Author Archives: Wai Gor

Performance Review (5)

Xingfa Aluminum (00098)

Xingfa’s performance and dividends are as expected, and they are satisfied. The only dissatisfaction is stock price performance.

Revenue increased by 37% to nearly RMB 10 billion, and gross profit increased by 33% to RMB 1.35 billion. The overall gross profit margin decreased slightly by 0.4% to 13.6%, mainly due to the 2% decrease in the gross profit margin of construction aluminum profiles. By maintaining existing customers and attracting new customers, the processing costs were reduced, and the revenue of this business segment increased by 32%, and the price reduction achieved the expected results.
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Globe Brand (787.HK) — Why is Feng’s reincarnation and potential behind?

Feng’s frankly stated that the number of shares he accepted for scrip dividends would not increase his holdings by more than 1.99% of the “enlarged share capital,” thus avoiding the potential mandatory offer obligations, and therefore the minority shareholders if they choose to scrip dividends. There will be no offer to protect the reserve price. To make a major change, it is estimated that the key reason is that the CSRC asked Feng to make a clear disclosure on the stock dividend interest intention on March 14. It is not ambiguous. It will not be announced until March 28 after the stock scrip dividend plan is closed. Therefore, if Feng said on March 14 that he would break the dividends in full, it is believed that most of the minority shareholders feel that they will follow the stock exchange scrips because of the potential offer relationship. A result is a large number of new shares. The net asset value per share was significantly diluted, but Feng could not achieve the goal of increasing the shareholding of the shares. It would be better to announce that it would not increase its holdings by more than 1.99% of the enlarged shareholders, so that the minority shareholders would not follow suit.
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That’s why I buy Global Brands (787.HK)

I saw a lot of people inquiring about the reasons for buying a brand of profitable brands. Therefore, I will briefly talk about the detailed analysis. I will wait until the net is removed in March, because the length will be slightly longer.

The reason why I bought the target is very simple. It is only for the “incidents” that may occur. I am not gambling on the reversal of my performance. I do not believe that the business of the target can be reversed in the next one or two years. Therefore, the purchase of the target is pure. It is an event-driven event that may occur. The main reason for the trigger event is that the company announced a special interest of 0.28 yuan per share, which can be used to scrip dividends, while the major shareholder has disclosed the intention to choose to use the stock to scrip. Assume that most of the minority shareholders will choose cash dividends. If only the majority shareholder chooses to scrip dividends, then the current shareholder will calculate the dividends of up to 810 million yuan, which will be converted into shares at a price of about 9 cents per share. After the completion of the scrip dividend, the major shareholder can exchange about 9 billion new shares, and its shareholding will be greatly increased from the original 33.88% to nearly 68%!
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Beijing Enterprises Water Group Ltd. (00371): Double Win Plan

Beijing Enterprises Water Group Ltd. has announced the placing of a 5% new share to China Changjiang Power International Co., Ltd., a wholly-owned subsidiary of China Yangtze Power International, which is listed on the A-share market, at a price of HK$4.29 per share. Upon completion of the Placing, China Changdian International will hold a 4.76% stake in Beijing Enterprises Water, and once Changjiang International has increased its shareholding in the market and its shareholding reaches 10% or more, China Yangtze Power International has the right to nominate a candidate. Serving as an executive director of Beijing Enterprises Water.

This placement and business cooperation agreement is beneficial to both parties.

I personally feel that this time through the placement of China Yangtze Power shares as a shareholder, and reached a cooperation agreement, there are two significant advantages:

1. It is a significant business opportunity for Beijing Enterprises Water to participate in the Great River Basin protection.

2. The notice mentions that once China Changdian International absorbs 5.3% of its shares in the market and its shareholding exceeds 10%, China Changdian International can nominate a candidate to become an executive director of Beijing Enterprises Water. In the future, Electric Power International has laid a heavy burden on the market. Why do you want to hold more than 10% of the shares and be able to appoint an executive director? I believe that it is necessary to make Beijing Enterprises Water Water become an associate of China Yangtze Power Co., Ltd., which is listed on the A-share market. Everyone may ask why it is only 10% of the shareholding, which is enough to make Beijing Enterprises Water become an associate of Yangtze Power. My own opinion is:

a. When surpassing 10% equity, Yangtze Power can appoint a candidate to be the executive director of Beijing Enterprises Water, which is sufficient to participate in the daily operation of Beijing Water Control and has significant influence, but has no control;

b. There will be continued important business contacts between Beijing Enterprises Water and Yangtze Power in the future.

Based on the above two points, I personally feel that even if Changjiang Power only increases its holdings to 10% in the future, although it is less than 20% of the equity, the account should be able to list Beijing Enterprises Water as an associate of Yangtze Power, rather than a simple financial investment.

If Beijing Enterprises Water has become an associate of Yangtze Power, what benefits does it have for Yangtze Power? This is a significant incentive for Yangtze Power to increase its holdings of Beijing-controlled water in the market.

Finally, Gloen’s article set a target market value of 100 billion for Beikong Water (equivalent to a stock price of about 10 yuan). I feel too optimistic myself; if the stock price can regain 6 yuan, I am delighted.

[Funny] Do not provide any investment advice is correct!

My mother-in-law like invest stock too, she love invest on Large Stocks and I love invest on Small and Medium-sized stocks either.

She saw the HSI decrease intensely in June 2018 and buy 1398 as the “LOW” simultaneously. Then, the stock price turns down. In November 2018, she asks me: “Will the stock drop deeply? Should I sell all of the stocks?”

She knows me is to monitor the stock market closed, so she always asks me questions and options. But I said I am focus on small and medium-sized stocks, large stock is not my investment target. I also know I will not good if my options are the fault, therefore I answer the question with ambiguous.