Saturday, November 28, 2009

VTech purchased

On Friday I sold shares in Pacific Basin (2343) to invest in VTEch Holdings (303). VTech has a strong balance sheet with no debt and the equivalent of about HK$11 per share in cash. It has come through the recession in good shape with new products enabling it to more or less maintain reasonable profit margins on sales that have held up well. It is selling on an undemanding forward 2010PE of about 10.4 and offers a dividend yield well above 5%.

I placed my order early on Friday morning at 68.80. Unfortunately, in spite of the market being down heavily, VTech jumped against the general direction of the market and only about 62% of my order was filled before the share price rose above HK$71 per share. I elected not to chase the market. If the share price retreats to below HK$70, I will complete the rest of the order. If not, I will hold the shares purchased.

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