Category: Stocks

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China Stocks

Home Inns and Longtop

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Home Inns (HMIN) is raising fund through convertible bond (up to) $149 m (reuters news). It seems they still need the cash to expand.

Longtop got more analyst converge: Deutsche bank and Jefferies initiated with Buy with target price of $30 and $29, respectively. Quoted here:

Deutsche Bank initiates coverage on Longtop Financial Technologies (NYSE: LFT) with a Buy rating, setting a $30 price target, citing a great position within its quickly growing industry, unique barriers to entry and impressive operating results…

Jefferies initiated Longtop Financial (NYSE:LFT) with a Buy rating and $29 target, as they expect strong earnings growth over the next several years from an acceleration in P&L performance and the company’s attractive secular demand backdrop.

home inns map pic
(image from thestockmasters.com)

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China Stocks

Not so harmonious stock market?

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According to Chinatimes.cc (Shui Pi),

上证指数自10月16日创出历史新高6124点之后已经连续下跌30天，下跌1346点，跌幅达到20%，市值的损失高达5万亿左右，相当于这一轮牛市启动之前中国股市的整个市值，不夸张地说，是蒸发了一个传统股市。按照跌幅超过25%可以视作牛熊转换的理论来看，这样的调整即便不能算崩盘，至少也是大起大落的一种表现，更何况根据媒体的统计，从2006年11月至今，投资者亏损面已经达到70%以上，挣钱的不足25%。

……

一个和谐社会是离不开一个和谐的股市的，要把胡锦涛总书记“创造条件让更多的群众拥有财产性收入”的讲话精神落到实处同样需要一个充满着阳光和希望的股市。投资者要有风险意识，管理层又何尝不是如此呢？

Seriously, harmonious or not, I do not think there is a stock market in which more than 50% of the participants making money. To be more realistic, I think 30% make money, 70% lose money is common in stock markets, especially in short term (say one year time frame as shown above).

On the other hand, I do believe investing in 401k (say, buy and hold index funds for 25 years) will mostly likely bear fruits for investors. As one can see this is totally different from the “make fast money” mindset for majority of the stock traders in China, including many mutal fund managers 🙂

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Master Series Stocks

Investing with Bolton

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bolton

Screen shot Capital Week published on Dec. 1, 2007

Anthony Bolton is the legendary fund manager for Fidelity (the mutual fund company Peter Lynch made his name). He visited China lately and answered investing questions from reporter of Capital Weekly.

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China Stocks

My take on Longtop

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longtop logo

First a little background. Longtop did its high profile IPO on Oct. 24, a short month ago at NYSE (think how much market sentiment has changed since then). As the first Chinese software company listed in NYSE, Longtop is in the sweet spot in terms of the customers they serve: the Chinese banks. Chinese banks, both the big 4 and the (smaller) city commercial banks, have lots of money to spend lately, after raising tons of cash through IPO in recent years.

On the serious side, the banks do need to improve the workflow and upgrade their IT system, so that their customers don’t have to wait one hour for over the counter service, or wait half an hour for ATM machine. The banks are also targeting the newly minted middle class for personal banking, credit card and other services. After all, it IS a competitive environment. China opened up RMB services to foreign banks early this year. If people can not get the services at domestic banks, they may go to foreign banks.

Here are two common questions for Longtop.

1) The usage of the IPO proceeds.
According to its F1 prospectus, the company plan to use the net proceeds of this offering as follows:

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Stocks

Longtop: update

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longtop logo

(Updated) I used the revenue number from company report and calculated the growth rate, using google spreadsheet. Revenue, in thousand of $, the following columns may not align right, click the G speadsheet above if you like.

FY ending
3/31/2007 3/31/2008 growth rate 3/31/2009 growth rate
Q1 9238 11530 24.81% ?
Q2 11204 20200 80.29% ?
Q3 11581 15500 33.84% ?
Q4 7750 10770 38.97% ?
Total 39773 58000 45.83% 80000 37.93%

Couple things:
1) Seasonality: the past quarter (ending Sept. 30) is the strongest. The company did say summer and fall are typical strong quarters. Note the seasonality is quite different from typical US software company, where Q4 (quarter ending Dec 31) is ususally the strongest.

2) Healthy growth overall. The recent boom can be attributed to the boom of Chinese banking industry. The question is can the company can sustain this 40% growth rate?

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Stocks

Eye exam and add-on services

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zeavision pic

I went to do my annual eye exam today. I noticed they offer an add-on service named QuantifEye(R), which is a macular degeneration test cost $20 (not covered by insurance). Curious about the test, and because I worked a lot before computers (thought that would make my eyes aging faster than my parents), I did the computer test. The good thing is I got a good result (score 62) which is exceptional good. Interestingly, the test is developed by a St. Louis based company called ZeaVision.

I remember a short while ago, when I visited dentist, they offer a $60 (again not covered by insurance) oral cancer test. Both things made me to think that doctors (at small clinics) increasingly offer those small tests. One thing for sure this is a boom for the test developers (companies). And clinics, the distributors of test developers, can also make some money.

Think that relation smilar to the relation between ETS, Education Test Service, which develops SAT, ACT, TOEFL etc., and Prometric, the administrator of those tests…

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Stocks

UGG boots

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I heard these UGG shoes (boots more exactly) from my friend Sophie not long ago. Today when I visited the west county mall, I stopped by the Journeys and Nord Strom, and I saw those boots were both displayed on the predominant spots. Not surprisingly, I also saw quite a few people are wearing those funky (fashion) shoes. Being curious about the stock, I looked at company Deckers (DECK) which owns UGG, and attributes its growth mainly to UGG boots lately. Here is the Q3 2007 report. While the recent growth is very impressive, I think:

1) Its sole dependency on UGG for growth could make it more vulnerable to the change of consumer taste;

2) It got majority of revenue from the US market, a slowdown in US economy could spell trouble for them;

I will add more comments if I got time to read its 10Q and 10K.

ugg boots pic

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Stocks

Wang Shi: Vanke not endorsing house flipping

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vanke pic

“万科不鼓励炒房”, the original Chinese article is here at 21cbh.

<21世纪>:万科怎么看待炒房客?

王石:在高档住宅方面,万科占的比例很小,同时万科也不鼓励炒房。这不是说你要炒房我们就不卖给你房子,但是我们在合同当中是有一些限制,不鼓励炒房。我们有一条规定,买了万科的房子,在房产证交给你之前,你要办过户手续万科是不给办的。当然,办了房产证之后,你要炒那是你自己的事,跟万科没有关系。

<21世纪>:怎么看待外国人到内地炒房?国内房价高企多少应该归因于海外炒家?

王石:现在这种势头还是有的,尤其人民币升值吸引大量热钱往里进。海外购房者不可能成为中国购房的主力军,国内的房价也不可能是外资购房者哄抬起来的,就连香港这么国际化的地方,你能说香港的房价是外来投资者支撑的吗?中环的高档写字楼那些另当别论,光看住宅的话,更多的还是当地购房者购买,因为人口比例在那里摆着呢。

万科的开发是针对主流市场,当然我们开发的高档住房,外来投资者占的比例可能达到20%,但主流市场一定不是他们。举个例子,香港居民到深圳购房的比例都不超过8%。

My take: house flipping has been highly profitable in the past few years. Besides the famous Wenzhou housing flippers, I have heard brokage firm such as E-Housing (NYSE:EJ) has made money from this too. But Vanke is not interested in making this. They are focusing on their main business: build the homes that (potential) customers will love, crave or dream about.

Categories
China Stocks

IS Nov 8 the turning point?

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for Chinese stock market? It looks more and more like it, after two brutal weeks for many small investors/speculators in China. Here is an old article from ChinaTimes.cc (via JinRongJie). The title is 泡沫不死 挤压不止.

From my observation, it is very rare that a prime minister would comment the stock market directly. But again this is China. Borrow the marketing slogan from LiNing (sports wear) anything is possible, 一切都有可能.
===========
本报记者 吴君强 　　
　　11月8日，农历二十四节气“立冬”。仿佛是巧合，这天股市寒风凛冽，沪指重挫近5%，上千只股票下跌。沪指上周跌8%，创下9年来最大单周跌幅。中期调整终以暴跌的姿态确立。 　　

　　在接受《华夏理财》记者采访时，多位分析师认为，本轮中期调整中，大盘可能下探至5000点或4950点。一些更悲观的分析师则认为，在4700点—4800点区域，大盘才能得到有力支撑。 　　

　　他们说，一、二、三线股齐跌，再也没有什么“二八”、“八二”现象充门面，在趋势转向之后，现在有太多的理由，去看空A股市场了。 　　

　　该是“动手”的时候了 　　

　　一切都是有征兆的。 　　

　　11月3日，国务院总理温家宝在外访问之际，罕见地对目前的中国股市作出详细论述。 　　

　　“内地股市增长很快，防止股市泡沫，维持市场平稳健康发展，不要大起大落，将是十分艰巨的。”温家宝说，股市的波动牵扯国家的经济和股民的利益，政府随时关注。他还表态，政府将采取市场手段对股市进行调节，防止其大起大落。 　　

　　“温总理最近的讲话，表明中央对资产泡沫问题的重视程度明显提高。”南方基金一位基金经理说。 　　

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Fun Stocks

Peace of mind

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My wife joked with me that I ONLY got talktive and excited when talking about the stocks. I know that is largely true, and that was the case with yesterday evening’s gathering with my old friends. The good thing is unlike my wife, my friends are also interested in stocks.

For me, it is always interesting to learn some of the success stories and mistakes from others. But I still believe I learned most from my own mistakes: mistakes I made in the past, and continue to make now. Of course it would be better if we could learn from other mistakes, because the mistakes in stock investing or trading could be costly 🙁

If I could give my friends one piece of advice on stocks, that’s not going to be a stock pick, a good book, or where the market will go (will Shanghai composites test 4,500 before going up again?).

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