The same falling star pattern observed last friday seemed to be the repeat of that same on Oct 31. If you are out on the sidelines, just stay put. Wait for lower to collect if you are already in. Prognosis: Not good.
Its only in your dream to catch Huaan below 0.380. only less than 3 weeks left for the QR announcement. Huaan is back in business, like whenit was in 2007 and 2008, the share was above 0.800. Tomorrow Tursday, new investor will show up again, if you want to sell cheap its up to you..i am toping up,
We will see people posting negative thing about Huaan with no evidence at all. Try not to trap into it, they just want you to sell your share cheap to them. Compare Huaan with any other company that make 260 milion revenue and 40 milion net profite per quarter and compare the share value of both, you will see that Huaan share is realy undervalued, give example, Frontkn and Dnex both share are 0.460 and 0.485 and theire revenue is less than 50 milion, with about only 10 milion net profite per quarter.Huaan worth 4 time more.
Last day trading of 2017, was a day for profite taking, what happen to Huaan happen to almost all klci stocks, shares raised up during morning session, and sell off during afternoon session, it is a trading patern happen every year at that day. Tomorrow is different story, back to 2 to 3 cent up a day for Huaan.
Let us start this new year with some positive sharing. Earlier I said hedging could be the DARK HORSE which could make profit of rmb 600 - 700 ton for Huaan in Q4. Below is elaboration on this dark horse.
First, let us examine the likelihood of Huaan hedging for Q4. For an understanding of hedging by coke producer, please see this example. (http://www.360doc.cn/article/1688791_112957041.html - pls use google to translate)
So two conditions are required for coke producers to hedge the coke futures:- 1. coke futures HIGH PRICE 2. RISK of coke spot prices fall in future and affect profit
These two conditions were clearly presence in Aug / Sept 2017 when: 1. coke futures was at sky high price of about 2500 (pls see the main future contract at that time, J1801 http://finance.sina.com.cn/futures/quotes/J1801.shtml - please select 日K) 2. high risk of coke spot price fall in Q4'17 and Q1'18 due to the state winter production control and affect profit
So in Aug/Sept 2017, it is LOGICAL for any prudent coke producer to hedge at the coke futures to LOCK IN PROFITS. In fact it is a Golden Opportunity to hedge at that time because for the past few years, coke spot price was very depressed (way below 2500) The nearest to the future price of 2500 was in Nov/Dec 2016 when Linyi coke spot was at high of 2200 only. (http://xiaohatu.com/screen/598c11e0673c75002f420c0f/59954d7756ba1500200e12ea/59955092447b9a0010f77324)
So based on (1) the above reasonings; (2) the chinese article claiming that "Futures become black industries enterprises operating standards to overcome hardship and protect profit" http://futures.eastmoney.com/news/1765,20171128806767516.html (pls see my comment on 29/11); and (3) circumstantial evidences suggesting that Huaan HAD HEDGED BEFORE in Q2 (pls see my comment on 19/11), then the likelihood of Huaan hedging in Aug/Sept was almost certain.
So now the question to ask is how much profit Huaan could make by hedging in Aug/Sept 2017. Coke future contract J1801 peak near 2500 in Aug/Sept 2017 and bottom at 1663 on 24/10, so the spread is about a BIG GAP of 800+. (http://finance.sina.com.cn/futures/quotes/J1801.shtml - please select 日K)
Under such situations, I believe: (i) a good hedger can make profit of 600-700 per ton !! (eg. sell futures at 2400 in Aug/Sep, later buy back at 1800 in Nov) (ii) an average hedger can make profit of 300 per ton (eg. sell futures at 2200 in Aug/Sep, later buy back at 1900 in Nov) (iii) even a poor hedger can make profit of 100 per ton
So if Huaan made profit of 300 per ton, then profit = 200,000 tons x 300 profit per ton x 0.62 exchange rate = RM37.2 million (or EPS of 3.3 sen) !
If Huaan made profit of 600 per ton, then profit = 200,000 tons x 600 profit per ton x 0.62 exchange rate = RM74.4 million (or EPS of 6.6 sen) !
This hedging profits will simply EXPLODE Huaan Q4 EPS ! ! ! !
On a lighter note, if our dear friend dompeilee, who don't even had a way to trade met coke, can theoretically make profit of 250 in the coke future small run-up from 1600+ to 2000+ (spread of about 400) in Nov 2017, then I believe Huaan, being an industry player who have their fingers on the pulse of the industry and who could easily have access to EXPERT coke futures analysts, could do better than dompeilee's 250, when the spread from top (Aug/Sept) to bottom (Nov) was as big as 800+ !! Right dom ?
------------------------------- Posted by dompeilee > Nov 24, 2017 03:15 PM | Report Abuse
Sigh...Wish I had a way to trade met coke coz my prediction 2 wks ago( 1750 going to 2000 min) has proven correct. Anyway I am indirectly long that commodity by keeping my 78k Huaan.
In that case Huaan Q4 net profite should exceed 70 milions? Anyway Q4 look like it going to be excelent quarter as well i expect Q1 for 2018 will be also an excelent quarter. Thanks Keith and Harlem.
If we follow Kyy rules that last 2 q earnings have been increasing (eps 1.96 Sen and 3.04 Sen) , and next q earning is expected to be good, then it's a strong buy call.
Huaan share will be swolled on tuesday, you dump, many will collect, up to you, big investors have met these 3 days after friday, and made their mind already,, you may miss the boat again if you plan to queu low...
As i told u all 2017last day trading many people choose to hold the cash so they sell off their shares and see the situation of stocks in 2018..this stock really will fly to at least rm1..just need to be patient for next quarter result out..
>> pantor If we follow Kyy rules that last 2 q earnings have been increasing (eps 1.96 Sen and 3.04 Sen) , and next q earning is expected to be good, then it's a strong buy call.
Yes, it is wise, but last friday's volatility is still here. just waiting for a good buy. still too early to tell.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
bowman
2,602 posts
Posted by bowman > 2018-01-01 10:05 | Report Abuse
The same falling star pattern observed last friday seemed to be the repeat of that same on Oct 31. If you are out on the sidelines, just stay put. Wait for lower to collect if you are already in. Prognosis: Not good.