One of the PRC-based companies listed on our exchange has done quite well in the past few weeks. That stock is Xingquan International Sports Holdings Ltd ('Xinquan'), which is involved in the manufacture of shoe soles; outdoor & indoor sports & leisure shoes; outdoor & indoor sports & leisure apparels & accessories. I had posted on Xinquan earlier. Go here.
Chart 1: Xinquan's daily chart as at July 14, 2010 (Source: Quickchart)
Another PRC-based company which seems to be attracting some attention lately is XIDELANG Holdings Ltd ('XDL'). XDL is involved in the design, manufacture, and marketing of sports shoes, sports apparel, accessories, and equipment. It reported an EPS of 4.5 sen for QE31/3/2010. Based on this, XDL's annualized EPS is about 18 sen. XDL, which closed at RM0.43, is now trading at a PER of only 2.4 times.
Table: XDL's last 3 quarters' financial results
Yesterday XDL broke above its strong horizontal resistance at RM0.40-41. This bullish breakout could be the start of an upleg for the stock. Its immediate resistance is at RM0.49-50, while its immediate support is at RM0.40-41.
Chart 2: XDL's daily chart as at July 14, 2010 (Source: Quickchart)
Conclusion
Based on good financial performance, attractive valuation & positive technical outlook, XDL could be a good stock for medium-term investment.
(Warning: Despite the above positive comments, we must be cautious taking long position in PRC stocks due to the high incidence of accounting irregularities.)
Note: There is one more PRC company that did very well in the past 4 weeks and that company is K-Star Sports Limited ('KStar'), which is also involved in the design, manufacture, and distribution of sports footwear under the Dixing and K-Star brand names in the People’s Republic of China (PRC). KStar rose from an intra-day low of RM1.81 on June 16 to an intra-day high of RM2.62 yesterday.
10 comments:
Gd morng Alex,been following ur blog for sum time.can u pls advise me whether it advisable to subscribe d sinotop-or(bot at rm0.10-rm0.05}?at d moment there is abritrage chances.what do u think of d company FUNDAMENTAL in Long Term?heard too much about China Stock!
Gd morng Alex,been following ur blog for sum time.can u pls advise me whether it advisable to subscribe d sinotop-or(bot at rm0.10-rm0.05}?at d moment there is abritrage chances.what do u think of d company FUNDAMENTAL in Long Term?heard too much about China Stock!
Hi Alex,
Any comment on BJToto and MPHB?
Thanks!
Hi abc,
Sinotop was previously JMI (or, John Master). It did a huge Rights Issue of 10-for-1 at RM0.20 where the ex-date was on June 23. Based on the closing price of RM1.63 on the last cum date, the theoretical ex-rights price can be computed as follows:
[(1 x 1.63) + (10 x 0.20)]/11
This will give you a value of RM0.33. The share was pushed up to RM0.495 in June 24 and reached a high of RM0.65 on June 29. Since then it has dropped back to below RM0.30.
Your question is whether a person holding Sinotop-OR should subscribe for Sinotop now. It's not an easy question to answer. In addition to the push after the ex-date, the stock was also pushed up before the ex-date. For example, it closed at RM0.965 on May 31. From a relatively quiet stock [prior to mid-June], Sinotop became an active stock. There is a lot of "air pocket" in this stock that would continue to deflate over time. The drop in its value would pick up speed upon the listing of the huge Rights Issue share.
You have to choose between an immediate loss of not subscribing for Sinotop-OR or to subscribe for it but to run the risk of subsequent losses. It is a decision that only you can make.
I have enclosed a link for the chart of Sinotop:
http://www.tradesignum.com/chart/sinotop
Hi Lim
I think BJToto and MPHB are trading at an attractive level. BJToto has good support at RM4.00-4.10 while MPHB's support is at RM1.90.
hi alex. how the market outlook now? the worst is over and time to enter market liao?
hi alex. need ur help to analysis MitraJaya. thx alots.
Hi Alex,
Thanks for your comment. Do you think these 2 shares will only move up when the proposed 1st prize payout reduce by the goverment?
Hi wong
After much prompting, I have to post my take on the market outlook. With regards to MitraJaya, it has been testing the recent high of RM1.31. A breakout above that level may see the stock challenging the next resistance level at RM1.40 & then at RM1.60.
Hi Lim,
The increased gaming duties (from 6% to 8%) and the subsequent proposal to reduce prize payout would impact its top-line & bottom-line somewhat. Then again, both stocks were heavily sold down after the news. So, I think the downside is quite limited now.
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