Photo: iai.review
Translated by Andrew Vanburen from a Chinese-language piece in Sinafinance
AS THE SCRIPTURES say, God causes His sun to shine upon the rich and poor alike.
Perhaps the same could be said of rain.
That's because Liu Yang -- known in Chinese investment circles as both a “Stock Goddess” and "China's Lady Buffett" -- has been deluged with a downpour of dour dealings these days.
Indeed, Ms. Liu, Chairperson of Atlantis Investment Management, is enduring major struggles in the local stock markets much like the rest of us.
This just goes to show that even China’s most celebrated female investor can’t escape the ongoing doldrums.
Ms. Liu won herself the above-mentioned nickname as the PRC’s version of Berkshire Hathaway’s Buffett after she herself amassed a fortune in share earnings over the past few years.
But it's been rough going of late.
Cement and clinker play Dongwu Cement International Ltd (HK: 695) warned this week that it expects to report a loss for the first six months.
Dongwu said that due to the tapering off of fixed asset investment in the PRC, it anticipated market demand for cement on the Mainland would decrease this year, resulting in a selling price reduction for the group's cement products.
The Suzhou-based firm added that it expected its gross profit margin and net profit for 2012 to be “significantly and adversely affected.”
Photo: Soho
Dongwu Cement had braved the choppy waters and launched an IPO in June, originally planning to raise upwards of 160 million hkd in the process.
However, it had to settle for much less – around 65 million hkd – on weak market reception.
This would all normally be backpage business news in a bear market.
But the fact that Atlantis Investment’s Ms. Liu had been very gung ho on the counter in its pre-listing days, touting the upside demand drivers in a construction-happy Chinese marketplace, makes it all the more newsworthy.
Add to this the fact that “China’s Lady Buffett” had Dongwu Cement as her top stock among her “New Favorites” list makes the fact that the newly-listed enterprise issued a profit warning just 49 days after going public all the more shocking.
Dongwu warned shareholders it expects to show a net loss for the January-June period, partly due to the costs associated with its Guotai Junan Securities-sponsored listing in June.
Dongwu is not alone in its travails, and is in fact among several firms to list this year in Hong Kong that have also since warned of profit shortfalls for their interim results.
Other market newcomers already having issued negative earnings alerts are China United Cement Corp (HK: 1312), construction play Vision Fame International (HK: 1315) and Xiwang Special Steel (HK: 1266).
But Dongwu Cement stands out as being not only the earliest to go from listco to laggard, but also the most surprising underperformer given the expectations of major government infrastructure spending earlier this year intended to jumpstart the Mainland China economy.
Therefore, the fact that China’s most famous and celebrated female investor could be so wrong about a particular “Buy” and equally mistaken about the importance of government-driven construction activity on cement demand speaks volumes as to just how hard a nut this current market downturn has been to crack.
But then again, “China’s Lady Buffett” making a misstep now and then should come as no surprise.
After all, Warren Buffett himself bought a 10% stake in Shenzhen-based vehicle maker BYD Co (HK: 1211, SZA: 002594) a few years back, thinking pure electric and hybrid vehicles would take off in China on both consumer demand and government support.
But BYD’s Hong Kong shares have skidded into treacherous terrain this past year, and the automaker has been one of the clearest symbols of the ongoing bear market in China and Hong Kong of late.
See also:
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