Inverse Head and Shoulder Pattern Forming
Updated
Comment
1. The company is selling below the value of its current assets less all liabilities— Benjamin Graham most famous "net nets". Net nets per share of 3.74 versus $0.84 per share2. Selling at less than 1.5 times past 5 years average earnings ($0.71)
Comment
Things to look out fora. Counterparty Risk: During the financial year 2018, the Group impaired an advance of RMB 233 mil paid to a supplier due to the supplier’s significant financial difficulties and ceased operation. Is has RMB 2 billion prepayment as at Dec 2018. Dec 2019 figures not available yet.
Comment
b. As at dec 2018, The inventories decreased from RMB 2.6 bil to RMB 1.6 bil (39% reduction) partly due to write down of RMB 211 mil on WIP. As at Dec 2019, the inventories further decreased to RMB 1.6 bil from 2.6 bil (40% reduction), however there is no breakdown on the inventories figure.c. About 30% of the revenue is from trading of metals and chemicals. Since oil price has slumped this might have an impact on the gross profit amount on this segment. However, gross profit contribution from trading segment is relatively small at 2% compared to Shipping building at 55%, so the impact might be minimal.
d. In 2019, 59 vessels were delivered according to schedule as compared to 46 vessels delivered in 2018. In spite of more
vessels delivered this year, the Group recorded a lower shipbuilding revenue of RMB13,019 million in FY2019
mainly due to construction of less large size containerships during the period.
e. Outstanding Order book: USD2.9 bil for 75 vessels + USD 1.1 bil announced in March 2020 for 10 dual fuel containerships (ordered by Tiger Group based in HK)
Trade closed: target reached
Head pattern almost complete, Target to take profit on or before 1.010
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