What's the story behind S-chips?

So cheap meh.

chinaTaisan, your ticket to 16.5c.
If you still cannot see the bull horn tip, and end up catching the tail , u will be the one to hold till 2016. or may be worst 2019.
winter is long and cold.
dow 14400 will be the last kiss goodbye.

all your s are good for the run. acc them .

chinataisan maybe the very first, but the reat will follow up with the next 2 months i hope so.
and all yours memetion are good , acc them, foreland ,qingmei, chinaNtown, sapphire, just concentrate on a few, dont. over do it, want to cut also easy.
and last, what is share here are all risky stock, so pls do your due diligent.
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[Serendipity 18-06-2012]:

So which would you consider to be the other "good, reliable penny" at SGX. Valuation-wise, these stocks are now dirt cheap, as in Depression-era cheap. I'm not very optimistic on ChinaFibre because of its management, but Qingmei, Foreland and Eratat all look to be quite good. These counters are trading at PEs of less than 2. P/NTA is less than 0.5. All have huge cash hoards and zero debt. At the low prices, bad news seem to have been sufficiently priced into the stocks.
I personally am more biased towards Foreland and Eratat. Foreland has been increasing its earnings quarter-to-quarter when other fabric companies have seen their profits shrunk. This speaks a lot about its competitive position in the industry. Besides, Foreland has been operating at peak capacity for some time. Once they finish building their new factory, it's highly likely that earnings will continue to grow as they no longer have to turn away orders. A further positive point is that the company has a history of paying dividends when results are good.
Eratat suffers from the problem of having high trade receivables, and that recent quarterly profits has declined. However, from the past reports, managment has explained that it is making a shift towards higher-margin apparel as opposed to footwear over the past few years. Changes in product mix has shown this to be true. The shift to higher-margin apparel may prove to be a shrewd move, as several footwear manufacturers are now struggling(eg. even Qingmei) because of oversupply in the industry. Meanwhile, Eratat has been increasing its ASP over the years. As for the trade receivables, even if it turns out that a large part of the receivables are uncollectible, the company, which is now trading at less than net cash, should still be worth more than current valuation. If it turns out that management is honest and the transition period is complete(particularly after granting renovation subsidy in the second quarter) with no more surprises, there may be strong upswing in the stock.
I haven't really looked at Qingmei in-depth, but a quick glance seems to indicate that management doesn't seem to have anticipated the oversupply in the industry, so their competency may be suspect. Nonetheless, until recently, earnings over the years have been good. The stock seems promising now because of the cheap valuation, with large cash hoard and zero debt. There's room for good things to happen, such as an unexpectedly positive earnings report, or a good dividend payout.
Guys, do share what are the other stocks that you think are cheap and good buys. I'm interested to know as well [img]plugins/editors/jce/tiny_mce/plugins/emotions/img/smiley-laughing.gif[/img]
 
 
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[Guest 17-06-2012]:
If you are bitten by shake, anything that look like snake you will be scare. so many s-chip gone with invester money, who dare to risk. And we are spoilt for choices with so many good reliable penny at SGX, so why take the risk??? But soon, they will be in play, your chance to get out, but to get out at the high price u bought will be wish, and for u a hope. but i think fat hope. Use this to get out and put that money to work eslewhere. Don't hope against hope.

You can't take the cash at face value. Isn't the entire S-chips risk mainly talks about fake cash? So what's the point in using net cash per share as the anchoring point for your investment thesis?
No doubt, in a bull markets, such S-chips may rise like crazy.. as evident in the 1Q trading of this year but unless you are 80-90% convinced that the cash is real, such investment is nothing more than just executing the "Greater Fool" theory.
Somewhere along this thread or others, I read people saying Lumiere is vested in Eratat, so that got to be safe. But the question is are they STILL vested in Eratat? How much of their portfolio is vested in Eratat? It could be 0.5% but you are waging 20% of your portfolio. Also, it doesn't mean they are vested in Eratat means it is safe. This is the issue & cost of free ridership or not doing your homework. Is their batting average 100%? What happens if it is so unlikely you hit their failed buys?

The point in using net cash per share is that it tells you the stock is at a very cheap valuation. So cheap such that it warrants a closer look.
Eg. if the company runs into any problems, no biggie, cos the risk is already priced in. Market is expecting its performance to be lousy so the price won't move much. Meanwhile, there's plenty of upside potential, so if anything good happen(eg. management is honest, the cash is real, sudden growth in quarterly profits, management announce special dividend, etc.), the price can go up signficantly. At a cheap enough valuation, you don't have to achieve 100% batting average. Plenty of risk is already priced inside, and there's plenty of room for good things to happen.
On another note, I'm also puzzled by how S-chips fake their cash. Typically, won't the auditors require bank confirmation letter for their audit? So shouldn't cash be one of the most difficult items to fake(as opposed to say, liabilities)? Can anyone here shed light on this issue?
 
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[Guest 19-06-2012]:

You can't take the cash at face value. Isn't the entire S-chips risk mainly talks about fake cash? So what's the point in using net cash per share as the anchoring point for your investment thesis?
No doubt, in a bull markets, such S-chips may rise like crazy.. as evident in the 1Q trading of this year but unless you are 80-90% convinced that the cash is real, such investment is nothing more than just executing the "Greater Fool" theory.
Somewhere along this thread or others, I read people saying Lumiere is vested in Eratat, so that got to be safe. But the question is are they STILL vested in Eratat? How much of their portfolio is vested in Eratat? It could be 0.5% but you are waging 20% of your portfolio. Also, it doesn't mean they are vested in Eratat means it is safe. This is the issue & cost of free ridership or not doing your homework. Is their batting average 100%? What happens if it is so unlikely you hit their failed buys?