interest rates at a speed comparable to that of Fed's action is the way forward to prevent exodus of funds.

Fasten your seatbelts, spend less and save more to buy the dip.

Prescientsuperphang
http://superphang.blogspot.sg