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.

                                                                                                                                                 Ezra, 1 June 2015