China Fibre Tech

[oys-ter]

Anyone looking at China Fibre tech which is currently grossly "undervalued"? The company is in net cash and does not have any long term debt.


China Fibre Tech cash position = CNY 447,567,000 = S$93,989,070
Total liabilities = CNY 60,670,000 = S$ 12,740,700
Cash after deducting all liabilities = S$ 81,248,370
Number of Share outstanding = 448,329,625
Cash per share = S$ 0.181
Current trading price = S$ 0.027

(FX rate used in calculation is CNY/SGD = 0.21 and the figures used are unaudited )

In the most recent full year statement for FY2013, the company recovered from net loss in FY2012 to a small profit of CNY 1,730,000 (S$363,300) in FY2013. Management indicated positive outlook for FY2014 and expect to remain profitable in FY2014.

Given the large discount of the share price relative to the cash held, i believe at current price of S$0.027, the risk/reward ratio is attractive due to downside risk of S$0.027 versus a upside potential of S$0.181 even if this is a S chip which is prone to fraud.

Anyone have any view on this stock?

[Greenrookie]

Anyone looking at China Fibre tech which is currently grossly "undervalued"? The company is in net cash and does not have any long term debt.


China Fibre Tech cash position = CNY 447,567,000 = S$93,989,070
Total liabilities = CNY 60,670,000 = S$ 12,740,700
Cash after deducting all liabilities = S$ 81,248,370
Number of Share outstanding = 448,329,625
Cash per share = S$ 0.181
Current trading price = S$ 0.027

(FX rate used in calculation is CNY/SGD = 0.21 and the figures used are unaudited )

In the most recent full year statement for FY2013, the company recovered from net loss in FY2012 to a small profit of CNY 1,730,000 (S$363,300) in FY2013. Management indicated positive outlook for FY2014 and expect to remain profitable in FY2014.

Given the large discount of the share price relative to the cash held, i believe at current price of S$0.027, the risk/reward ratio is attractive due to downside risk of S$0.027 versus a upside potential of S$0.181 even if this is a S chip which is prone to fraud.

Anyone have any view on this stock?

I used to trade China FibreT.

I will stay clear no matter how good the numbers are. Do consider:

1) No dividends
2) The amount of interest income earned from their cash hoard, when they are not expanding, not buying any businesses
3) It is also from the famous textile industry from Fujian, where Foreland, Qingmei, Fuxing, Gaoxian are.
4) Amount of cash at company level for years...

I rest my case, I lost more than I make from FibreTech, I have enough.

[yeokiwi]

Given the large discount of the share price relative to the cash held, i believe at current price of S$0.027, the risk/reward ratio is attractive due to downside risk of S$0.027 versus a upside potential of S$0.181 even if this is a S chip which is prone to fraud.

Unless you are certain of the cash held by the company, otherwise, by mathematical terms, the cash value per share is undefined.
Since the cash value per share is undefined, naturally, risk/reward ratio cannot be defined.

And.. investing on financial information that are undefined is considered a gamble .

[cyclone]

If I were the controlling shareholders, I would have privatised the company, say at 10 cents. Too bad, I am not the controlling shareholders. Hmm, I drool on the asset.

[desmondxyz]

Could it be another Eratat? Be careful....

[oys-ter]

Could it be another Eratat? Be careful....

Eratat which is "in net cash position" still went to the market to borrow money. Furthermore, i believe the interest for the debt is quite high.

However, if you look at the balance sheet of China Fibre tech, you will notice that there is no long term debt. There is also an article dated on 2/5/2013 on how the cash in the company is being confirmed.

One part of the article on verification of the cash in company:
" A representative from Mazars said the Singapore Exchange has guidelines on how auditors should do cash audits. Mazars auditors have personally gone to the banks in China to collect the bank confirmation of the account balance in Nov 2012 and January 2013, and checked the bank statements. This is unlike audits for Singapore-based companies whereby auditors obtain the bank confirmation by post.

Giving an account of his work, Raphael Liew, who was appointed China Fibretech's senior finance manager in April 2012, said every month the company gives him the bank statement which is also circulated to the directors.

Every month, he reviews the transactions to make sure they tally with the accounts, and "so far there has not been any inconsistency." "


Assuming that the article is true, then there is a more than 50% chance that the cash is real. Coupled with the huge discount to the "value", in my opinion, it is worth a try despite the fact that the cash could be fake.

i believe one possible catalyst for the stock price to narrow the gap is a turnaround in the result which has happened for FY2013.

[desmondxyz]

Could it be another Eratat? Be careful....

Eratat which is "in net cash position" still went to the market to borrow money. Furthermore, i believe the interest for the debt is quite high.

However, if you look at the balance sheet of China Fibre tech, you will notice that there is no long term debt. There is also an article dated on 2/5/2013 on how the cash in the company is being confirmed.

One part of the article on verification of the cash in company:
" A representative from Mazars said the Singapore Exchange has guidelines on how auditors should do cash audits. Mazars auditors have personally gone to the banks in China to collect the bank confirmation of the account balance in Nov 2012 and January 2013, and checked the bank statements. This is unlike audits for Singapore-based companies whereby auditors obtain the bank confirmation by post.

Giving an account of his work, Raphael Liew, who was appointed China Fibretech's senior finance manager in April 2012, said every month the company gives him the bank statement which is also circulated to the directors.

Every month, he reviews the transactions to make sure they tally with the accounts, and "so far there has not been any inconsistency." "


Assuming that the article is true, then there is a more than 50% chance that the cash is real. Coupled with the huge discount to the "value", in my opinion, it is worth a try despite the fact that the cash could be fake.

i believe one possible catalyst for the stock price to narrow the gap is a turnaround in the result which has happened for FY2013.

Then I can only wish you good luck with another 50% chance that the cash is fake.

[felixleong]

the cash is only 100% confirm plus chop real if paid as dividends to shareholders

there's a reason why S chips are trading at so low valuations and why blue chips that constant reward shareholders at much higher multiple. Track record and management is also important, dun look at numbers only.

[chongsk]

My experience with investing in China Hongx and Foreland is bad enough to share with you.

I bought in for exactly the same reasons, both are so much under valued and share prices are lower than cash/share. The latter is even paying good div for 2010 & 11. To be extremely careful to invest in company from Cn is my advice.

[Greenrookie]

Could it be another Eratat? Be careful....

Eratat which is "in net cash position" still went to the market to borrow money. Furthermore, i believe the interest for the debt is quite high.

However, if you look at the balance sheet of China Fibre tech, you will notice that there is no long term debt. There is also an article dated on 2/5/2013 on how the cash in the company is being confirmed.

One part of the article on verification of the cash in company:
" A representative from Mazars said the Singapore Exchange has guidelines on how auditors should do cash audits. Mazars auditors have personally gone to the banks in China to collect the bank confirmation of the account balance in Nov 2012 and January 2013, and checked the bank statements. This is unlike audits for Singapore-based companies whereby auditors obtain the bank confirmation by post.

Giving an account of his work, Raphael Liew, who was appointed China Fibretech's senior finance manager in April 2012, said every month the company gives him the bank statement which is also circulated to the directors.

Every month, he reviews the transactions to make sure they tally with the accounts, and "so far there has not been any inconsistency." "


Assuming that the article is true, then there is a more than 50% chance that the cash is real. Coupled with the huge discount to the "value", in my opinion, it is worth a try despite the fact that the cash could be fake.

i believe one possible catalyst for the stock price to narrow the gap is a turnaround in the result which has happened for FY2013.

Lets just talk about risk reward.

If it is a fraud, with its red flags. ( the interest income is way too low, for its cash hoard, u can help come up with many reasons like its a current account, it is offset by interest of small debts to maintain relationship, but come on la. If u have not touch the money for 3 years, why not put half in 1 year FD?? Is banking relation so important when u have a hoard of cash and might not need to borrow anytime soon?)
U lose everything !

If it is not a fraud, but being surrounded by crockcoaches in the fateful industry, with not company level effort to distinguish itself (e.g. Share buy back, dividends, self - imposed special audit), there is no catalyst for value to be unlocked in near time , except during time of penny speculation rotating to this counter.

If it is not a fraud, is it big enough, strong enough to attract investors/ funds?

P.s. if u read Eratat announcement, CFO went to bank for spot check, cash is there, spoke to bank manager, again confirm cash is there, but when money is needed to pay bonds, huh? Cash record is Inconsistent ?

How robust is the cash check? The best cash check is consistent and dividend payout. Foreland used to do that, and yet it got into troubles. It be can an industry problem. Fibre tech is smaller with no track records, I will not bet on it.