RJ87 the simple answer is to study the business. The elaborate answer is as follows.
How the market values a company (Stock Price) is both determined by the current worth of the company and how much people believe the company is worth. For a company like DUFU and the fact that they are in the Technology industry, the amount I believe the company is worth in the future is dependent on how much capital investment they put back into the company to take advantage of new technology.
To illustrate my point look at DUFU's financial statements I've shown below. The first table is how much money they put in investing in new plants and equipment for the year and the second line is the companies profit for the year. Check out the year 2011 and 2012. Look at how much money DUFU put in capital investment to keep their technology up to speed.
If you understand how business run things you can see that DUFU was spending a lot of money to gear their manufacturing for new products in 2011 which is then released in 2012 in the form of a new HDD drive technology. Then within 2 years of the new HDD drive launch their profits starts to skyrocket. Until now when the new Helio HDD drive is now the big on demand item in the market so much so that all the HDD makers WD to Seagate just cannot meet demand.
Compare this with the other HDD makers in the market on their financial statements for the same year and you will see they don't spend as much capital investment as DUFU did. DUFU invested in the future and they are reaping the rewards currently.
Which goes back to the question how would I know if DUFU is trading above their worth.
It all depends on how I see their future. Currently DUFU is riding high on new in demand tech but that is fleeting and good for a few years. Eventually they will achieve market saturation of the new tech, Then I look and see if they are investing their capital wisely to take advantage of new technology for their future.
If not I wait until I think I see market saturation for Helio HDD. When I see signs of market saturation I exit because then their revenue would have stopped growing by then. If however I see they put a lot of their profits into capital investment then I go to their Annual AGM to ask them what they are investing in to determine if their new investment has future potential.
Now this takes care of my long term exit price for DUFU.
The short term one is if they hit something like 20 - 25 P/E then I'll seriously consider exiting for the short term until the P/E goes back to a lower amount.
However this depends on whether I determine if there is market saturation or not. If not I buy back if yes then I have to look if they reinvest their capital and the capital investment is good or not. If it is good even if I think the P/E is higher than the price I sold it at I would consider buying back into DUFU.
PE 20-25, that puts DUFU same category of Penta's capital gain potential. Do u charge for writing such long report? or updates on changes of fundamental?
I make similar assessment with less resolution. Have a look on VIS trading at PE18. R&D, increased inventories conversion. I'm anticipating good quarter report that will put VIS at pe 20 above. But ofcos, it's not exactly undervalue n margin of safety is bad now.
RJ87 I don't charge because I hardly ever talk about my investment strategy. In theory I should for DUFU but I'm already in good enough shape financially that I would rather have more educated value investors in the market. Hence I broke my usual silence and decided to post my DUFU research especially my research on SSD prices.
Because no insult to you or investor 9999 that was the missing info to make DUFU price skyrocket. Nobody could counter the one arguement that HDD is in the downswing compared to SSD. No matter how many times you guys brought up the good numbers and P/E ratio somebody would say HDD not as good as SSD and everybody would worry.
This is what I mean by understanding the business. My curse is I'm one of those who cannot leave a question unanswered at least to my own satisfaction and I will spend hours or days to research the answer. I don't just read what everybody is saying I go to direct sources and read the raw data themselves to find my answer.
What CYF is doing is to educate people NOT TO BE like pang72. Punting left and right. And be investors that does his research. Identify growth or saturation. This is the only way to stomach price volatility.
The purpose of research is to identify revenue generation for 4-8-12 QR depends on the nature of the business and if current price is worth it's future earning. That's the real game you are playing.
The punting in between is more like trying to impress a disgruntled woman at her time of the month. Well, sometimes, it works; sometimes it doesn't.
The point is, do your research. If you don't believe; try date a woman in her 14th day of menstrual cycle. You have better chance of getting laid. DO YOUR RESEARCH. =D
No matter how much statistics that indicates how house always wins. Yet, people still jump straight in.
This is human nature. Only a handful of people will appreciate what's CYF is doing. And to certain extend, some doesn't as it would reduces price volatility as they view it as "opportunity".
I'm sure everyone that goes up Genting has a method too. And he still believe that he does even before he jump off the building.
I do agree it's not as attractive at this price now, but if there if there is clear visibility of revenue growth of 15% YOY, then, PE20 is not too impossible. That depends on your investment period preference. Some can wait very long. Some is impatient.
Anyway, gambling is always more exciting than investing.
Sold too early......bang balls !!! Should have reserved some to enjoy the ride . From a low of 90 cents shot up to 1.95......unbelievablei in a short span period of time. Those with guts are laughing to the bank . ..... smiling with joy .
Why so angry le? Earn money still angry.... Be patient ...!!! Respect other and stock invested. Is Dufu a stupid stock? Obviously not right. Are you stupid? I guess not too.
RJ87, As you claimed CYF earn a condo in Dufu, I earn a Civic in lionind. You maybe earn 2 condos in lion and dufu... Why you still so angry le? Be happy....Every where is opportunity as you are so smart and better than me
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michaelwong
3,068 posts
Posted by michaelwong > 2018-08-13 17:47 | Report Abuse
Depend on what price you bought in and it takes some risks to maximize your profits .