Fuxing makes good its plans to make 3 acquisitions. All 3 deals are done are at a good price with Fuxing paying 372 million for 3 companies valued at 402 million. EPS are to improve from 3.8 cents to 8.3 cents (based on FY 2009 and assumed acquisitions has been effected at 1 Jan 2009) Expected date of completion of deal is April 2011. Hence these acquisitions will enhance Fuxing profits next year. With the possible turnaround of the textiles industry in PRC, all these bode well for the future of Fuxing. Snergy and cost savings are to be realized from this acquisition exercise as Fuxing is the ex-customer for the services of all 3 companies.
Fuxing is meeting investors and presenting it's financial results in 1 march. Results should not disapoint since they are giving a presentation. Hence my initial worries about admin expenses eating into profits could be uncall for. Fuxing has fallen for it's height of 20.5 to 18 cents since it announce it's acquisition. There might be profits surprises. (income tax rebate for getting it's tech company status in PRC could already be capture in results, further boosting it's results, given that the zipper industry is kind of link to the textile industry, the fact that many textile companies announcening higher revenue should mean good demand for its zipper product) During the presentation, watch out for the revenue contribution of the super durable zipper, if it's improve significantly, it could mean that this higher margin product is gaining acceptance. All in all, I believe there should be some good news, I doubt any management in the right mind will call for a presentation just to share medicore results without any potential good news. For those with spare cash, can try getting Fuxing at 18 or 17.5 in the meantime. It should recover to 20 cents after it's announcement of results. A gain of 10% for holding the stock for 2-3 weeks. If it doesn't materlise, no matter, it will record profits from its acquisition soon, at 18 cents it is still a value stock.
From 13.5 cents during Japan crisis in mid-March to 17 cents tooday. Today everybody is in luv with Fuxing but why was it sold down when the zipper business in a Fujian province cannot be impacted by Japan tsunami and nuclear?
Was doing a re-read of the info of Fuxing when I realized that the acquisition of the 3 companies should have been completed by 15 June according to their sgx announcements. Yet, thus far, there have been no news. So I have decide to check with my sources and this is what I find out: 1) all approval and papers completed for 2 of the companies, only 1 last approval from 1 authority for the last company, so there is indeed some delays. 2) consolidation o these companies earnings into Fuxing earnings should be as of May, and they are doing the paper work for the auditors to pass. While nothing is confirm, I am cautiously confident that the earnings can be reflected in Q 2 reports. So expect some boast to the earnings. 3) the preferential tax rate of 15% instead of 25% only apply to their SDZ products, should it will be immaterial to the bottom-line. 4) at the current depressed price and market sentiments, I would not be surprise if they are taking their own sweet time in their dual listing plans. In fact, if the confirmation o the plans can takes place in august when and IF sentiments improve, then the stars are truly aligned for a strong rebound.- better earnings, sentiments, stronger investors' interest from it's dual listing exercise. Right now, hang in there and wait for the flurry of activities to unfold for this company. Aquisitions, organic expansion of capacity, rolling out of new products(SDZ is already jn commercial productions) turnarounds of their Qingdao and shanghai plants. (think Qingdao might turnaround earlier since shanghai is experiencing power rationing for is malls, I GUESS the factories would not be totally unaffected and the execution of dual listing plans and finally further merger and acquisitions. At around sub 7 PE , valuation might not seems attractive for a s-chip. but this is a 2nd biggest company in PRC and third in the world which is aggressively growing. If u look at PB ratio then it's only 0.46. Unless they bought profit making companies that become loss- making this year, we are looking at about 20 million of profits contribution from the acquisitions. And improve eps by 2.1 rmb cents at least.. My 2 usd worth. Think usd will start going up from next year onwards. Haha
Thanks greenrockie for sharing. M a Fuxing fan too. [url=http://www.nextinsight.net
/story-archive-mainmenu-60/912-2011/3948-fuxing-site-visit-robust-1q-vs-valuation-nadir]FUXING Visit: Strong 1Q, Weak Valuation, Eyeing Taiwan[/url]
Fuxing announced the completion of the aquisitions of the 3 companies finally.
2 companies will be wholly subsidaries with effect from 19 April, so they will contribute to the topline and bottom line this quarter, assuming there are profitable.
Hopefully there will be earning surprise come 11 august (logicially should be, why give a results briefing to announce medicore results for investors, btw i will go for the briefing.)
NRA has a tentative price target of 19 cents citing execution risk of these aquisitions, now that they are completed, and if the profits of these companies also rise (right choice of management to purchase), they may upgrade this stock. Their previous TP is 28 cents
DMG has a price target of 25.5 cents.
With Fuxing as less than 11 cents, if it goes 20 cents, investors also almost gain 100%.
This of course, only if you believe the world can avoid a double dip recession.
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