Readers' Top Picks (Part2)

My 2 cents worth:
(1) Silverlake ($0.34) - It has clean balancesheet with little debt and alot of cash (RM80mln as of Sep 2010). High ROE (38%), Strong free cashflow and highly profitable (GPM 59%, NPM 41%). Expect a strong surge in earning for its FY ending Jun 2011 in the magnitude of RM$140mln or SGD 2.7 cents per share and a div yield of 4% based on 50% payout. To address the liquidity issue, Mr Goh Peng Ooi has yesterday further reduce his stake to 75% by placing out another 50mln shares at $0.32. Hence I expect more trading interest and potential re-rating by Analysts.
(2) Hu An ($0.35) - FY2010 Earning should come in within Analysts' expectation (around RMB 170mln NPAT). All eyes will be on management's execution on its new expansion plan. It is a clear beneficiary of China Urbanization Programme in the 12th 5-Years plan starting in Year 2011 where more and more cables will go underground which required higher specifications.
 
 

My not so original ideas, as they were taken from earlier postings in this forum:

1) Hotung (13 US cents): Expected upside 40% to 18 US cents.

Since the new lady chairman took over a few months back, the stock has been aggressively bought back by the company and by substantial shareholders. Hotung stock can run if the share buyback is sustained and sends a positive signal to the market. As it is, Hotung is undervalued as its NAV is US23 cents, so there is a fundamental story.

2) Action Asia (20 cents): Expected upside 75% to 35 cents.

CIMB has a 40+ cent target price for this stock that is now on track for PE of only 2.9 X this year’s earnings. Well below NAV of 22.4 cents, despite sssolid quarter on quarter results. Needs a catalyst – maybe they should go for dual listing in Korea, or do aggressive share buyback, or just do a general offer at 35 cents.

Here are my top 2 picks (26 Dec 2010):

1. Ying Li International Real Estate (Current price $0.385) with expected price appreciation by more than 100%. Top line grew by a good 17.3% YoY (3Q10: RMB36.8m, 3Q09: RMB31.4m) with total comprehensive income for the period (excluding foreign currency translation differences) recorded at RMB6.6m – a 23.0% YoY (3Q09: RMB3.5m) improvement. Its intrinsic value is 90cents and RNAV valuation by some brokerages is as high as 80cents. Ying Li is riding on Chongqing's fast growth and Chongqing is one of the highest growth city in the world. The Go West policy by China Central government will benefit Ying Li, which has many properties in the prime CBD area of Chongqing such as Jiefangbei, GuanYinQiao, Yuzhong area etc. Its IFC project is another success to its portfolio and cld be worth much more than current price. A pipeline of developments is also in progress for Ying Li. The above are from F.A point of view. On T.A point of view, Ying Li has a big descending wedge which is on verge of breaking out. Bullish divergences are also spotted. The OBV suggests possible good accumulation had been done by big hands. Accumulation could be completing and high explosive movements could be coming. Ying Li: One phrase to describe it. Bright prospect.


My next pick: 2. China Sky Chemical Fibre (Current price $0.23) with expected price appreciation by more than 100% too. I should had posted this when China sky was 21.5cents, but anyway, that's life.. China Sky is a big turn around quality S Chip. It used to be a market darling but had been unfairly punished by the market. During the financial crisis, only a minority of S chips were black sheeps, but the great majority were actually pure and clean white sheeps. China Sky produces high end quality nylon and the demand, as well as Avg Selling Prices (ASP), of such products are recovering well. The recovery is sustainable and lasting. China Sky which has made -198.869m after-tax loss in 2009, has made +59.415m profits 9M10. It is still improving and could be soon be there to challenge its past glory of annual +400m to +650m after-tax profits. With an NAV of 70cents, it is really priced at such a huge discount, and especially so if it is compared to its peers in Korean Listings. The above is on F.A basis. On T.A basis, China Sky has broken out of a big descending wedge which is in essence, very bullish in nature and has formed a major reversal already. There is a new uptrend in China Sky chart with healthy volume. There is also a golden cross in China Sky which is bullish.

My picks:
 
Advanced Holdings (26c currently, 35c target=about 35% upside by end Q1-2011)
1) Recent contract wins should provide some continuity in generating profits form existing ops
2) ATAC and Applied Engineering should be contributing fully to Advanced Holdings' next quarterly results
3) Cash rich and pays ~8% dividends
 
Falcon Energy (43c* currently, 55c target=about 30% upsideby end Q1-2011)
1) Heavily oversold after rights issue
2) O&G related stock, with long term charters direct to oil majors and earnings not as volatile as EPC players like Ezra
3) P/E of about 8.5 quite cheap relative to industry peers (eg Ezra is at P/E 12)
 
*Edited from 42c as Falcon rose 1c as I was composing my message

I like to pick Bright World as a top pick for 1Q2011.
Current share price 49.5 cents. Estimated share price 65 cents by end 1Q2011.
Reasons being;
1) 2010 should be a year of good results since 9M has already contributed 100m profit. Expect the full year earnings to be 130m. Based on 400m share cap, the earnings per share is around 6.5 cents. At target price of 65 cents, the PE is 10x historic.
2) I expect strong growth in 2011 which should provide the catalyst for analysts initiation. Profit may grow 40% to 180m. This will bring the 2011 PE to around 6.5x.
3) Strong dividends payout will continue to provide stability to the share price
4) Industrial orders in Asia are doing well and this is an indirect indicator to Bright World good prospects for 2011.
 

This thread is Part 2.

Part 1, which features stocks such as Ziwo, Hu An Cable, Fuxing and Techcomp, is here www.nextinsight.net/index.php/component/...ers-top-picks-part-1