IPO - Sino Contruction
Why I will buy this stock
• Invited to participate in public tenders for the construction of the Daqing Airport and the relocation of Daqing Railway Station, which are expected to start in 2008
• Plan to tender for larger building construction and civil engineering projects with higher contract values
• Securing larger and landmark projects would boost corporate image and reputation
· Expand business to overseas markets
1) The above growth has not yet been factored into this stock, but again this are just plans in the future not happened yet.
2) Good track records, have many ISO certificates and most important their C2 licence
3) Strong cash flow and reserves
4) The continued strong investment growth and GDP growth in Daqing, according to their research such investments drives the demand for more officers, buildings etc.
5) Intrinsic value estimated at least $0.45 , optimistic view is about $0.68
6) At a price of $0.39 important ratio are as follows
- PE: 7.8 times
- PVB : 0.65
- ROE extremely high 21%, 30%, 70% possible?
Why I would be careful of this stock
1) Limited growth, as most of its growth is currently in Daqing, after all the construction and building, the question is what next? For this company.
2) Again, high oil prices affect its profit margin; they stated that they prepaid their suppliers thus reducing material cost and possibility of passing the cost to their clients.
3) There is a possibility that they might not get those big contract by government of other investors, thus might lose their C2 license
4) Under their P/L for 2007, most of the cost not really factored in like financial cost etc. Careful of window dressing.
5) Their account receivables are increasing fast every year. Watch out and be prepared for more defaults. However as stated in their annual report , their clients so far from 2005 to now , no defaults , all payments were fully paid.
Strategy: Buy, but don’t apply for its IPO. Very likely to drop in this coming few days as Oil prices are scarring the market, either you wait for market to factor in the high oil prices or when its reaches $0.30-34 which is a very attractive offer.
• Invited to participate in public tenders for the construction of the Daqing Airport and the relocation of Daqing Railway Station, which are expected to start in 2008
• Plan to tender for larger building construction and civil engineering projects with higher contract values
• Securing larger and landmark projects would boost corporate image and reputation
· Expand business to overseas markets
1) The above growth has not yet been factored into this stock, but again this are just plans in the future not happened yet.
2) Good track records, have many ISO certificates and most important their C2 licence
3) Strong cash flow and reserves
4) The continued strong investment growth and GDP growth in Daqing, according to their research such investments drives the demand for more officers, buildings etc.
5) Intrinsic value estimated at least $0.45 , optimistic view is about $0.68
6) At a price of $0.39 important ratio are as follows
- PE: 7.8 times
- PVB : 0.65
- ROE extremely high 21%, 30%, 70% possible?
Why I would be careful of this stock
1) Limited growth, as most of its growth is currently in Daqing, after all the construction and building, the question is what next? For this company.
2) Again, high oil prices affect its profit margin; they stated that they prepaid their suppliers thus reducing material cost and possibility of passing the cost to their clients.
3) There is a possibility that they might not get those big contract by government of other investors, thus might lose their C2 license
4) Under their P/L for 2007, most of the cost not really factored in like financial cost etc. Careful of window dressing.
5) Their account receivables are increasing fast every year. Watch out and be prepared for more defaults. However as stated in their annual report , their clients so far from 2005 to now , no defaults , all payments were fully paid.
Strategy: Buy, but don’t apply for its IPO. Very likely to drop in this coming few days as Oil prices are scarring the market, either you wait for market to factor in the high oil prices or when its reaches $0.30-34 which is a very attractive offer.
posted by Chlorophyll Inc at
10:52 PM
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