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Falling Knife ! Watch Out
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zhuge_liang
Supreme |
24-Mar-2008 16:18
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China Energy in big trouble. China Energy "Whenever any possible accounting problems arise, markets would just sell," a dealer from a local brokerage said. China Energy, which makes alternative fuels, said on Thu it has engaged PricewaterhouseCoopers (PwC) to conduct an independent review on the acquisition of Jiutai. The Chinese firm had said in Aug '07 it paid 197.8 million yuan for Jiutai but did not disclose payments of an additional 190 million yuan to cover the latter's liabilities. The payment was subsequently discovered by China Energy's audit committee. "The key concern raised is the actual payment of about 390 million yuan to Jiutai, when the net asset valuation and prospectus disclosure only valued the company at about 200 million yuan," CIMB analyst Jessie Lai said in a client note. Lai, who dropped her "outperform" call on China Energy for a not-rated view, expects volatility in the share price to continue until completion of the review by PwC. |
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zhuge_liang
Supreme |
23-Mar-2008 17:03
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ML report dated 18/3. We were not impressed by our recent visit to China Energy at Zhangjiagang and reduced our FY08/09E earnings by 39%/47%. The group is still projected to achieve decent growth albeit at a slower pace. We retain our BUY rating but reduce our PO to $0.62 (previously $1.68) given the higher earning risks. Commercial DME production at Zhangjiagang was affected by the snowstorm and delayed till Jun 08. CEGY had faced a similar delay at Guangdong, which reflects poorly of management?s execution and suggests downside risks for future DME capacity expansion as well as its new 500,000 tpa methanol plant.
We also learned that DME at Zhangjiagang is priced at a higher discount of 15-20% to LPG. Management explained this is due to competition from smaller local DME producers. This is likely to hurt DME margins and is only worsened by LPG price control in China. Further decline in methanol costs could help mitigate the impact but to a limited extent.
We lowered our FY08/09 DME sales volume (16-30%) and gross margins (2-5%). CEGY?s expansion could be further delayed if it fails to raise enough funds for its CAPEX requirements. Nevertheless, these risks may have been priced in with the stock now trading on 8xFY08 P/E and 1.6x P/B. The group also achieved 62%/38% earnings growth in 4Q/FY07 and is likely to sustain the momentum in 1Q08. We see limited downside from here although the market may prefer to see more earnings delivery before re-rating the stock. |
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singaporegal
Supreme |
23-Mar-2008 14:44
Yells: "Female TA nut" |
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I genuinely believe that analysts try their best. However, by the time their report comes out, it is old news. The big movers have already taken up their positions and leave the scraps to retail investors. That's why analyst reports should be taken with a pinch of salt. This is one reason why I use TA more than FA - TA measures the changes in market sentiment (this usually means big boys movements).
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ktlow08
Member |
21-Mar-2008 09:38
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I agree with "hotstock". I see that Phillips show the older reports and recommendations of their researchers/analysts. But certainly Singapore can benefit if someone comes out and systematically tracks and rates these folks. Let's have some sort of accountability. | ||
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soloman
Master |
20-Mar-2008 18:44
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The problem is not just the analyst The problem is CHINA stocks Lousy dividend mean lousy price for the CHINA stocks |
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hotstock
Veteran |
20-Mar-2008 16:35
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To add, I think there should be a database to track the analysts. Some analysts are young and how much do they know abt the domain knowledge. Whether the report is trustworthy can be easily backup by the writer's track record. | ||
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awchyeong
Member |
20-Mar-2008 15:44
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must trust but in different direction. if that is a buy call, we sell. This is their strategy to dump or to accumulate their stocks | ||
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787180
Master |
20-Mar-2008 15:31
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See just in Dec 2007 CIMB claims TP maintains now wad happens...don't trust analysts. 4 December 2007 China Energy (CEGY SP / CENR.SI, OUTPERFORM - Maintained, S$1.17, Target: S$2.12) Company update - Moving up the value chain by Jessie LAI China Energy is expanding its methanol production capacity by three-fold by 3Q08. We estimate this could increase its self-reliance for methanol to 86% for its Shandong and Zhangjiagang DME plants. Coupled with rising DME prices and softer methanol prices, we expect gross margins to improve to 29-39% in FY08-09, from 17-21% previously. Revisions have been made to DME expansion plans, with a 400,000-tonne p.a. increase in capacity but 6-12-month delay in completion. We have raised our FY07-09 EPS forecasts by 6-63% to factor in higher DME ASP and gross margin assumptions. Accordingly, our target price climbs to S$2.12 from S$1.73, still based on a 30% discount to our new DCF valuation (WACC 13%, LTG 2%) of S$3.03 (S$2.48 previously). We believe the implied 7.5x CY09 P/E is undemanding, given its 3-year EPS CAGR of 79%. Maintain Outperform. Full Report [ Click here ] or the URL below http://www.gohdirect.com/NASApp/spaf/econtent/sg/ChinaEnergy-041207.pdf To view these reports, you need to have Adobe's Acrobat Reader. To download a free reader, click here. PS: if you wish to Opt-Out or Change your Mailing Details, please send an email message to enquiries@cimb-gk.com. Otherwise call your respective Salesperson. [ The contents of this e-mail may be confidential. Do not disclose, copy or distribute it if you are not the intended recipient. It may also be unlawful to do so. This e-mail is sent without any implied warranty or representation as to the accuracy or completeness of its contents, or as to the authority of the sender to send it. Do not rely on its contents without written confirmation from a duly authorised employee of CIMB. Please notify admin1@cimb.com.my if you have received this message in error. ] |
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hotstock
Veteran |
20-Mar-2008 14:18
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New info: Engages PwC to investigate extra RMB 190 mln paid for acquisition of Jiutai Energy Guangzhou Looks like this counter can short all the way from now |
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henrytan
Member |
20-Mar-2008 10:05
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They cut the target price because they may sell off China Energy and have shorted the shares. | ||
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hotstock
Veteran |
20-Mar-2008 09:26
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It just shows that analyst reports are so terribly wrong. Estimates are usually offmark but I just cant find a reason that the target price is cut by 102c. If such a short time see such a drastic change in biz environment, then i would see this stock selling at cents soon. | ||
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tchoonw
Veteran |
20-Mar-2008 08:08
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Lookslike this bugger can drop to 20c! | ||
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ruanlai
Master |
20-Mar-2008 07:39
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Price can drop so fast must be those insider those the new and short all the way down. Down till no more meat to squeeze, then they annouce the news. Why no control in this issue, meaning new should be annouce asap and not to hide for short down then annouce. Sad !!! China Energy Ltd. Pricing in higher earning risks �� FY08/09 earnings cut; PO lowered to S$0.62 We were not impressed by our recent visit to China Energy at Zhangjiagang and reduced our FY08/09E earnings by 39%/47%. The group is still projected to achieve decent growth albeit at a slower pace. We retain our BUY rating but reduce our PO to S$0.62 (previously S$1.68) given the higher earning risks. Poor execution yet again Commercial DME production at Zhangjiagang was affected by the snowstorm and delayed till Jun 08. CEGY had faced a similar delay at Guangdong, which reflects poorly of management?s execution and suggests downside risks for future DME capacity expansion as well as its new 500,000 tpa methanol plant. Rising threats of DME competition We also learned that DME at Zhangjiagang is priced at a higher discount of 15- 20% to LPG. Management explained this is due to competition from smaller local DME producers. This is likely to hurt DME margins and is only worsened by LPG price control in China. Further decline in methanol costs could help mitigate the impact but to a limited extent. Still growing albeit at a slower pace We lowered our FY08/09 DME sales volume (16-30%) and gross margins (2-5%). CEGY?s expansion could be further delayed if it fails to raise enough funds for its CAPEX requirements. Nevertheless, these risks may have been priced in with the stock now trading on 8xFY08 P/E and 1.6x P/B. The group also achieved 62%/38% earnings growth in 4Q/FY07 and is likely to sustain the momentum in 1Q08. We see limited downside from here although the market may prefer to see more earnings delivery before re-rating the stock. Merrill Lynch & Co., Inc. |
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singaporegal
Supreme |
19-Mar-2008 22:00
Yells: "Female TA nut" |
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You're welcome, john_koh. Look at this counter fall! The price chart is hugging the lower bollinger band. Very bad looking. |
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john_koh
Member |
17-Mar-2008 22:41
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Hi singaporegal, Thank you for your advice.. |
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ChinChye
Member |
13-Mar-2008 18:41
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Chart looks bad.. hugging lower brollingerband... think will drop further... | ||
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ruanlai
Master |
13-Mar-2008 10:00
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My 1st post on the 12 Feb already given the signal of this counter.......Withdrawal of billions and billions of fund from the FFM, who have the power to support the china market...... Wait till it drop further to 50cents then may consider a good entry to buy and keep. You may short if you dare.....your guys will pay against your profit.... |
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zhuge_liang
Supreme |
13-Mar-2008 00:09
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CIMB said China Energy is still a key alternative choice for energy-thirsty China. During their recent "The Great China sale" conference, investors voiced concerns over mismatches in China Energy's DME and methanol expansion, which would increase its exposure to volatile methanol prices. China Energy?s methanol self sufficiency is expected to increase to 35% in FY09, and management has a target of 50-70% by 2010. The share price dived on 11/3 on speculation that energy price controls could be imposed by a new National Bureau of Energy in China. However, they believe that the near-term impact would be immaterial and DME should feature as a key alternative energy to increase China?s energy self-sufficiency. CIMB's FY08-10 EPS estimates have been cut by 6-10% on higher coal and lower DME price assumptions, with their target price reduced accordingly to $1.44 from $1.76, still based on a 30% discount to DCF valuation (WACC 13%. Their new target implies 9x CY09 PE, which they believe is well supported by an EPS CAGR of 79% for FY08-10. Maintain Outperform. |
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Eldarchen
Member |
12-Mar-2008 22:30
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Hi Guys, Just checked seems like they were worried the new energy commision formed may impose a limit on prices. check out the report by cimb today . |
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singaporegal
Supreme |
12-Mar-2008 22:22
Yells: "Female TA nut" |
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Hi john_koh, From TA charts, it defnitely looks bearish. Acc/Dist are heading south and price trend has cut the lower bollinger band. |
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