This morning I added Hua Han (587) to the private portfolio paying HK$1.00 per share.
Hua Han's main business is the manufacture and distribution of pharmaceutical products and feminine hygiene products. Given the expansion of the the PRC health care sector and the continued growth in the number of middle class households in China, this can be expected to be something of a growth industry. Unlike many other Hong Kong listed companies, management has remained focused on its business and resisted the urge to use shareholders' funds to speculate in the stock market.
The company is trading on a single digit PE ratio (7.2x historically but this will be diluted by the recent capital raising) and has a considerable amount of net cash on hand. A minor negative is that the company has flagged that it is looking to expand by way of acquisition which is not always a good thing. The latter may account for the fact that the company does not pay a dividend.
Friday, August 07, 2009
Wednesday, August 05, 2009
Cash for clunkers - deeply flawed
The cash for clunkers program is a classic example of bad policy. Very bad policy.
No matter which way you approach the program, it is nothing more than a transfer of wealth from taxpayers (or more accurately the children and grandchildren of today's taxpayers) to car users. In effect one group of citizens (taxpayers) are being asked to subsidise the discretionary consumer spending of another group of citizens (car owners).
Unlike many other areas of government spending (e.g. welfare, essential services), this is morally indefensible.
The benefits to the various components of the car industry are, at best, a debatable a side issue.
If the objective was to improve the environment by replacing high mpg cars with lower mpg cars, then the program is flawed. There are much more cost effective ways of achieving the same or better environmental results.
No matter which way you approach the program, it is nothing more than a transfer of wealth from taxpayers (or more accurately the children and grandchildren of today's taxpayers) to car users. In effect one group of citizens (taxpayers) are being asked to subsidise the discretionary consumer spending of another group of citizens (car owners).
Unlike many other areas of government spending (e.g. welfare, essential services), this is morally indefensible.
The benefits to the various components of the car industry are, at best, a debatable a side issue.
If the objective was to improve the environment by replacing high mpg cars with lower mpg cars, then the program is flawed. There are much more cost effective ways of achieving the same or better environmental results.
Tuesday, August 04, 2009
China Blue Chemical purchased
This morning I added China Blue Chemical (3983) to the private portfolio paying $4.72 per share. China Blue Chemical manufactures a number of chemical products, including fertilizers. The company has a clean balance sheet with net cash on hand. Recent small acquisitions indicate that the company is looking to grow vertically (presumably with the intention of deriving associated cost benefits as well as securing raw material supplies). The earnings valuation is not demanding (trailing PE of 11.6) although the dividend policy of distributing only 20-30% of profits results in a rather low dividend yield of around 2.3%.
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