ChinaMilk - Mooing away to a Bullish Time?

ChinaMilk has suffered a crisis within a crisis within a crisis for 1) being a China Share 2) Being embroiled in the Melamine scandal and 3) being in the financial crisis. As the saying goes, in crisis lies great opportunities, therefore, our SGDividends radar decided to zoom in on this counter. Is there a GEM of an opportunity? Let us see...

It's net profit is an astonishing 64%!! Not surprising actually when one thinks of it, just think of how cheap semen is and embryos.

Looking at the balance sheet, the current asset is much much larger than the current liabilities. And look at its Cash warchest! It is much more than the current liabilities. For sure, this is one company that does not require to take on any loan during this credit crunch.Just to confirm, we looked at another part of the report, just in case there was a printing error. (Just joking, see below)Voila! It has nothing to repay within this year.

We therefore proceeded to look at the Cash Flow Statement, and guess what again, it has a rich, sustained FREE cash flow. Sperm is indeed cheap. This company will only continue to increase its already gargantuan cash balance.

So let's see how cheap is this company. See below. Its Net Tangible Asset 246RMB which is approximately 49cents and what is the now? 35 cents. Cheap!

Risk Reduction

On 26 September 2008, samples of the Group’s raw milk were sent to an independent laboratory for testing, namely, Daqing Bureau of Products Quality Supervision and Inspection (大庆市产品质 量监督检验所), a government laboratory accredited by the Heilongjiang Bureau of Quality and Technical Supervision (黑龙江省技术监督局) which in turn is an affiliate of the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (国家质量监督检验检疫总局) and it was tested that there was no trace of melamine.

Possible Upside
A recent acquisition of a joint venture company with the Heilongjiang Animal Breeding Centre of an amount of SGD$28.6 million which it paid for entirely with cash. Objective of acquisition has got something to do with sourcing for superior breed Holsteins from Heilongjiang and neighbouring provinces instead of Australia to save cost. ( A good sign eh....)

Given that it has not been embroiled in the melamine scandal, and part of its business is also to sell raw milk, it should be possible to take market share from its melamine- scandaled competitors don't you think?? Your guess is as good as ours!

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

WingTai .... a sparrow or an eagle lying dormant?

Lately, Wingtai has increased it's stakes in USI holdings. So SGDividends decided to see whether this company's management was mad or not and whether it is overly expanding...and run the risk of not being able to pay their loans, just like Ferrochina. Take note that Wingtai is in the property development business and retail lifestyle business, which will be hit hard in recession...

See the balance sheet above, current liabilities is way less than current assets. Good.....and WOW..it has a CASH WARCHEST which by itself can even pay off 2 times its current liabilities!

See their Cash Flow above.Its cash flow from operations is also consistently making positve flows, even after deducting from their expenditure needed to sustain the business...its still positive....Good.

And look at its Net Asset Value ( what the company is worth per share)....$2.03. And how much is a share now? $0.73. ( But then again most companies are cheap now...aren't it?).And guess what..nearly everyday from 1 Sep 2008, they have been consistently buying back their shares.....why not..they are Cash Rich!Definitely in our watchlist!!We give it 5 chilli padis!

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team

It's Mr YangjiJiang. How Do You Do?

Let's look at Mr YangJiJiang shall we? Let's see if its at the risk of becoming like Sir Ferrochina. ( SGDividends will be using Sir Ferrochina as the benchmark.). So why are we doing this? Cos we are now looking at stocks to put on our radar screen and since we are analysing, why not share it to the world. Fact Facts Facts..thats what SGdividends hanker after...not fluff.

OK. Looking at the above. This company is seems pretty safe in terms of repaying its liabilities. Current Assets: RMB1612,183 VS Current Liabilities: RMB504,321. What's lovely is that it has Cash and its equivalent of RMB852,374. What this means is....it can repay debts which are due within a year easily as it has CURRENT ASSETS more than its CURRENT LIABILITIES. ( Im looking at the 2nd column of the charts above from the right , in case you are looking somewhere else.) In fact using their CASH is enough to pay their CURRENT LIABILITIES already.

Now lets Compare with Sir Ferrochina, shall we? ( This was released when analysts were still issuing buy calls..Lelong ah..they think what..durians ah)

Current Assets : 11,530 VS Current Liabilities 116,790 ( 2nd column from right) See how much they have to repay at the third chart!

Compare and contrast Mr YangJiJiang and Sir Ferrochina....Your Guess is as Good as mine !(The above are the latest financial statements available at this point of time publicly, btw.)

Investing Tip: At such times like this, look at debts of the company..seriously..share value fall never mind...but as long as they dont disappear ...games not over. Take care of the downside!

Important: The objective of the articles in this blog is to set you thinking about the company before you invest your hard-earned money. Do not invest solely based on this article. Unlike House or Instituitional Analysts who have to maintain relations with corporations due to investment banking relations, generating commissions,e.t.c, SGDividends say things as it is, factually. Unlike Analyst who have to be "uptight" and "cheem", we make it simplified and cheapskate. -The Vigilante Investor, SGDividends Team