29 August 2010

Xidelang Holdings Limited


In early July, this company came into my sight when I was browsing through the postings in Investalks Forum.

Once I saw it, my eyes just can't move away from its unbelievable low price -- a PE as low as 2!

After several days of study and collecting information, I found that its financial situation and growth potential is great. Then, I decided to buy it at 36.5sen.

Here's some attractive numbers of XDL:

  • ROE ~ 40%。
  • Debt/Equity = 0.24.
  • During years 2006 ~ 2009: Revenue CAGR = 59%, profit CAGR = 79%.

The numbers are great, yet it was trading at a price of PE=2, sounds not logical...

I had gone through its IPO prospectus, annual reports, also browse through some blogs and forums, and search for any information available on the internet. Finally came to my own conclusion about its extremely low price -- these newly listed China company just can't get confidence from the public! No matter how good is the data, people just don't believe in it. Manny worrying that it's another conman company.

I don't have a strong confidence in XDL either. But my thought was simple -- Since I didn't see any suspicious point in the data, I choose to believe it. But, isn't it too risky? ... Yes, it's risky -- if you put 50% of your fund in it. For me, I just invested RM5k+ , i.e. just about 10% of my entire portfolio value. I feel quite comfortable with this.

I think I will hold on to this stock for several years, as long as its fundamental remain strong.


x x x

The following spreadsheet shows some data that I sort out from XDL's IPO prospectus and annual report.

(NOTE: Currently there are 3 subsidiaries under XDL. They were separated entities before the listing. Its IPO prospectus only provides separated balance sheets data for these three entities. The consolidated data below is from my own calculation -- I sum up their numbers, then eliminate the related-parties & inter-companies' borrowings/receivables. There will be some errors in the calculation, which is unavoidable, due to the limited information disclosed.)

I had put the data on Google-Docs (click here to see the complete spreadsheet) for easier sharing. I will continuously updating the data in the future.


23 August 2010

TSH Resources BHD - strong growth ahead.

(I bought 3000 units of TSH at RM1.80, in early July.)

There are three business segment in TSH -- palm oil, cocoa, and wood products. While the palm-oil segment are growing exponentially, the other two segments were facing difficulties in recent years.

In 2009, palm-oil business had contributed about 80% of TSH's revenue, and 100% of its profit. Hence, we can say that the future of TSH is relying on palm-oil. So, I simply ignore the wood & cocoa segments, concentrate my analysis on its palm-oil business alone.

Let's take a look at the historical figures of THS' palm-oil segment: (RM million)

Revenue Profit
2001 83.0 14.5
2002 143.8 19.6
2003 233.5 35.8
2004 272.7 41.9
2005 318.0 35.7
2006 358.3 48.9
2007 575.7 85.3
2008 814.5 88.5
2009 784.2 118.6

During these years, the palm-oil business was growing at a CAGR of 30%.

In recent years, TSH had been aggressively purchasing plantation-land in Indonesia. Today, its accumulated land-bank area already closed to 100k hectares. Among these, only 25k ha had been planted with oil-palm trees. And in these 25k ha planted area, 13k ha are newly planted trees, age only 1~3 years old (i.e. non-matured). The remaining 12k ha trees are in prime matured stages, age 4~20 years.

Hence, we can predict that the oil-palm production of TSH is going to doubled within 3 years, which translated into a CAGR of > 25%.

Then, according to its management, current TSH's expansion plan is to plant up to 5000 ha of new estate per annum. If this target is achieved, then the matured-estates of TSH will be growing at 20% p.a. pace for another 3 years.

Seeing the huge land bank behind it, I believe that TSH will keep its double-digit-growth for many years, deep into the future.


22 August 2010

Reasons buying Notion.

This is a company that I had been observing since 2007, when it's still listed on MASDAQ. I bought 2000 units of it last month, at RM2.97, just before it plunge to the current level.

Main reason of buying is the high growing potential, supported by its great financial performance.

A review of historical data: (RM million)


balance sheet ratios and cashflow:



In short summary:

  • Good profit margin (maintaining above 20%)
  • Great ROE (above 20%)
  • High growth rate (25% CAGR for year 2004~2009)
  • Healthy balance sheet and cashflow.

I think that Notion is able to maintain this performance in the next five years.


One more thing that I love Notion very much is the ability to diversified its product base. Below shows the product mix of Notion in recent years.


The balancing between SLR cameras and HDD sectors reduce Notion's dependency on a specific customer, hence lower its business risk.

This year 2010, the newly emerge customers, Samsung & Alphana, will bring Notion into the 2.5" HDD sector (producing baseplate and spindler motor hubs), hence further broadening its product base and customer base.


Recent development.

Soon after I bought Notion, its share price dip 40%.

Following the release of its latest quarterly report, we had learned that Notion is currently facing technical challenges, causing a high rejection-rate from its new customer, Samsung. The higher operating cost leads to a very poor profit margin.

In my opinion, the high-rejection-rates problem is just a temporarily issue. I have my confidence in Notion's management, and believe that the company will manage to get through this. (Though it may take months to fix the problem).

So, its current share price actually looks very attractive to me, and I'm currently considering to increase my stake in Notion.


17 August 2010

Shares bought in July.

Last month, soon after selling MAS-PA and Titan, I added RM6000 of new capital into my portfolio. Then bought in 3 companies that I believe to have great potential to growth in the next 5 years:

  • Notion, bought 2000 unit at RM2.97.
  • XDL, bought 15000 unit at RM0.365.
  • TSH, bought 3000 unit at RM1.80.

I'll write down the reasons of buying them in the coming posts.


here, just to record an interesting observation on their price-movements in the past few weeks:

  • Notion's price had been falling for nearly 40%,
  • XDL, on the other hand, up for nearly 40%,
  • TSH, almost unchanged.

three extremely-different ways of price move happening at once, what a coincidence!


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