China Minzhong - not another Scandal?

This must be the most disastrous "anniversary" for China Minzhong ("CMZ") shareholders with the Company scheduled to announce its results for on 29 Aug 2013 before trading hours.

I wrote this piece of article about one year ago on 28 Aug 2012 - China Minzhong - the analysts don't get it when share price dropped dramatically after its Q4 results and this time around, another "Carson Block" type of firm called Glaucus Research Group is out to "finish" China Minzhong once and for all with a target price of zero!

The report is here. It is a very depressing read and contain several allegations which you should read it even if you are not a shareholder.

It will be interesting to see how the Board of Directors react to the allegations mentioned, especially the non-executive members. At the time of my writing, they are probably in deep discussions with external counsel, auditors and management. Based on the annual report in 2012, the non-executive board members in the hot seat consist of the following members:

1. Lee Edan Kietchai, Managing Director of Olympus Capital
2. Wang Anson, Co Founder and Managing Partner of CMIA Capital Partners
3. Lim Yeow Hua, Consultant
4. Heng Hang Siong, Management Consultant
5. Lim Gee Kiat, SVP Finance to Ying Li International

I highlight the two more prominent non-independent directors below.

Edan Lee and Anson Wang are deemed to be non-independent because their funds hold a huge stake in CMZ. The following table is from last year's annual report.

CMIA Capital Partners first became "famous" because of Ferro China blow up previously. Will it be twice unlucky for them? Somehow, it looks weird when other shareholders hold more shares than the founder. 

The auditors Crowe Horwath First Trust LLP must also be feeling the heat now. The audit partner was previously on the board of China Hongxing. It is always a risk to be a board member on S-Chips, especially the Independent directors.

A Company that is always in need of cash?

Sounds so familiar for companies in trouble as they always need capital because they are cash flow negative and can never afford to pay out a dividend. PT Indofood (ticker code: INDF.JK) holds 29.33% of the Company after they subscribed to another 98m shares at $1.12 per share in Feb 2013. The share price of PT Indofood dropped 5.6% versus the 47% drop by CMZ today.

In case you are interested to know if your reserves are safe, GIC fully divested its stake in March this year. 

The weekly share price chart looks downright ugly and hit a all-time low today at $0.50. You know my dislike for S-Chips and in a hypothetical situation where i am ever vested, my usual method is to cut loss first (to preserve capital) and think later. I will not average down. Cutting loss is an "competitive edge" which small investors like you and me have but will be more difficult for big funds and shareholders. 

S-Chip Scandals

Here you go. The list of S Chips that bite the dust and if this one goes as well, frankly, I don't know what other S-Chips you should consider. While i was contemplating a "short sale" on CMZ and Sino Grandnes today. 

In any case, there are not many options available to the BOD. I outline a few for you.

1. Refute all the allegations and promise to sue Glaucus Research Group. This is followed by major shareholders coming in to support the shares (most optimistic outcome).
2. Convene special auditors to investigate the allegations and in the meantime, the independent board and shareholders have countless sleepless nights.(most probable outcome)
3. A fire breaks out at the finance department in the factory and the independent board and auditors resign shortly thereafter, citing uncooperative management. (most dramatic but likely outcome).

My view is option 2 is the most likely outcome for the short term and given the track record of Galucus, i think it will eventually lead to outcome 3.

I certainly hope i will not see another scandal (where our hard-earned money are being conned) but history is against us.

Comfort Delgro & CapmallAsia

I spotted Comfort Delgro last week but was too busy trying to set up SaxoCFDs that i missed it, only to realized that the Saxo Plaform for CFDs for local stocks sucks. There is very limited number of shares available on Saxo for shorting. If you want to trade local CFDs, still think POEMS is the best platform to do so, especially "short" trades.

Anyway, i share this trade so that you will have a better idea how to do a projection on the target.

I wanted to short this counter at 1.96 when the parabolic is triggered. Parabolic is one of the indicators i like to use for trading. After you initiate a trade, you can use Fibo to project the possible target with the 50% mark being the "first target" at $1.86 and the second target at the 38.2% mark at $1.82. 

I think another target that will follow in Comfort Delgro footstep is CapmallAsia.

I shorted this counter a few days back at 1.96, using POEMS this time. Again, using parabolic to initiate and fibo to project, the first target is 1.87 followed by 1.82.

Happy trading.

P.S. by the way, i am pretty busy travelling for work.... and will probably be missing in action the most of Sep. :( 

Ninja Master Fund - Fire and Forget?

There are so many things that i want to do in life.

• Write a book on how to play IPOs (my first project)
• Invest my SRS fund
• Trade for a living
• Travel round the world.
• Teaching and sharing with people how to pursue for financial freedom 

I contemplated for a long time whether i wanted to share this with you but i decided that i need to "torture" myself further. 

You know that i swing trade on a part time basis since i hold a full time job. My many hours of meetings during the day and frequent travels for work is really not conducive for trading. I have been sharing some of my trades with you on this blog in the past with the cut loss and target levels and i hope you learn something from them.

With the advancement of technology, it is now much easier to place "OCO" orders on a good trading platform. OCO stands for "Order Cancel Order". It means that if one order is done, it will automatically cancel the other order. In other words, i can now key in my "target price" and my "cut loss" price once i enter a trade. It allows me to "fire and forget". I have not used this feature yet but am seriously contemplating do it for my next trade as i should be tapping technology to make my life easier so that i can go "fishing". 

Since April this year, i have started a $100k trading account with Saxo. In my view, it is an excellent platform that allows me to trade except that my brokers will not be pleased since less trades are routed through them. I have decided to share with you my journey on this Saxo account here so that overtime, it will be a place where i can come and dig back my memories.

The account started with $100,000 in April 1, 2013. As of today, it is around $104,967.60

This account is mainly for swing trading local stocks (and occasionally US stocks). I will feature the trades on this blog if i make any trade through this account and overtime, i will also share with you how the equity line moves up or down. The key to trading is to protect your downside while letting your upside run, so not all trades will pan out as what i hoped. I will not also not hesitate to cut loss if the situation warrants it. Capital preservation has been a key feature in my trading.

Anyway, till next time. Happy trading. 

Note that i only swing trade this account when i am free. ^_^

Trade like a Shark

This is an interesting book about trading. Go read it.

9 Key Characteristics of Shark Investors:
• Sharks are aggressive
• Sharks are opportunistic and reactive
• Sharks stay in motion
• Sharks plan their attacks
• Sharks are patient when they stalk their prey
• Sharks take advantage of the emotions of the crowd as it becomes frenzied and emotional
• Sharks don't have emotional or sentimental attachments to the stocks they profit from
• Sharks are risk averse and do not hesitate to swim away the moment they sense danger
• Sharks have an attitude.

MINT and Capitaland

Initiated a trading position in Mapletree Industrial Trust today @ 1.34. Target around 138-145. Cut loss below the recent low.

Happy trading. Will post my positions update to the comments sections for the benefit of readers.

Capitaland update

Initiated my position last week.

Looks good today as it closed at the high with a fairly strong volume. Will move stop up and see if it can run towards 328-340 range.

Happy trading.

Trading Positions

Sorry, i am busy with work but have added a few trading positions in alphabetical order for your information. Take it with a huge pinch of salt

Biosensors

Bought some at 1.07 two days back. Target 1.15-1.20. Cut loss below recent low.

Capitaland

Bought some at 3.09. Target 3.20 to 3.30

CourtsAsia

Bought some at 0.91. Target 0.95 to 1.00

CWT

Bought some at 1.46. Target around 1.55 to 1.60

Capitaland & Sembcorp Industries

Entered the above 2 trades today.

Capitaland

I bought some shares at $3.51. The closing wasn't as good as i would prefer it to be. First target is for it to break above $3.58 and reach around $3.65-$3,70. Second target will be around $3.80-$4.

Cut loss below the recent low.

Sembcorp Industries

I bought some shares at 4.96. Was choosing between this and Semb Marine. First target is around $5.10 to $5.15 and second target is around $5.20-$5.30 and thereafter $5.40-$5.50. Cut loss is below the recent low.

Happy trading.