I like Foreland for the following reasons :-
1. closing price on 16 nov 2012 is 3.3 cts. Its nta is 24 .95. It is trading at only 13.2% of its nta.
2. it has no debts and a cash holding of 11.4 cts per share against its share price of 3.3 cts. meaning .. it is trading at only 28.9% of it's cash holding. (Source : ShareInvestor)
3. Mr. Tsoi accepted script dividend valued at 8.6 cts per share at a time when the share was trading at around 7 cts. This compares to friday closing of 3.3 cts.
4. On 7 sept 2012 Mr. Tsoi sold 53 million shares to 3 investors at a price of 5.8 cts per share. Compare this to friday (16 nov 2012) closing price of 3.3 cts.
5. The company is still profitable. It has a profit of S$8.7 mil up to 30th sept 2012 though it register a loss of $185,000. on its 3rd quarter result. On 3.3 cts the company is capitalised at only $17.9 mil. Assuming that the company make a loss of another $200,000. on the 4th quarter it would still show a profit of S$8 mil. for the full year. This gives it a p/e of around 2. (pls note that the last quarter loss is only a wild guess. I am not able to know how much it will make or loose. I am using the 3rd quarter as a guide).
6. After the sale of shares Mr. Tsoi still 239 mil shares or 44.18 of the company's total shares. He is still heavily vested. Keep in mind too that his son is an employee of the company.
7.Year ending 2011 the company gave a dividend of 0.8019 cts per share. Based on 3.3 cts the dividend yield is a ridiculous 24.3%. The company does give dividend on and off and I am unable to tell whether they will give or not for this financial year.
8. Mr. Tsoi is quite involved in the civic, political n commercial activities in the Jinjiang and the Quanzhou City area. Personally I quite like his credential.
9. Finally the share price is at or near bottom. If you buy a share at its bottom, you can never loose money except when the company go bankrupt or some fraudulent activities.
10. The textile/fabric business in China is in very bad shape. There is a shake up going on. Those who survived the shake up will eventually be big winners. Based on its cash holding Foreland is likely to survive the shake.
Above are just my views and ways of looking at things. Its not intended to ask you to buy or sell. You are advise to do your own diligent before you make a decision.
Based on the above I like the counter and am heavily vested.
I wish all of you all the best.
Thank you Joseph for your sharing. There are indeed so many things to like about Foreland (at this current price level). Can I ask you to play Devil's Advocate? What are the things you don't like about Foreland? That way, we force ourselves to balance the positives with the negatives and obtain a clear view of the situation.
Hi Amanda, its difficult to see any negative side at the current price of 3.3cts per share except that the company is an s-chips n the general fear of s-chips in the investment community. The other flip side could be that it is in a very congested/competitive industry ie textile/fabric industry and in every downturn there is tremendous pressure on price n revenue leading to low margin and gross profit.(Price in relation to its nta, cash holding and historical high/low) My view is .. not all s-chips are bad. That the reason why I put alot of weightage on the credentials of the major shareholders. In previous fraud instances many of the companies major shareholders/CEO were not that involved in civic/commerce or political activities. There was therefore not that much to loose when they 'çheat'on the company. The shake up in the industry will take quite sometime and anyone investing in this company need to have the patience to wait and the faith that it will survive and come out stronger. Waiting can be a nervous n stressful affair. At current price I don't see much downside but much patience n faith are required.
Playing the devil advocate here, if cash per shares is 11 cents, why did chairman sell his not insignificant stake at 8 cents? Why not pay dividends? Many in the sector has been hit by fraud cases. As I mentioned earlier, when so many are hit from the same sector, there must be some "common practices" we don't take kindly to. However, I believed at such low price, the market has already priced in the long winter and the high risk premium for fraud. If there is no monkey business, rewards is immerse. Also as compared to other schips, the red flags of foreland is not as serious as other more doggy s chips, so indeed this might be a gem. Definitely not all s chips are fraud. Those who have proven themselves like yangzijiang and sound global command lofty valuations as compared to s- chips av. Just my 2 cents worth.
I look at amazement some of the postings in this thread.... If there is a fox in a chicken coop for years......just because there are presumably lots of chickens in the coop, one assumes there should be some chickens left even though the fox has been inside for years....maybe the fox might feel guilty about killing so many chickens.....haa haa haa....just because there are hypen '11 cents' in the balance sheet one assumes that even if worst case there should be at least half of it.....can one assume this way? If I want to scam, i will take all and leave nothing.....as simple as that.....maybe a little bit for operating cost to keep it running as long as i can.....and you think i would keep half of the cash for you? ^^ boss accepted scrip at 8.6 cents but sell shares at 5.8 cents. What does it implies? well one guess could be the company might have cashflow prob to payout all in cash so in order to keep the show going, director has to accept part of its due in scrip dividend. lastly share price at bottom meant it is at 0.1 cents....at 3 cents? still a long way to go......
NextInsight
a hub for serious investors
