Foreland Fabrictech

[bullseye]

hi dydx
thanks for sharing the link for amfraser report
hope that this sleeping dog can slowly wake up and start barking again

cheers
bullseye

AmFraser has just issued a report on Foreland dated today (17Jun11) with a 'Buy' recommendation and a Fair Value estimate of $0.215 for the counter....
https://www.amfraser.com.sg/gcsg/downloa...062011.pdf

The report is based on a recent visit to Foreland's factory in Fujian by AmFraser's research team. Today, AmFraser has also issued a separate report entitled "China Textile Industry".....
https://www.amfraser.com.sg/gcsg/downloa...062011.pdf

[dydx]

Today (8Jul11), Phillip Capital has issued a 'BUY' call and initiation report on Foreland together with a TP of $0.191.....
http://www.remisiers.org/cms_images/rese...buy_PS.pdf

I was amused by the analyst's reasonings (re-produced below) for setting a very conservative TP..

"We price Foreland at 4.35x FY11E earnings. This represents a hefty 70% discount to broad market PE of around 14.5x. Reasonable considering a 50% (we are cautious too) S-chip “may-go-bust-anytime” sentiment discount, 10% small cap discount and a further 10% for the laughable bid-ask spread of $0.001. This gives us a target price of $0.191."

[bullseye]

hi dydx
i also laughed my head off when i saw the analysts reasoning for the valuation

buti have to say that the new ask/bid spread in SGX for stock below 20c is not helping in trading volume at all

i spoke to few of my trader friends who all said that now each bid is only 0.1 cent instead of 0.5 cent, it will take 5 bids to make what they use to make so that may discourage them from trading penny stocks

ironically, it may become LPPL situation, when management of penny stocks later on may consider doing a share consolidation so that stock price can go back up above 20cents again haha

cheers

Today (8Jul11), Phillip Capital has issued a 'BUY' call and initiation report on Foreland together with a TP of $0.191.....
http://www.remisiers.org/cms_images/rese...buy_PS.pdf

I was amused by the analyst's reasonings (re-produced below) for setting a very conservative TP..

"We price Foreland at 4.35x FY11E earnings. This represents a hefty 70% discount to broad market PE of around 14.5x. Reasonable considering a 50% (we are cautious too) S-chip “may-go-bust-anytime” sentiment discount, 10% small cap discount and a further 10% for the laughable bid-ask spread of $0.001. This gives us a target price of $0.191."

[dydx]

I suppose, in anticipation of continued good results for Q2-FY11 and the forseeable future, Foreland's management is making more efforts to engage investors, and yesterday (26Jul11) CIMB hosted a lunch presentation by the company, and NextInsight today posted an interesting follow-up report for the event.....
http://www.nextinsight.net/index.php/sto...technology

[dydx]

Yesterday (2Aug11) evening, Foreland released a "Positive Profit Alert" for the coming Q2-FY11 results.....
http://info.sgx.com/webcoranncatth.nsf/V...00023E6AB/$file/Forelandpositiveprofitalertanddateofresults.pdf?openelement

It will be really great and impressive if the coming Q2 results are even better than Q1's.....
http://info.sgx.com/webcoranncatth.nsf/V...B000FEC7C/$file/2011Q1resultannouncement.pdf?openelement

[dydx]

Q2/1H-FY11 results (first released on 12Aug11) are so impressive that I guess many Foreland should be very pleased.....
http://info.sgx.com/webcoranncatth.nsf/V...A001AE591/$file/2011Q2resultannouncementvfinal.pdf?openelement [Results announcement]
http://info.sgx.com/webcoranncatth.nsf/V...A001AE591/$file/2Q11ResultsPressReleasevfinal.pdf?openelement [Press release]

Q2 makes 5 successive quarters (starting from Q1-FY10) of rapid increase in both revenue and NP for Foreland, and it seems the strong growth momentum - supported by increases in both business volume and selling prices - is not about to slow down at all. Q2's revenue of Rmb 203.31m is up by a solid 32.4% sequentially, when compared with Q1-FY11's Rmb 153.5m. And Q2's PBT of Rmb 53.15m is also up by an equally impressive 35.7% sequentially, when compared with Q1-FY11's Rmb 39.16m. These very strong qoq growth in both revenue and PBT/profits are indeed very impressive!

Foreland has also declared a maiden Interim dividend of Rmb 0.027/share (equivalent to approx. $0.0051/share), with scrip option.

I guess many people may agree with me that it is rather inappropriate that Mr Market should keep Foreland's share price - last done (12Aug11) at $0.113 - at a big discount to its latest (as at 30Jun11) NAV of Rmb 1.14 (based on the 511.167m outstanding issued shares) - equivalent to approx. $0.217.

Using Q2's NP of Rmb 38.84m as a basis, Foreland's NP is now running at Rmb 155.36m a year, which will equate to a full-year EPS of Rmb 0.3039 - equivalent to $0.0577 - based on the 511.167m outstanding issued shares. A conservative PER of 5x will give a fair value estimate of $0.2885, before counting any additional value from Foreland's large and growing cash reserve of approx. $0.07/share (as at 30Jun11).

I guess given enough time, many brokers and institutions should see Foreland's investment merits, and this should trigger a justified re-rating of the counter.

[sgmystique]

Hi dydx,

I just wonder, Foreland seems to be available at too good a price to be true. It is not exactly a small company with 511.167m outstanding issued shares. At the current price, market values it at approximately S$62 mil. The undervaluation is well pointed out in your post. And considering the fact that it is a zero debt company with a rapidly growing cash balance the current price seems to be a mistake...but can hundreds/ thousands of investors be missing what appears such a compelling buy to you and me.

Would appreciate if you could let us know of some other similar story that you may be aware of where we had huge undervaluation for a very long period of time followed by a rationalization of the price. That would definitely help in bolstering up confidence in our investments in Foreland.

Q2/1H-FY11 results (first released on 12Aug11) are so impressive that I guess many Foreland should be very pleased.....
http://info.sgx.com/webcoranncatth.nsf/V...A001AE591/$file/2011Q2resultannouncementvfinal.pdf?openelement [Results announcement]
http://info.sgx.com/webcoranncatth.nsf/V...A001AE591/$file/2Q11ResultsPressReleasevfinal.pdf?openelement [Press release]

Q2 makes 5 successive quarters (starting from Q1-FY10) of rapid increase in both revenue and NP for Foreland, and it seems the strong growth momentum - supported by increases in both business volume and selling prices - is not about to slow down at all. Q2's revenue of Rmb 203.31m is up by a solid 32.4% sequentially, when compared with Q1-FY11's Rmb 153.5m. And Q2's PBT of Rmb 53.15m is also up by an equally impressive 35.7% sequentially, when compared with Q1-FY11's Rmb 39.16m. These very strong qoq growth in both revenue and PBT/profits are indeed very impressive!

Foreland has also declared a maiden Interim dividend of Rmb 0.027/share (equivalent to approx. $0.0051/share), with scrip option.

I guess many people may agree with me that it is rather inappropriate that Mr Market should keep Foreland's share price - last done (12Aug11) at $0.113 - at a big discount to its latest (as at 30Jun11) NAV of Rmb 1.14 (based on the 511.167m outstanding issued shares) - equivalent to approx. $0.217.

Using Q2's NP of Rmb 38.84m as a basis, Foreland's NP is now running at Rmb 155.36m a year, which will equate to a full-year EPS of Rmb 0.3039 - equivalent to $0.0577 - based on the 511.167m outstanding issued shares. A conservative PER of 5x will give a fair value estimate of $0.2885, before counting any additional value from Foreland's large and growing cash reserve of approx. $0.07/share (as at 30Jun11).

I guess given enough time, many brokers and institutions should see Foreland's investment merits, and this should trigger a justified re-rating of the counter.

[dydx]

Foreland has just released the presentation slides used in a briefing to analysts and fund managers presumably held today.....
http://info.sgx.com/webcoranncatth.nsf/V...F000EC99D/$file/Foreland2Q2011PPTfinal.pdf?openelement

Based on the strong and fast-rising revenue and profit numbers in Q1 and Q2, and let's be conservative and just assume Q3 and Q4 will just stay at the same level achieved in Q3, my own estimates show Foreland is poised to achieve in this FY11 a record revenue hitting Rmb 750.0m (vs. Rmb 348.4m in FY10; and previous record of Rmb 460.7m in FY08) and a record NP hitting Rmb 140.0m (vs. Rmb 45.4m in FY10; and previous record of Rmb 106.9m in FY08).

Foreland's business and profit turnaround is simply awesome!

[dydx]

Following the superb Q2 results, SGX actually made a query on the marked increase in GP Margin, and Foreland today gave a straight-forward response.....
http://info.sgx.com/webcoranncatth.nsf/V...0003418EC/$file/ForelandReplytoQueries2Q2011.pdf?openelement

A relevant question: With SGX's review officers going through the results announcement with a fine comb, would Foreland's CFO and CEO and the IDs continue to do a good job in discharging their responsibilities in financial management and supervision?

[sgmystique]

Foreland is now available at S$0.104 per share. That's a PE ratio of less than 2 based on the forecast EPS for 2011. So if the company is genuine and we can hold onto our investment for less than 2 years the company should be able to earn enough to pay for itself (:

This does sound too good to be true...or is it...

Only time will tell...In the meantime I need to decide whether to accept my dividends in cash or as scrip at S$0.10 per share...