It's the start of August, and there's alot of whipsaw action in the markets. Looking at STI, it is now at the pre-crisis levels and rumored to even hit 3000 by end of the year!
Ok, let's look back. Since the mad sell off in Feb-Mar, the market took a huge turn by killing all the bears and most of the stocks you have bought during that period of time will have made you at least 30-40% gain till date. It seems that Asia markets has recovered quite a fair bit but the US markets has still room to move up. Dow is still below its 10,000 mark and NASDAQ close to its 2000 mark.
Moving back to the STI, Celestial is still suspended, pending its negotiation with the bond holders. Below is the latest reply:
----
CELESTIAL NUTRIFOODS LIMITED
(the “Company”)
(Incorporated in Bermuda)
UPDATE ON EARLY REDEMPTION OF CONVERTIBLE BONDS FOR JULY 2009
Further to the Company’s announcement nos. 00073 and 00175 released on 15 June 2009 and 30 June 2009 respectively, the Board wishes to inform that the Company has had preliminary communications and discussions with bondholders representing a substantial majority interest in the convertible bonds, and has been working with the sole dealer manager, Merrill Lynch Far East Limited and the legal advisor, Milbank,Tweed, Hadley & McCloy LLP to develop potential proposals for bondholders’ consideration.
Should the bondholders wish to communicate with the Company, please find below the contact details of the Company:-
Contact : Sun Feng
Telephone : 0086-10-65561809
Email : info@celestialsms.com
The Company will provide an update as and when there is any further development.
By Order of the Board
Ming Dequan
Executive Chairman
31 July 2009
----
It has missed the bull run recently, with most of the S-Shares moving fast and furious and recovering to its pre-IPO prices. Yangzijiang is currently trading at $0.895, which is at the 2006 pre-crisis levels, and others like China Milk and China XLX moving into the $0.50 levels.
Kinda busy nowadays, as banks are trying to catch this sudden uptrend in the economy, and doing the mid year appraisal is stressful as well!
Showing posts with label Celestial. Show all posts
Showing posts with label Celestial. Show all posts
Celestial is suspended from 16/06/09
As reported in SGX, celestial has requested for suspension for its share until further notice:
Quote:
The suspension is to allow Merrill Lynch Far East Limited and its affiliates, the appointed sole dealer manager to assist the Company for negotiation with the Bondholders. The suspension will be lifted as soon as the views of the Bondholders are obtained.
Link: http://info.sgx.com/webcorannc.nsf/vwprint_portal/36EC058E838F56F3482575D30005AAA9?OpenDocument
They have also taken the chance to dismiss the rumour of a bank going to buy its bonds:
MISCELLANEOUS :: CLARIFICATION TO THE RUMOURS IN RESPECT OF THE ARTICLE IN THE LIANHE ZAOBAO HEADLINED "传一中资大银行或收购天圜营养债券" OF 13 JUNE 2009
Link: http://info.sgx.com/webcorannc.nsf/vwprint_portal/C205199BDC4E5343482575D6002DBAE3?OpenDocument
As I was saying previously, Merrill should be generating some form of contact and deriving solutions to resolve this and fast enough, I am guessing that this suspension could be proposed by Merrill and some news may come out fast enough these few weeks. Quite a number of comparisons were done with other suspended companies like Sino-Environment Tech and Beauty China. This definitely leaves some worries for investors, especially it didn't worked well for the 2 companies and I am quite heavily invested in this counter.
Quote:
The suspension is to allow Merrill Lynch Far East Limited and its affiliates, the appointed sole dealer manager to assist the Company for negotiation with the Bondholders. The suspension will be lifted as soon as the views of the Bondholders are obtained.
Link: http://info.sgx.com/webcorannc.nsf/vwprint_portal/36EC058E838F56F3482575D30005AAA9?OpenDocument
They have also taken the chance to dismiss the rumour of a bank going to buy its bonds:
MISCELLANEOUS :: CLARIFICATION TO THE RUMOURS IN RESPECT OF THE ARTICLE IN THE LIANHE ZAOBAO HEADLINED "传一中资大银行或收购天圜营养债券" OF 13 JUNE 2009
Link: http://info.sgx.com/webcorannc.nsf/vwprint_portal/C205199BDC4E5343482575D6002DBAE3?OpenDocument
As I was saying previously, Merrill should be generating some form of contact and deriving solutions to resolve this and fast enough, I am guessing that this suspension could be proposed by Merrill and some news may come out fast enough these few weeks. Quite a number of comparisons were done with other suspended companies like Sino-Environment Tech and Beauty China. This definitely leaves some worries for investors, especially it didn't worked well for the 2 companies and I am quite heavily invested in this counter.
Another day, another week gone
Another week of volatile trading, with the focus on Celestial. Friday was the day where the convertible bonds were due, but no news were out in particular to the company. Merrill Lynch has been appointed to tackle this problem and likely, there would be some solutions in the next few weeks.
Even Channel U and 早报 made some coverage on Celestial too:
市场谣传，一家大型中国银行可能成为拯救中资企业天圜营养集团(Celestial NutriFoods)的“白武士”，出资收购后者一批总值2亿3480万元的债券(convertible bonds)。
Link: http://www.zaobao.com/cs/cs090613_512.shtml
To translate that, it means there are rumours that there may be a big bank to buy over the bonds from Celestial. I guess there may be more trading done on Celestial and likely it may go below $0.165.
Putting that aside, governments are all trying to find ways to unwind the huge stimulus packages that they have put in place to fight inflation. Once the economy recovers, inflation will be shooting fast and furious. Remember the $150 oil? Oil is now at around $72, which is coming back to the precrisis levels.
Went butter factory last friday, and the queue there is horrible! But then, it was the 1st time that I drink until I got blackout and merlion-ed non stop!
Even Channel U and 早报 made some coverage on Celestial too:
市场谣传，一家大型中国银行可能成为拯救中资企业天圜营养集团(Celestial NutriFoods)的“白武士”，出资收购后者一批总值2亿3480万元的债券(convertible bonds)。
Link: http://www.zaobao.com/cs/cs090613_512.shtml
To translate that, it means there are rumours that there may be a big bank to buy over the bonds from Celestial. I guess there may be more trading done on Celestial and likely it may go below $0.165.
Putting that aside, governments are all trying to find ways to unwind the huge stimulus packages that they have put in place to fight inflation. Once the economy recovers, inflation will be shooting fast and furious. Remember the $150 oil? Oil is now at around $72, which is coming back to the precrisis levels.
Went butter factory last friday, and the queue there is horrible! But then, it was the 1st time that I drink until I got blackout and merlion-ed non stop!
I finally graduated!
My results are out and it has been confirmed! I finally completed my studies!
The first goal for this year has been achieved, and now for the second goal at the end of the year. Equities are still quite beaten down, and Celestial has been the hot topic of the week, especially when Friday is coming near. Will they survive this through rights issuance or will the bond holders decide to hold it till 2011? It has become so speculative that trading up and down is in at least 10-20%.
Other news to take note of:
The first goal for this year has been achieved, and now for the second goal at the end of the year. Equities are still quite beaten down, and Celestial has been the hot topic of the week, especially when Friday is coming near. Will they survive this through rights issuance or will the bond holders decide to hold it till 2011? It has become so speculative that trading up and down is in at least 10-20%.
Other news to take note of:
Citi and U.S. finalize deal - $58B stock swap
NEW YORK (Reuters) -- Citigroup Inc. on Wednesday began a long-delayed $58 billion stock swap that could leave the government with a 34% stake in the nation's third-largest bank.Citigroup (C, Fortune 500) plans to swap common stock for as much as $33 billion of preferred shares, and convert as much as $25 billion of preferred shares held by the U.S. Treasury into common stock.
Citigroup said the swap could make it one of the world's best-capitalized banks, adding up to $61 billion of tangible common equity and $64 billion of Tier-1 common equity. It had planned to begin the swap in April.
The exchange offer could result in the issuance of more than 17 billion new common shares, diluting the holdings of existing investors by 76%. The public exchange offers expire July 24.
Link: http://money.cnn.com/2009/06/10/news/companies/citigroup_stock_swap.reut/index.htm?postversion=2009061008Celestial... again
I have been following on a thread in the forums under Channelnewsasia on Celestial and it has been interesting to see how contradicting some forumers may have for their own self interest and post conflicting posts and information.
[quote="hoegaandit" Posted: Fri May 01, 2009 2:58 am ]
It seems that the longists in this thread are not facing reality. The management has not been able to arrange any committed finance for the past six months and now there is only a month to go! This is despite the Chinese Government's massive stimulus and massively increased lending in China recently. It is all very well getting caught up in the Chairman's positive talk at the AGM - but where are the results?
In other words the recent price increase is completely speculative and just froth, which could collapse back suddenly.
The complete lack of any substantive progress on financing the CBs does not augur at all well for this company.
Thread: http://forum.channelnewsasia.com/viewtopic.php?t=240217&start=10
[quote="hoegaandit" Posted: Thu Apr 16, 2009 2:33 pm]
Ha ha friend - actually I was a long not a short. I try and do a more thorough job when I buy and post all the reasons not to buy and see if posters can counter them. Only problem was that I didn't buy enough.
No, haven't sold. Basically I am a fundamental investor who has been severely mauled by my "buy and hold" strategy in respect of small caps.
While not totally convinced against buy and hold I would like to recommend professor Mark who has a good track record with trends
http://www.asiawind.com/pub/hksr/mark/mark55.shtml
You will note he correctly forecast a major resurgence in stocks last year - but is also forecasting a further major downwave after that. That is also my own view.
So I will be looking to get out sometime - but not yet, as Celestial remains severely undervalued on almost all worst case scenarios.
Link: http://forum.channelnewsasia.com/viewtopic.php?t=234793&postdays=0&postorder=asc&start=60
------
Hmm, I believe everyone has their own agendas when you publish certain information about a company or industry or whatsoever. As mentioned in my previous posts, the market is always very efficient in the short run and highly inefficient in the long run. Since I am in the topic of Celestial, let me cover some parts of it again.
What is the convertible bonds that is haunting this company?
Quote from Wiki:
In finance, a convertible note (or, if it has a maturity of greater than 10 years, a "convertible debenture") is a type of bond that can be converted into shares of stock in the issuing company or cash of equal value, at some pre-announced ratio. It is a hybrid security with debt- and equity-like features. Although it typically has a low coupon rate, the holder is compensated with the ability to convert the bond to common stock at an agreed upon price and thereby participate in further growth in the company's equity value.
Next, what are the options then for Celestial? Finance this bonds from a loan. Here is one of the announcements from the CEO:
---------
CELESTIAL NUTRIFOODS LIMITED
(the “Company”)
(Incorporated in Bermuda)
UPDATE ON FINANCING FOR THE POTENTIAL EARLY REDEMPTION OF THE
S$235,000,000 CONVERTIBLE BONDS (the “Bonds”)
Reference is made to the announcement no. 00003 released by Celestial NutriFoods Limited
(the “Company”) on 23 March 2009 in relation to the Emphasis of Matter by Auditors on the
Financial Statements for the financial year ended 31 December 2008.
At the request of the Singapore Exchange Limited, the Board of Directors of the Company
wishes to update that the Company is trying to raise the necessary fund to finance the
potential early redemption of the Bonds. The Company has held discussions and negotiations
with several financial institutions, both in The People’s Republic of China (“PRC”) and outside
PRC to arrange for credit facilities to finance the potential early redemption of the Bonds but
has not been able to commit any fundings as of to-date. The financial crisis that has engulfed
the financial market has made this more difficult. The Management will continue to work hard
on this, and the Company will provide an update on the financing status via the SGXnet if
there is any material progress occurs between the monthly updates.
By Order of the Board
Ming Dequan
Executive Chairman
30 April 2009
---------
Does this add a twist to the bond conversion which is due soon in June? I believe it raises some concerns as investors do worry if they are unable to raise the funds needed. If they are unable to raise the funds necessary, the company may have to forced into insolvency. So what next?
Remember, their AGM has cleared all their resolutions:
---------
The Board of Directors of Celestial NutriFoods Limited (the "Company") wishes to announce that at the Annual General Meeting ("AGM") of the Company held on 28 April 2009, all resolutions relating to the matters as set out in the Notice of AGM dated 9 April 2009 were duly passed.
---------
Now, they have an option to issue rights up to 100% of the existing shares to raise capital in the open market. So what now?
I can't really answer for the bond holders, but in order to attract the bond holders NOT to exercise their bonds or further extend the redemption date, Celestial has to propose a very strong strategic plan moving forward. Also not forgetting I do have a vested interest in this company, I will be following closely on the announcements and the direction of the company.
[quote="hoegaandit" Posted: Fri May 01, 2009 2:58 am ]
It seems that the longists in this thread are not facing reality. The management has not been able to arrange any committed finance for the past six months and now there is only a month to go! This is despite the Chinese Government's massive stimulus and massively increased lending in China recently. It is all very well getting caught up in the Chairman's positive talk at the AGM - but where are the results?
In other words the recent price increase is completely speculative and just froth, which could collapse back suddenly.
The complete lack of any substantive progress on financing the CBs does not augur at all well for this company.
Thread: http://forum.channelnewsasia.com/viewtopic.php?t=240217&start=10
[quote="hoegaandit" Posted: Thu Apr 16, 2009 2:33 pm]
Ha ha friend - actually I was a long not a short. I try and do a more thorough job when I buy and post all the reasons not to buy and see if posters can counter them. Only problem was that I didn't buy enough.
No, haven't sold. Basically I am a fundamental investor who has been severely mauled by my "buy and hold" strategy in respect of small caps.
While not totally convinced against buy and hold I would like to recommend professor Mark who has a good track record with trends
http://www.asiawind.com/pub/hksr/mark/mark55.shtml
You will note he correctly forecast a major resurgence in stocks last year - but is also forecasting a further major downwave after that. That is also my own view.
So I will be looking to get out sometime - but not yet, as Celestial remains severely undervalued on almost all worst case scenarios.
Link: http://forum.channelnewsasia.com/viewtopic.php?t=234793&postdays=0&postorder=asc&start=60
------
Hmm, I believe everyone has their own agendas when you publish certain information about a company or industry or whatsoever. As mentioned in my previous posts, the market is always very efficient in the short run and highly inefficient in the long run. Since I am in the topic of Celestial, let me cover some parts of it again.
What is the convertible bonds that is haunting this company?
Quote from Wiki:
In finance, a convertible note (or, if it has a maturity of greater than 10 years, a "convertible debenture") is a type of bond that can be converted into shares of stock in the issuing company or cash of equal value, at some pre-announced ratio. It is a hybrid security with debt- and equity-like features. Although it typically has a low coupon rate, the holder is compensated with the ability to convert the bond to common stock at an agreed upon price and thereby participate in further growth in the company's equity value.
From the issuer's perspective, the key benefit of raising money by selling convertible bonds is a reduced cash interest payment. However, in exchange for the benefit of reduced interest payments, the value of shareholder's equity is reduced due to the stock dilution expected when bondholders convert their bonds into new shares.
-----------
Next, what are the options then for Celestial? Finance this bonds from a loan. Here is one of the announcements from the CEO:
---------
CELESTIAL NUTRIFOODS LIMITED
(the “Company”)
(Incorporated in Bermuda)
UPDATE ON FINANCING FOR THE POTENTIAL EARLY REDEMPTION OF THE
S$235,000,000 CONVERTIBLE BONDS (the “Bonds”)
Reference is made to the announcement no. 00003 released by Celestial NutriFoods Limited
(the “Company”) on 23 March 2009 in relation to the Emphasis of Matter by Auditors on the
Financial Statements for the financial year ended 31 December 2008.
At the request of the Singapore Exchange Limited, the Board of Directors of the Company
wishes to update that the Company is trying to raise the necessary fund to finance the
potential early redemption of the Bonds. The Company has held discussions and negotiations
with several financial institutions, both in The People’s Republic of China (“PRC”) and outside
PRC to arrange for credit facilities to finance the potential early redemption of the Bonds but
has not been able to commit any fundings as of to-date. The financial crisis that has engulfed
the financial market has made this more difficult. The Management will continue to work hard
on this, and the Company will provide an update on the financing status via the SGXnet if
there is any material progress occurs between the monthly updates.
By Order of the Board
Ming Dequan
Executive Chairman
30 April 2009
---------
Does this add a twist to the bond conversion which is due soon in June? I believe it raises some concerns as investors do worry if they are unable to raise the funds needed. If they are unable to raise the funds necessary, the company may have to forced into insolvency. So what next?
Remember, their AGM has cleared all their resolutions:
---------
The Board of Directors of Celestial NutriFoods Limited (the "Company") wishes to announce that at the Annual General Meeting ("AGM") of the Company held on 28 April 2009, all resolutions relating to the matters as set out in the Notice of AGM dated 9 April 2009 were duly passed.
---------
Now, they have an option to issue rights up to 100% of the existing shares to raise capital in the open market. So what now?
I can't really answer for the bond holders, but in order to attract the bond holders NOT to exercise their bonds or further extend the redemption date, Celestial has to propose a very strong strategic plan moving forward. Also not forgetting I do have a vested interest in this company, I will be following closely on the announcements and the direction of the company.
An article to greatly debate on: Stop Buying These Stocks
April 26, 2009 | Comments (21)
A few weeks ago, my Foolish friends Brian Richards and Tim Hanson profiled five stocks they felt investors should avoid. Their argument struck me as pretty straightforward: Investors would be well-served to avoid companies with opaque financial statements (like Citigroup (NYSE: C)) or complicated government ties (like, um, Citigroup).
Apparently many members of our community disagreed.
Pointing to their significant short-term gains in stocks such as Bank of America (NYSE: BAC) and Ford (NYSE: F), many readers (rather rudely, in my opinion) insisted that Brian and Tim’s analysis was invalid.
This comment from IronBob is a good representation of the feedback that Brian and Tim received:
INCREDIBLE! Thanks for the advice! I'm glad I'm ignoring it as I almost doubled my money on Ford in less than two months!
While I’m happy for IronBob, I’d like to caution readers that his returns are hardly typical -- and that short-term speculating in no-moat companies is simply not a sound investing strategy.
Just say no ... to short-term speculationJumping in and out of stocks is certainly exciting, and -- if you're lucky -- it can result in some satisfying short-term profits. But over the long haul, active trading is a loser's game.
For starters, you have to correctly predict both the direction and the timing of a stock's move, which most experts agree is impossible to do with any consistency. Anyone can get lucky once or twice, but repeatedly? Forget it.
...
What this means for you
In other words, if you're interested in preserving your capital and accumulating long-term wealth, stay away from short-term speculation in subpar companies.
...
So what should I buy, smart guy?
That's easy. Concentrate on buying great businesses -- companies with straightforward business models, sound balance sheets, strong financial statements, and shareholder-friendly management. If you buy such businesses when they trade at a significant discount to intrinsic value, it's highly likely that you'll make a lot of money over the long term.
...
------
I have cut shorted the article by a few paragraphs as I find the remaining portions quite repetitive. Now, here's the thing, this article bashes traders who plays the market on a short term basis, meaning buy-sell within minutes to within days or just a very short span of time.
Apparently, the stocks that the author suggested to avoid like Ford, Citi, Bank of America etc, well.. kinda made a huge turn back over the past 1-2 months, like gaining more than 100%.
With Citi lowest at $0.90, and BAC at $3+ during February lows, current trading price is at Citi $3.19, and BAC at $9.10, you can't help but say, hey, that's more than 100% increase in my portfolio! There's a huge debate as well in the comments, take a read at the comments:
http://www.fool.com/personal-finance/general/2009/04/26/stop-buying-these-stocks.aspx#commentsBoxAnchor
Now, if you are a trader, this profit margin is very good as markets in the short run is very, very efficient. Any news will either sink or tank the stock to its recent new highs or lows. The trade off is, you got to monitor the market very closely to beat the market.
Next is if you are an investor, the author is simply implying that you should not bother about the companies mentioned above because in the long run, these companies are least likely to return to their glorious moments like Citi, $60+? Take note of the key word, least likely, because in the long run, its no longer about efficiency. It's more about fundamentals, profitability and the business model of the company.
Lastly, I was a trader when I first started off, and it did gain me alot of knowledge and profits, but as time moves fast, markets became more and more unpredictable and losses start emerging. At the same time, it took a toll on my job as it was very difficult to concentrate on your job when you are losing money and now, I read alot on annual reports and invest in profitable companies which I have a clear understanding on. Although I still look at the markets occasionally, it is quite a tough habit to kick away.
Recently, I have been buying into Celestial again, averaging down to approximately $0.45 per share. After the recent surge to $0.185 and trending down to $0.155, the AGM tomorrow will be interesting as they are seeking votes to approve the rights issuance. Will the market be interested in the rights issue of Celestial? Remember my previous article on investing in a good company, here is the snapshot of its past 9 years again:
| year | revenue | profit after expenses | profit after tax | EPS | ROE | ROTA | ROC | Price per share | P/E ratio | dividend | Total Equity |
| 2000 | 51,100 | 15,100 | 14,300 | - | |||||||
| 2001 | 131,200 | 46,200 | 43,900 | - | |||||||
| 2002 | 226,400 | 89,100 | 71,900 | 51.7% | 51.7% | - | 139,104 | ||||
| 2003 | 288,463 | 115,800 | 93,100 | 0.110 | 38.0% | 18.1% | 38.0% | 0.00 | 245,203 | ||
| 2004 | 432,168 | 148,888 | 117,393 | 0.250 | 25.2% | 11.5% | 25.2% | 0.00 | 465,297 | ||
| 2005 | 802,572 | 281,147 | 281,006 | 0.520 | 29.0% | 13.9% | 27.9% | 0.58 | 1.12 | 967,680 | |
| 2006 | 1,158,161 | 369,995 | 369,995 | 0.610 | 26.5% | 8.3% | 14.1% | 1.51 | 2.48 | 1,397,569 | |
| 2007 | 1,799,657 | 484,760 | 487,829 | 0.660 | 27.9% | 9.3% | 15.9% | 1.03 | 1.56 | 0.02 | 1,751,164 |
| 2008 | 2,301,500 | 595,319 | 499,200 | 0.780 | 22.8% | 8.6% | 14.6% | 0.12 | 0.15 | 2,185,157 |
My study on rights issuance is, normally the price will fall after a rights issuance as dilution of EPS is relatively high. Unfortunately, Celestial has gone to this step is due to the Convertible bonds that are due coming June/July 2009. They can choose to finance a loan to service this CB payouts, but most likely, they are using this rights issuance to raise capital to prepare for a full payment if all the bond holders decide to bail out.
There's no win-win situation definitely, as you take a loan, you pay interest rates that may kill you, or you issue rights and dilute the earnings per share. My prediction (personal opinion) is that, once this CB saga is over and the company is more less back on the right track, they may do a reverse stock spilt again to reconsolidate the available shares on the market, depending on the number of rights issued.
Part 4: How to define a good business?
Here is a snapshot of Celestial:
From this table, you can see that revenue is increasing every year, and even in 2008, it manage to surpass revenue in 2007. Gross profit is also at a relatively healthy growth but for net profit, it only showed a slight increase. ROE has been above 20% for the past 7 yaers but ROTA seems to be falling.
From this table, you can see that revenue is increasing every year, and even in 2008, it manage to surpass revenue in 2007. Gross profit is also at a relatively healthy growth but for net profit, it only showed a slight increase. ROE has been above 20% for the past 7 yaers but ROTA seems to be falling.
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