Friday 4 October 2013

China Stationery – too cheap or too good to be true?

CSL’s shares are currently trading at just one time earnings and one-quarter of its net cash value per share. Put in another way, imagine paying 25 sen for a one ringgit note! 

Its stock price has fallen from a 52-week high of RM1.13 to just 22.5 sen and one-fifth of its IPO price of 95 sen back in February 2012.  By comparison, its book value per share is RM1.18 sen and net cash value per share is 86 sen, as at June 2013. 

CSL’s past financials show strong earnings and balance sheet strength. 

In 2012, the company reported net profit of just under RM247 million, with EPS of 20.8 sen. Results for the first half of 2013 suggest a similar annualised performance, implying a full year EPS of around 20 sen – near its current stock price. 

Despite these seemingly attractive valuations and strong fundamentals, the company’s major controlling shareholder, Lead Champion Ltd has been paring its stake aggressively, a move which does not send a positive signal to investors. 

Is something amiss? Is the massive selling by insiders a precursor to something negative? Or is CSL shaping out to be the market’s “cheapest” stock right now? 

For the full analysis, read The Edge Malaysia this weekend ...

23 comments:

  1. Check out their cashflow statement, cash from interest against fd rate by major chinese bank.

    I am a shareholder but something is amiss.

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  2. http://marketcsi.blogspot.com/2013/09/china-stationary-buying-by-company.html

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  3. Is CSL china stationary limited or chua sui lek?

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  4. Typical china stocks profile... both earnings and cash are healthy, but no fat dividend payout. Makes one wonder if the cash is for real...

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  5. Having been teased, I waited eagerly for the weekend issue of The Edge. But I am disappointed as the same questions were posed in the article with no answers. The 'analysis' was a let down and I am non-wiser.

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    1. Dear Grandpa,
       
      Thank you for your comments. I must say it was brilliantly crafted to get a reply.
       
      I am an analyst and observer of the stock. I see it from the outside and have access to the same public information as everyone else. I do not have "inside" information. By the way, trading on "inside" information is illegal for those who are not aware.
       
      What this means is that I try to dissect and analyse the various information available. I put together a train of thoughts and events, and analyse what this all means. I then try to assess the consequence of these on the company's financials, to see if they are consistent and rational.
       
      Hopefully, I come to a correct opinion. But I cannot be absolutely certain because I am not an insider. As an outsider, I have the same information as everyone else.
       
      As I start to share my thoughts in a public forum, I must also be careful with what I say, or I may be sued.
       
      I am also not a stockbroker, so I do not provide investment advice. You would have your own stockbroker or remisier, whom you pay for these services.
       
      I try to write in a manner that people can understand, but there are also limits to what I can say without breaching the laws or inviting lawsuits.
       
      As with all the articles in The Edge, we provide the facts and analysis, but we cannot decide for you. But we do hope our articles provoke deeper thought, debate and understanding, and help you make better informed decisions.
       
      This article is an example of some of the questions and issues one should have when investing in the company. I think it is pretty clear what we say. Please read the last paragraph again, I am sure you will find some clarity. If not, ask your friends.

      Delete
    2. Dear Tong Kooi,

      Thank you for your prompt response and your kind words.

      I appreciate where you are coming from and understand the legalities of what you can and cannot write. I was looking for answers to the questions you posed in Friday's Business and Markets, and was naturally disappointed when there wasn't any.
      Based on the fundamentals I will stay invested in CSL. my only hope is that our authorities are vigilant enough to ensure that the numbers are true.

      Delete
  6. I must agree with 'Grandpa'. Expected a magazine of repute likeThe Edge would have carried out a company visit or some 'inside track' cum 'rumor'. What was written has all been said, discussed.and analysed.More investigative reporting is needed.
    The big question ......Is the RM1billion ringgit retained profit REAL?

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    1. I fully agree with you. When they put out a teaser like that, I expect more than just cut & paste job. This is too lazy and wasted readers time! A company visit, or some "new" information is expected when a teaser like that before the complete article. Very much disappointed on how lazy local writers are, like this how to achieve 2020 high income nation!

      Delete
  7. Emm....when people ask me why u don't touch Malaysia market, I replied... I don't understand it. Even u know all the figures in the financial statements, it doesn't mean those figures are real. This explain why international fund manager don't give a damn on this market which full of manipulators, including me.

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  8. Dear Tong, when Grandpa reply u, u assume it is crafted. Maybe or maybe not, if u r not ready to reply here, don't fooled by this craft master. I trust u when u say u r not insider. No worry, Malaysia unlike US where most big shots like u were framed. In fact, some insiders proudly tell me try they know insiders news. I tell them all the best, n go to hell (in my heart) Be Frank, if u trade based on so called "insider info", u can't sleep well at night. Fyi, I reply all your comments at the cosy bed at Bali.The reason is simple, u r deserved to get my attention. Hope u really r based on the market people talk about u.

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  9. 'RMB10' looks like 'RM810'......the accounting people must be very careful not to make such errors.......

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  10. If CSL cash is real, why did it issue its own shares 2 purchase Pelikan shares? In d name of shareholders' interest?

    Another question is..why does d major shareholders keep selling while d shares r going down?If u r a wise shareholder, will u sell ur shares at 30sen when u have 50sen cash?

    Or you can blame Chua Soi Lek for bad publicity (same initials), hence d fall in price. :)

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  11. If CSL cash is real, why did it issue its own shares 2 purchase Pelikan shares? In d name of shareholders' interest?

    Another question is..why does d major shareholders keep selling while d shares r going down?If u r a wise shareholder, will u sell ur shares at 30sen when u have 50sen cash?

    Or you can blame Chua Soi Lek for bad publicity (same initials), hence d fall in price. :)

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  12. The CEO just died?!
    http://www.thesundaily.my/news/850815

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  13. A big WHY a China company wanted to be listed in Malaysia when they could get better pricing and more liquidity elsewhere ? America, Hongkong , Singapore , etc. I won't even place a one dollar bet in it.

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  14. The way the stock is hammered down to such a low level is indeed a mystery. Truth is stranger than friction. I hope Bursa will investigate.

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  15. Hey guys! the ways that CSL managing its cash pile and funding its capex defied logic. Anyone with a sound mind will not place a big pile of cash for a miserable 0.36% to 0.50% return per annum over a number of years. FD rate in China is around 3% - 3.25% per annum.

    In addition, with almost RMB 2 billion in cash, where is the need to borrow RMB 50-60 million short-term loans at 6%-6.56% per annum and secured on assets with Director personal guarantee etc. Just pick up a phone, bankers will be lining up at CSL door step offering clean credit.

    Another questionable puzzle is the unsecured loans from shareholder. If the company is flush with cash, where is the need for shareholder’s loan?

    Something is amiss here. Let’s hope it is not another Satyam Computer Services scandal.

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  16. You see, we are not interested to hear all the questions all over again from the "experts". We want to hear the answers. These experts should attend the AGM, ask the CEO why why why. Then only write an article to give perspectives. Otherwise, what's the point for having an expert?

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  17. i think CSL is a good long term buy ! But dont invest alot ! maybe buy some 10 or 20 lots will do !!

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  18. I think it is cheap and easy to use is the best, it does not matter other

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