If you get the chance, do speak to the analyst at MIDF whose name and number is stated in the report. And if you're going to the AGM, I'd encourage you to speak to a Stephen Ng, the Malaysian director and one-time KPMG auditor - if there's anyone who can shed a better light on Xinghe, then it's him. He's the guy if you recall who signed the JV deal with Asfar back in April as reported in The Star and The Sun publications.

Yeah that's right.

Bunnypro have a little faith in your research. Even MIDF had issued a 17 sen per share call on Xinghe back in Feb this year (2 months before BDO completed its audit on FYE 31 Dec 2014 results). I just wish i3investor would publish the recommendation under latest headline above for all to see instead of burying them under 'view price target detail' which most are likely to miss.

Everyone loves a bargain. But that doesn't mean the price manipulation can go on forever. There's a limit to what a syndicate (assuming they're acting in concert) can do. Let's hope most investors wise up and not simply jump on the bandwagon selling their shares for 'peanuts'!

Of course, the price was deliberately brought down to 7 sen per share when the selling queue at 7.5 sen per share was about to finish, some are not done collecting - as I mentioned yesterday.

That's how distribution works. When you have tons of shares to offload, you don't stack them all at once and risk a free fall.

It's physics. The more the passengers the greater the number of buses required to move them. The pool of available shares in Xinghe stands currently at 2.35bn units. Compare that with IFCA which has 254 m public float and CAP with 600m outstanding shares, you'll know why it's far easier to lift the latter two. If every Xinghe holder knew that his or her shares and warrants are worth far more than what market is paying now, then naturally price will dramatically rise by leaps and bounds even within a day. Trouble with klse is there're more less informed investors than informed ones. Hence, the herd mentality. Given the greater numbers, it's quite natural for some to offload whilst others collect. Once distribution loses steams, accumulation will take over. Only then a rally will begin. Hopefully, by then investors will grow wiser and not all will settle for a lower price.

The market is currently still accumulating shares on the cheap. For some, bargain hunting isn’t over.

If you read the annual report you'll notice one of the directors happens to be also a chairman of the audit committee and director at CAP. The fact both companies share the said director who is a senior member of the auditing fraternity says a lot about Xinghe as a company. Besides him, two other Malaysian directors are numbers people too. And one Stephen Ng Lim Min (a former KPMG auditor turned entrepreneur) has been an early investor and director since 2011 and has remained invested ever since Xinghe listed on the KLSE via reverse acquisition back in April 2014.

Apart from CAP, only Xinghe is one of the two Chinese companies recently covered in news. Being visible in news is important especially when they can reveal something about the company's sale or stock prospect. The latter's impending JV plant in Malaysia between June this year and March next is a potential game changer. According to Stephen Ng, the said joint venture between Xinghe (the 6th largest edible oil manufacturer in China) and Asfar (a 30% Jordanian owned company in Malaysia) will yield an additional RM100 million in sales by next year.

BDO completed its first audit exercise on Xinghe back in April 2015. So as far as numbers go, Xinghe’s finances appear to be sound. Even the extraordinary profit growth in Q1 2015 is not unreasonable if one remembers part of the escalation in Q1 profit was attributable to a one-off expenditure for a reverse acquisition of a listed company on the KLSE which had understandably lowered the profit for FYE 31 Dec 2014. So actual profit growth derived from its peanut oil and peanut protein cake business was 60% in Q1 2015 which should be good enough to lift its TP level between 24 sen per share and 95 sen per share. And yes it could attain 35 sen per share at 5x PE forecast for FYE 2015 as some have pointed out; if one wishes to draw comparison with Yee Lee. If that were the case, the warrants will fetch a bigger improvement in price attaining an equivalent 25 sen each.

The question is when the market will allow these more reasonable price levels to emerge. That no one can tell. What is certain the current price of 7 sen per share and 2 sen per warrant are dirt cheap and benefits no one except the investor willing to go long on Xinghe.

Those seeking a quick exit do so for financial reasons either to avoid contra loss or simply because they wish to access the cash sooner rather than later.

Regardless, whether you choose to exit or remain invested, do so wisely and with great care. Do not allow the market or anyone to short change you. In short, make the call when you’re certain about when you wish to draw the line for profit or cut a loss.

Based on the Q1 report as at 31/3/2015 issued by the management and the 2014 annual report lodged with Bursa yesterday, the company has registered an annualized profit growth of almost 5 times - 4.65x to be exact.

Assuming BDO were diligent in their audit work for FYE 31 Dec 2014, the company posted a net profit attributable to equity owners of RM36,103,000 against an average share pool of 1.709 billion units. The resulting earnings per share (EPS) and price to earnings (PE) ratios were at 2.11 sen per share and 3.31x respectively based on last year's results and yesterday's closing price.

For the first quarter this year, the company captured a greater growth in its peanut oil and peanut protein cake business. It registered a net profit attributable to equity owners of RM41,949,000 against a current share pool of 2.35 billion units with a quarterly EPS of 1.79 sen per share. In annual terms, the said quarter results would translate into a full year EPS of 7.14 sen per share (assuming it can repeat the results each quarter since the said peanut commodities are consumed throughout the year).

Now assuming the PE remains unchanged at 3.31x, then the shares ought to be retailing at 24 sen per share.

Based on the latest results, a fair price of the share ought to be between 24 sen and 95 sen per share. This is my opinion, of course.

Whether actual trade will reflect, exceed or underperform these TP levels depends on how far the investors have factored the results into the share price before trading them come Monday onwards.


P/S Before you decide review carefully the Q1 report and annual report yourself and speak to the auditors and directors and anyone you can grab hold of, and make your own call - whether you choose to buy, hold or sell. Always remember to invest wisely (using your own surplus money and do not contra) and do the math before spending a single cent on any stock of choice; whether it's apple, ifca or xinghe for that matter.