China VTM (0893)

[Swinger]

Have been averaging down from 2.00 down to 1.25 over 6 mths. I did based on the following:

Annual Results 2011 2010 2009 2008 2007
Net Profit (Mn) 747 640 373 281 58
EPS 0.36 0.31 0.23 0.19 0.04
Reserves (Mn) 3,016/ 2,624/2,350/539/202
Cash (Mn) 1,058/1,101 2/011/133 /11

I must be missing something here as the price is behaving like the company is involved in fraud or funding problems. I thought it save to continue to average down as Credit Suisse Group AG (10.68%) and Templeton Asset Management Ltd. (8.00%) are among the major shareholders. I'm not worried if it is due to glut or slowing down of world economy which I'm willing to ride thru. My worst fear is that the above numbers are falsified. Still contemplating averaging down slowly unless of course my suspicion came true.

[chaosdiablo]

Hi Swinger,

I did about the same as you from 1.78 to 1.24 as I find their fundamental very good.....

Hope nothing surprise come out....

This stock however, is very volatile as I think it is a small/mid cap....

I have written email to their IR and is very confident that they will do well in the years to come, barring any unforeseen circumstances.....

The demand of iron ore in the western region will be good as it is better to export overseas and transport to the sichuan region.......the fall in stock price this time round is likely due to the fact that the production is affected due to the electricity supply issue......

Have been averaging down from 2.00 down to 1.25 over 6 mths. I did based on the following:

Annual Results 2011 2010 2009 2008 2007
Net Profit (Mn) 747 640 373 281 58
EPS 0.36 0.31 0.23 0.19 0.04
Reserves (Mn) 3,016/ 2,624/2,350/539/202
Cash (Mn) 1,058/1,101 2/011/133 /11

I must be missing something here as the price is behaving like the company is involved in fraud or funding problems. I thought it save to continue to average down as Credit Suisse Group AG (10.68%) and Templeton Asset Management Ltd. (8.00%) are among the major shareholders. I'm not worried if it is due to glut or slowing down of world economy which I'm willing to ride thru. My worst fear is that the above numbers are falsified. Still contemplating averaging down slowly unless of course my suspicion came true.

[chaosdiablo]

Hi Swinger,

Seems like they dont have funding problem as their cash is more than the loan need to repay within a year....

Reply from their IR when I ask about the recent power failure incident....

Interest bearing bank and other loans only, as at 31 December 2011, around RMB321,514,000 will be due within one year or on demand and around RMB101,200,000 will be due in the second year to fifth years (inclusive).

Meanwhile, as at 31 December 2011, cash and cash equivalents of the Company amounted to RMB946,830,000. The financial condition of the Company is healthy, and is not facing any financing issue. Despite the recent unfavourable incidents and market condition, China VTM is well prepared to face challenges and will continue to make its greatest effort for the Company’s growth in the future.

Have been averaging down from 2.00 down to 1.25 over 6 mths. I did based on the following:

Annual Results 2011 2010 2009 2008 2007
Net Profit (Mn) 747 640 373 281 58
EPS 0.36 0.31 0.23 0.19 0.04
Reserves (Mn) 3,016/ 2,624/2,350/539/202
Cash (Mn) 1,058/1,101 2/011/133 /11

I must be missing something here as the price is behaving like the company is involved in fraud or funding problems. I thought it save to continue to average down as Credit Suisse Group AG (10.68%) and Templeton Asset Management Ltd. (8.00%) are among the major shareholders. I'm not worried if it is due to glut or slowing down of world economy which I'm willing to ride thru. My worst fear is that the above numbers are falsified. Still contemplating averaging down slowly unless of course my suspicion came true.

[Swinger]

Thanks for sharing the info. Although it's reassuring the answers coming from the company but I can't help but feeling skeptical looking at the numbers again. How to make sense of the share price based on the numbers below? Although I'll continue to hold an average down but I now treat this part of my holdings as high risk. There must be a reason for the current share price other than what have already been reported about oversupply, softening of iron ore prices, etc. When we finally come to know the reason I hope we do not lose our pants.

Mkt Price 1.11
NAV(HKD) 1.90
EPS(HKD) 0.35
PE 3.08
DPS(HKD) 0.073
Yield 6.61%
Price/PNAV 0.58

[dzwm87]

I will see information coming from the company to be only 1st level knowledge. There will always be a sense of biasness. Rarely will a company says that they are running into deep troubles.

Probably, it will be good to compare them against other mining peers?

One thing I know is regarding their capability to extract the two different kind of metals from the ore through one single production process - hence the cost competitiveness which they boast in their high margins.

Questions:
1. Why are they able to do so? Is it based on some cutting-edge technology which they have exclusive access to? Make no mistake, this is China & West China indeed.
2. Or is it due to some natural reasons? Are the ore in the specific Sichuan area easy for extraction? If so, then there is a natural moat for China VTM to enjoy.

I hope it is (2) though I am not even sure if it is possible.

China VTM is in my shortlist but due to time constraint, I have yet to look deep into it.

[chaosdiablo]

I know how you feel....same here....how can such a fundamentally strong company share price behave in this way???

It is high risk and there is no doubt about it.......and perhaps it is also high gain when dust settle.........one of the big funds just acquire more shares to more than 7% at 1.29 recently...

Let's hope for the best and we monitor this counter closely....perhaps it might be good to get more as it drops further.........as long as there is nothing unusual happen, I believe the share price can be more than $3 in 2015........

Thanks for sharing the info. Although it's reassuring the answers coming from the company but I can't help but feeling skeptical looking at the numbers again. How to make sense of the share price based on the numbers below? Although I'll continue to hold an average down but I now treat this part of my holdings as high risk. There must be a reason for the current share price other than what have already been reported about oversupply, softening of iron ore prices, etc. When we finally come to know the reason I hope we do not lose our pants.

Mkt Price 1.11
NAV(HKD) 1.90
EPS(HKD) 0.35
PE 3.08
DPS(HKD) 0.073
Yield 6.61%
Price/PNAV 0.58

---

Hi dzwm87,

I will enquire your question to them and see how they answer. I believe their iron ore are very rich in the other metals and hence is easy to extract and separate them.

From their web site:
All mines are located in Sichuan province, a region with the most abundant vanadium-bearing titano-magnetite resources in China.

Mean time, why not you also look at this company and we can share our information and discuss. As you can see, profit marigin can be 50% and it has a very strong fundamental and hence might be a multi bagger......

I will see information coming from the company to be only 1st level knowledge. There will always be a sense of biasness. Rarely will a company says that they are running into deep troubles.

Probably, it will be good to compare them against other mining peers?

One thing I know is regarding their capability to extract the two different kind of metals from the ore through one single production process - hence the cost competitiveness which they boast in their high margins.

Questions:
1. Why are they able to do so? Is it based on some cutting-edge technology which they have exclusive access to? Make no mistake, this is China & West China indeed.
2. Or is it due to some natural reasons? Are the ore in the specific Sichuan area easy for extraction? If so, then there is a natural moat for China VTM to enjoy.

I hope it is (2) though I am not even sure if it is possible.

China VTM is in my shortlist but due to time constraint, I have yet to look deep into it.

[Swinger]

Extracted from Templeton's Asian Growth Fund Annual Report (31 Mar 2012) . .

"China VTM Mining’s stock price corrected due to lower iron ore prices and general
iron ore market weakness. However, the company’s favorable long-term demand
outlook, driven by China’s steel production, as well as what we considered to be
attractive valuations and high potential return on equity, led us to maintain a
positive view of the company at period-end."

"Consistent with our long-term investment strategy, we used price
corrections during the reporting period to increase the Fund’s investments in
China VTM Mining, Chalco and Anhui Tianda at what we considered to be
more attractive prices given our assessment of these companies’ long-term
growth potential."

[chaosdiablo]

Great....

I have earned a few times on this stock already and when it is up, it is very furious too...

Barring unforseen circumstances, this is a good stocks with strong fundamentals.........the management had demonstrated that they can increase the output from 133mt to more than 400+ currently and likely to be 600mt in 2015.....

And I think I had not buy enough of this multi bagger......

Extracted from Templeton's Asian Growth Fund Annual Report (31 Mar 2012) . .

"China VTM Mining’s stock price corrected due to lower iron ore prices and general
iron ore market weakness. However, the company’s favorable long-term demand
outlook, driven by China’s steel production, as well as what we considered to be
attractive valuations and high potential return on equity, led us to maintain a
positive view of the company at period-end."

"Consistent with our long-term investment strategy, we used price
corrections during the reporting period to increase the Fund’s investments in
China VTM Mining, Chalco and Anhui Tianda at what we considered to be
more attractive prices given our assessment of these companies’ long-term
growth potential."

[chaosdiablo]

Analyst report latest.....

http://www.chinavtmmining.com/attachment...373_en.pdf

Weakness is due to cut in production as a result of electrical issue.....should be one time event......if this is case, current weakness present opportunity...

[chaosdiablo]

2 new analyst reports with TP 1.9 and 2.1 respectively......

Send email regarding their competitiveness to their IR.....waiting for reply.....