Investing

Is Xingquan a good bet?

 

As you know, Xingquan was trading at between 2 sen to 5.5 sen in early June 2017. I bought a total of 50.5 million shares at an average price per share of 3.5 sen. I bought almost all the shares traded.

As you also know, Xingquan has been selling between 10-13 for some time and I have been accumulating it. Last year annual report shows that I have accumulated 36.4 million shares. Now I have a total of 86.9 million shares and my average price per share is 6.85 sen.

Is 6.85 sen per share a good bet?  

I recall that CIMB was the under writer at Rm 1.70 for its IPO about 7 years ago and the auditors was and still is SJ Thornton of Singapore. I remember its retired senior partner a Chartered Accountant, is my cousin who is also 84 years old like myself.

You can see in its latest accounts that its NTA is Rm 1.90 per share with a lot of cash in the bank. I cannot believe the company could simply cooked the books to bluff the highly respected auditors for so many years.

I visited Xingquan’s factory in Fujian. It used all its money from the IPO to build a large factory with hostel accommodation for 2,000 workers. These assets must have appreciated many folds.

The question is can I trust CIMB and the auditors?

I noticed that most of the shareholders complained that the company gave them very little dividend at every AGM and they do not believe the audited accounts is true. If only the company gives out a little more dividend the share price would be different.

It has been selling about 10 sens for quite a long time and I have been buying.

A few months ago when Securities Commission issued notice to Xingquan to submit the 3rd accounts or it would be suspended, its price dropped to 2 sen and I bought almost all the shares traded. I bought a total of 50.5 million shares at an average price of 3.5 sen.

According to Bursa announcement, Xingquan did not submit its 3rd quarter accounts in time because its accountant’s contract was not renewed. As a result, many shareholders rushed to dump their holdings.

The company announced that it is looking for a suitable accountant to be able to submit its 3rd quarter accounts.

It is only natural, one day the controlling shareholder will sell all the company’s assets to benefit themselves and all the shareholders. Its audited accounts shows that its NTA is Rm 1.90.

I can imagine the amount I will make from my 86.9 million shares, costing me 6.85 sen per share. I will be laughing all the way to my bank.

In any case, there is always some risk in buying any share. I think Xingquan is a good bet.

 

 

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