To Observer2,
your question was "Which penny stock did not have a big fall in share price since March 2011?"
My critical start time was March 2011, and I would take the end time as now, March 2012. I see no point to consider the absolute high and absolute low of a stock price within this one year period because I do not aim to buy at the lowest or sell at the highest. I have however no comments if you prefer to define a sell down as the difference between the absolute high and the absolute low, without further regards any price increases before or after that. I am not well versed at all in the area of price fluctuations and definitions of such.
As far as I'm concerned, I'm a much longer term investor, and any investor who put money into Eratat in March 2011 would definitely not been much better off in March 2012 than any investor who put money into any of the penny stocks I have listed earlier.
And as I have mentioned, HongXing was a mistake purchase even though I made lots from it. A great trading buy does not mean it is a great FA buy. It is great that your friends made great money buying at near the absolute low and selling near the absolute high. I do not have the skill to do that.
Finally, if it was indeed what you had mentioned earlier
“understand well the business that one invested in”
"Ultimately, it is for each individual to decide whether he/she wants to invest in Eratat (or any other company) after knowing the full facts of the company."
"Oceanus had insured against the risk factors 1, 2, & 3 for up to 50% of the market value of its abalones."
it would be contradicting to label them as “High Risk, High Reward” in my opinion, unless the risks you are talking about refers to the state of being an S-chip. If the major risks was the integrity of the financial report and the management, then it would strike as extreme contradictory that one understands the risks from merely attending briefing sessions and understanding the business from its reports. Yet if the integrity was unquestionable, why should it even be labelled as "High Risk" in the first place?
And if expansion programmes, ability to deliver (your pts 4 and 5) are considered as major risk factors, it would be insane to label companies like Silverlake and Kingsmen and not high risk since it would appy to them as well.
And lastly, as I have mentioned, if one is aiming to talk about profitting from the price fluctuations, and not the business operations and management, I would not be interested, nor would I be able to comment on it.
The data I have presented earlier on Eratat is based on public information released by the company, the conclusions from the figures are mine. Of course, YMMV.
To Momoeagle
The point I was trying to make was that Eratat’s share price would also have fallen like any other penny stock because of the bearish market in 2011. The negative perception of the stock had obviously caused its share price to drop more severely. Sorry, I did not spell it out so as to avoid unnecessary arguments.
As all of us have different objectives and perceptions, I have no interest to engage in arguing over definitions or any other matters. What matter most for every investor at the end of the day, regardless of your investment strategies, is – your own final bottom line.
The current negative perception arises from the way Eratat conducts its business and runs its cashflow.
Certainly, if a distributor is a good seller and advertiser for Eratat (and distributing solely Eratat products), I fail to see how such good advertising would not trickle down to help other "ailing" distributors within the same country to perform better, especially when you have 12 good distributors (the remaining ones).
Additionally, nothing was mentioned in the previous report of a sales incentive, which struck me as a rather hasty decision (of 3 months or less) for the sum of 51mil RMB. I'm a partner in an SME, and if my other partner does similar things without even informing me, I will be very pissed. I wouldn't know how shareholders of Eratat would feel, but I don't see how transparent or shareholder friendly they are by informing only after the sales incentive ($$) was given.
Going forward, what do I expect for Eratat? Yes, the receivables will drop.
But how? Renovation subsidies. Cool way to write off receivables.
On Eratat's reply to SGX, the subsidy "is not expected to be more than 5% of the projected revenue in FY2012."
Let's assume a conservative 3% and a consistent 1 bil RMB in revenue for FY2012, and that would mean another 30mil RMB to be given out. Compare this with the FCF of 15mil RMB in FY2011 (FY2010 was negative).
Allowing new $$ to go into receivables is a taxable event. It is still considered as profit by Eratat, so it is taxed. But the money is still not in Eratat's hands! The amount is substantial enough already that if it were all collected back, Eratat could delist itself at 18 cts.
Thank you momoeagle for yr interesting thoughts on Eratat. May I know if you are currently invested in any other stock aside from Silverlake Axis (which you mentioned in a post below)? I got curious cos Silverlake is a very different type of stock from Eratat .
Offhand, I remember having the following...
I realised that if I want a "high risk high gain" investment, I'm better off putting that money into a real business, and hence you would see my portfolio gearing towards the defensives.
Mistakes bought during early investing days:
CitySpring
Aztech
Berlian Laju
Cosco
Hor Kew
Ok counters:
Saizen
Starhill
KGT
Silverlake
CMA (both stock and retail bond)
GLP
Capitaland
My better counters:
SPH
Starhub
Singtel
CCT
ST Engg
AIMSAMPIREIT
First REIT
SGX
