China Animal Healthcare: Lets hope is isn't sour (china) milk

for those who do not have internet connection or haven't checked the SGX website, China Animal Healthcare recently announced that international fund Blackstone has subscribed in both the drug maker's debt and new ordinary shares (via placement).

the good news in my opinion is that CAH is very likely to surge next week and that there is a lot of pressure for the company to list in Hong Kong due to the slightly punitive terms of the bonds in the event of the listing not happening. moreover, the new ordinary shares are placed at $0.35.

the interesting situation really is, is the issuance of debt really necessary considering that any expansion can really be funded by the huge cash pile that is supposedly sitting in the company's books? mind you, the current gearing is 0.02 which means that there is really lots of space to use the cash, rather than increase debt.

hence, china milk comes into my mind. the company had an interesting expansion strategy. it also had a very persuasive CFO and a very large pile of cash. However as we know, the CFO was only in charge of Singapore operations and that the company had so much difficulty repaying its outstanding bond issue till the company got suspended, much to no one's surprise.

to be forthcoming, i am invested with 4 lots and i do hope that everything will turn out fine. nonetheless, there is that niggling thought that a situation similar to China Milk will occur. what is helping me keep the faith with this vaccine maker is that Blackstone is the smart money. if they are willing to join so many investors and pump money into China Animal Healthcare, there is some assurance that things are not rotten.so the bottom line is, for those who are invested, keep track of the insider trades as well as any conversion of debt. if Blackstone increases its stake further by converting the bonds into equity, it generally means a good sign. also, there is 5 years left for the bonds to mature. so take note that problems will only surface closer to the end of those five years.

30 June 2010 Portfolio Review

this is a review as earlier promised. based on the screen i have got, the portfolio went up 20.11% while the local stock market barometer fell just 3%.

bulk of the gains from the portfolio were either from GMG Global or Etika. the non-performers far are Stratech and to some extent, Biosensors.

a bit about the market for those who are looking for some kind of direction. the answer is quite straightforward - the direction ahead is going to be choppy. it is still the case of things are better but the main movers, the funds, are still a little skittish. hence when money flows here and there, you get alot of volatility.

as i always say on this blog. stay invested and trade as little as possible.

possible scenarios

for those that do keep an eye on what i say, i have forecast that for 2010, it will be up a little compared to 2009. i have still got half a year for things to turn out better but not too much better.

in my opinion, most of the bad news is out of the way. the eurozone crisis really is a distraction and we should we watching out for things in the US. yes, jobs numbers and other important macro economic data have not been so fabulous. however, America still remains an important driver of Singapore's and the World's economy. Furthermore, if you stay invested for another 2 years, you should benefit from the 3rd year of the US presidency effect. watch out for this one.

stocks expensive?

at the risk of sounding that i do not add value, for those who are solely invested in the local market, stick to quality and high dividends. for those who are slightly adventurous, you can do some research on penny stocks. those investing in pennies (rather than trading) can look at those non-China, doing essential functions. I have in mind those that are in the foods as well as offshore and marine sector.

words of advice
i have been rather busy of late but the feeling i get on the ground is that there is no longer that stock market euphoria that had swept the market like towards the end of last year. i think this mean that there is still pockets of hidden gems. going forward, i will try to suggest some names so that readers can do their own research.

I will do a half year review the coming post. will think of something smart to say.

Anyway, there is always something to learn everyday from seemingly unrelated events. think of the flood in Orchard area and link it up to the events that have happened in the financial industry. Every once in a while, things that are suppose to happen once in how many years will happen and they will wreck your life. that can be a another topic altogether but the main point is that, dont get caught out when the floods occur.

Don't Dream It's Over

Sometimes, I don't really care how well the portfolio is doing. To a large extent, I am quite sick of this whole sovereign debt crisis in Europe thing. I can understand how the people in the affected countries feel. So what if my government owes money, a default will always be a risk the lender has to take. So why am I, the ordinary citizen, the one to bear the brunt of the so called austerity packages?

Moving on, for those who still follow me, the examinations went a bit smooth for me. All these while balancing who with hitting the book, and now I have no such worries, has left me feeling a little lost.

At the moment, I see no urgent need to put more money into the stock market largely because I am trying to save up for other stuff, such as my life and my hobbies. What I am trying to do is look for what I have done and see if I have managed to obtain any transferable skills. Yes, I guess I am looking for a new environment to grow.

Maybe that explains why I am irritated by the whole situation in Europe. That this has caused alot of companies to stop hiring and it is very evident in the job ads. To qualify, there are still jobs, but not that many for fresh graduates (hence industry switchers).

Going forward, I will try to catalog my skills and passions and hopefully this exercise will give me a better idea as to what I really want to do.

And by the way, Elite KSB has been on the rise. Its full-year financial results will be out in August end and I am suspecting some kind of dividend or equity issue like Old Chang Kee.

CFA I Tomorrow!

Did not get much preparation than I hoped for. Nonetheless, I will still have to take the examination tomorrow. Side note, Etika has again announced another acquisition. $1.00 looks likely within 6 months.