Friday, April 15, 2011

Mid April 2011 updates + Bright World (SGX)

Past 2 weeks I have been learning on how to better an entry for a purchase with the help of friends. Observing the volume as well as buying/selling pressure is an important side of investing, especially with the reliance on certain indicators, I find that this may well be a self fulfilling prophecy. The effectiveness I am still trying to gauge.

Indicators have a part to play in intelligent investing and many successful investors have employed various means to navigate the markets which in my opinion are indicators. Examples such as put-call ratio, money flow, index valuation versus a benchmark or macro indicators etc. There is also a part to play for micro indicators as well, such as price in relation to volume, relative strength to index etc. Having said that, it is hard to invest looking at the rear view mirror and even harder to try to time the markets. I still remain overwhelmingly a fundamental, bottom up individual who is exploring options to improve returns.

Next, there has also been updates on Bright world. 
The firm started 2011 with RMB 280 million in order book. Added 48 million from China CNR ( China northern railways) in Jan 2011. Just yesterday they announced a 10.9mm order from Jiangyin Zhongnan (listed on SSE) and a 13.4mm order from Changchun First Auto. Total order book will be RMB 352.3mm.

I wonder what is the rationale for the announcement when its only 3-4% of total order book. Perhaps they should update on the orderbook conversion progress instead. Somehow, I get the impression management is trying to promote the firm, in view of something positive happening.

Bright world is indeed an S chip, however imho, unlikely to be another case of fraud. Reasons being:
  1. Insiders own over 77% of the company, only 23% is floated on SGX
  2. Firm gives out regular dividends and have been rather substantial (Especially 2009)
  3. Margins and market share is in line with the financials and industry
  4. My only concern is build up of receivables/ inventories (but the firm manages to convert to cash) 
Thats all folks for now. 

Disclaimer: Author owns a small amount of the mentioned security for experimental purposes.



Great news again.

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