Today I purchased shares in Sinotrans Shipping (HK:368). The shipping industry is facing a very poor operating environment characterised by excess supply, unfavourable conditions for international trade and increasing cost pressures. As a result earnings have declined and share prices have followed. Sinotrans is no exception and its shareholders have been sharing the pain.
However, the company is is sitting on approximately USD880 million in cash which is slightly higher than the market capitalisation - in effect the shipping fleet is being valued at zero. This strikes me as excessively bearish even if the company does end up losing money in the second half of the year (it made a small profit in the first half). I am not expecting any dividend in the current year.
I paid an average of HK$1.68 per share.
As an aside, I spent some time looking at the PRC gold mining companies but could not get comfortable on the mine life issue so will not be purchasing.