12 June 2012

China Minzhong - Still worth to invest?

China Minzhong, one of my previous favourite stocks in Singapore stock market, has recently announced its latest quarterly report. With lower net profit margin and hiking of receivables and payables, it prompted me a lot of curiosity in its accounting standard.

Firstly, why would the sudden climb in receivables come together with the payables? As what I understood, the vegetables business require you to make the payment in cash to the suppliers. In my mind, I am still worry about the recent accounting scandals happended in one of the Hong Kong listed companies give a negative impact to the investor society here.

Secondly, with increasing bank loan to expand the business, my worries is that the company is not able not able to do so in near futures if the Europe crisis remains. Of cause, this is only a guess, as I do not really do the detail homework on the clientele of China Minzhong.

However, we still can see that the cash flow from operating is still in positive figure (partly due to the increase of total payables), but the total cash flow is in negative mode due to the increase in investing cash flow. So what I can foresee is the company is unlikely to return shareholders in good dividend. 

With current price of 54.5cents, let's see if the company can overturn the downtrend of the price. I sincerely hope that the company can grow with better financial controling in its optimal debt structure.

2 comments:

  1. hi jack..

    i just found out ur blog thru stockunleashed. btw, i really admire u for changing ur profession to investment banking. may i know how old r u? as for me i want to switch my comfort zone career as an engineer but im still comtemplating. sighhhh.. as for me im already 39 years old n wht do u think of switching to ur line?...from lofan73

    ReplyDelete
  2. Hi lofan73 bro,

    Thank you for your comments here.

    I am now 30 years old, and I hope that I can get my CFA soon (and the chances are unknown, haha). I believe that "passion" is the only reason that keeps me in this line, although there is still a long way to go.

    Nonetheless, you can still extend your hobby in investing during part time (the time after work). I believe that the ultimate goal of investing is to have a sustainable lifestyle after retirement.

    Good luck.

    ReplyDelete

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