Friday, August 24, 2007

Top picks - Reasonable valuations and insider buying.

So we have two companies at reasonable valuations and with strong insider buying. These are my top picks for the next year. I already hold Bright World and will place an order for Super Cofeemix when I can arrange some cash next week, if it does not rise above 0.8 SGD.

Insider buying in Singapore may not be what it seems. In her book "Show me the Money" Volume 1, Teh Hooi Ling reports ( page 117 ) that - based on a NUS honors thesis by Jaikishin " Insiders tend to conceal information laden buy trades through the use of family members or friends... Insiders also .. buy their own shares in order to support the share price. Or some of the trades were carried out to confuse the market or mask their real intentions."

I am not sure if disclosure norms have changed since that study was carried out(1990) so the results may no longer be valid. She does suggest though that significant buying by multiple insiders may be a good long term indicator.

Anyway do your own research, your investments are your responsibility alone.

Friday, August 17, 2007

Super Coffeemix Manufacturing

Super Coffeemix Manufacturing . Price .71 SGD, NAV 0.42, PE 14, P/S1.9, ROE 13.7, P/CF 11, LD/E 0.01, Yield 3%. Makes instant beverages (tea/ coffee ready mix) and convenience foods . Has been on my to research list for a long time, somehow I assumed the company had gone private and I forgot about them. Looks like it is still trading. See messageboard. Nice Annual Report , see quarterly report, and here. Sinagpore Exchange sponsored research reports are here .

From the reports we have

- 39,300,000 new ordinary shares were issued to CIM II Pte Ltd at S$0.60 per share, and
- 10,000,000 new ordinary shares were issued to Quek Chee Hoon at S$0.60 per share.
Post issue total shares are 542,542,980 and also we have 900,000 options issued to management.

My guess would be that if management think that S$0.60 is a good price to inject fresh cash then we can consider that to be a good price to buy.

Company has grown sales and gross income June end quarter by nearly 25%. Net profit skewed by other income from property sales. According to Shares investment No 301 Company has been profitable and paid dividends while growing sales and profits since records start from year end 2003. Possible negative is diversification into property development in Jiangsu China.

So it looks like a stable dividend paying and growing company in a defensive business, Reuters give long term D/E of 0.01. It does not pass my high ROE or low p/book screen but I can make an exception if the price is right as signaled by insider buying. Insiders seem happy to buy in the open market at S$ 0.83, price has fallen since then. Am thinking of placing an order.

I have tried their products. My office used to provide their instant tea packets in the cafeteria, the stuff is not great, but it is convenient, instant food will be with us for along time. Am off to make some instant coffee. Noted that its products are stacked in supermarkets and 7/11 stores right next to Nestle equivalents, so it seems to be holding up against the multinationals.

Thursday, August 16, 2007

Jardine Strategic - A Margin of Safety?

If you have read James Clavells books like TaiPan then you will love the Jardine group.

For the background see

I own Jardine strategic holdings, bought for its discount to Net Asset Value (NAV as reported in the balance sheet). It had turned up in a ROE/PTB screen I mentioned in an earlier post.

Some recent news.
Jardine Matheson the other jardine company said
"shareholders in Jardine Strategic are being invited to tender Jardine Strategic shares in the range of US$14.00 to US$14.50 per share representing a premium of up to 9.5 per cent. over the average closing price of the shares"



"Net asset value per share up 27% to US$24.69"


So put simply the offer is at USD 14.5 - a big discount to the USD 24
NAV of Jardine strategic. An unacceptable offer, I am not handing in my shares. But maybe this is simply an ploy by the owners to prop up the price of Jardine strategic to prevent a raider from getting a big stake. The price has certainly risen to the offer price though I doubt anyone investing from the business perspective will sell at the offer price as it is below NAV.

So what you have is company growing in Asia available at a discount to NAV and it will not fall much more because of the buyback offer at 14-14.5USD - a margin of saftey. Right now it is trading around 13.5USD - 1$ less than the top of the offer range.

Sunday, August 12, 2007

Stock Screen Analysis

I will be analysing stocks from my previously posted screens here.

Incidentally I also I increased my ownership of Soundwill holdings and added China Print Power to my personal portfolio. I also recommended TCS (No ADR) and Wipro (WIT ) on the Indian Stock exchanges to my friends and family. I do not like the WIT ADR because it trades at a premium to the Wipro stock on the Indian NSE.

Tuesday, August 07, 2007

High ROE and low P/B screens

The results of my high ROE screen are here.
The results of my Low P/B screen are here.
The results of my 20% annualized return backtested screen are here.
I would have posted these in this article but the table formatting got messed up.