Thursday, October 20, 2011

Sozo- rising on prospect of 2nd listing on SGX

Sozo Global Limited ('Sozo') is a Mainland China-based food-stuff company listed on our exchange. Like many of the Mainland China-based companies, it suffered from poor perception. Based on its latest quarterly financial statements, it reported a net profit of RM31 million on sales of RM103 million. Annualized EPS is about 24.4 sen. As such, it is trading at a PE of only 2.54 times. It is expanding and is now seeking a second listing on SGX (here). Mainland China-based companies that listed on SGX can command a higher valuation than those listed on Bursa Malaysia.

Chartwise, the stock has broken above two strong horizontal resistance at RM0.57 & RM0.595. Its immediate resistance is the medium-term downtrend line (S1-S1) at RM0.62-0.63. Thereafter, it may test its intermediate downtrend line (SS) at RM0.69-0.70. The indicators are all turning upwards, supportive of further upside for the stock.

Based on good financial performance, interesting prospects & attractive valuation, Sozo can be a good stock for medium-term investment. However, one should avoid holding too large a position in any Mainland China-based company due to questions about its corporate governance. A good entry level may at RM0.57-0.60.


Chart: Sozo's daily chart as at Oct 20, 2011_9.30am (Source: Quickcharts)
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4 comments:

  1. cherngThursday, October 20, 2011 10:12:00 AM

    Hi Alex,

    *china-base companies in bursa are performing under par, they earn a lot of money, but not willing to pay more dividends, such as Xing Quan, XDL rtc.. Do u think Xing Quan worth a look at 0.94?

    *Read your analysis in the past about Uchitec.. now it steadily stand above 1.20..Can this stock become more defensive in this uncertain market, which most of its clients from Europe?

    *Maybulk is now totally ignored because of poor performance, its future also in doubt.. In your view, Maybulk at 1.75, can buy for long term?

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  2. AnonymousThursday, October 20, 2011 11:14:00 AM

    Hi Alex, what is your take on Olympia?

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  3. Alex LuThursday, October 20, 2011 4:00:00 PM

    hi Anonymous

    Olympia has broken above its intermediate downtrend line at RM0.25. Its immediate resistance is at RM0.30 while the support is at RM0.27-0.28.

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  4. Alex LuThursday, October 20, 2011 4:17:00 PM

    Hi This is the day,

    I will give you my technical take as follows:
    1) Maybulk is still in a downtrend line with resistance at RM1.85; and
    2) Uchitec is range-bound between RM1.10 & RM1.35.

    Maybulk & Uchitec are good companies, trading at undemanding value.

    As for the Chinese stocks, they are attractive on paper. However, the big question is whether they are worth anything near the paper that the accounts are printed on. If I were the boss of Sozo, I would ask myself this question: why should I invite strangers to partake in my company at a PE of 2.5 times? I can't find the answer.

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