XINQUAN (5155) - Xingquan is a Good Bet - Koon Yew Yin




I am sorry that I made a mistake in calculating my average cost per share in my previous article “Is Xingquan a good bet?”.
Xingquan was listed in 2009 with CIMB as the under writer at Rm 1.75 per share. I did not buy any share in 2009 and its it's 2009 annual account shows that I did not hold any shares.


As you know its price has been falling quite rapidly ever since the company was listed. I started buying it in 2010 when the price fell below Rm 1.00. Its 2010 annual account shows that I had a total of 17,005 million shares. I think my average price is about 70 sen per share.
(1) My cost is 17.005 X 0.70 = Rm 11.9 million and the price is falling rapidly ever since my purchase.

As you know, Xingquan has been selling around 10- 12 sen per share for a long time and I bought 19.4 million shares at an average cost of 11 sen per share.
(2) My total cost is 19.4 X 0.11 = Rm 2,13 million.
When SC gave notice of suspension, its price plunged to trade between 2-5 sen per share and I bought 50.5 million shares, almost all the shares traded during those few days.
(3) My total cost is 50,5 X .035 = Rm 1.77 million.
The total of (1) + (2) + (3) totalling 86.9 million shares costing Rm 15.8 million
My average cost is Rm 15.8 divided by 86.9 = 18 sen per share.
There is always some risk in buying any share. They say ‘No risk no gain and the higher the risk the higher is the gain”. There is also a saying “The higher you climb, the bigger you fall”. Which is right?
The game is not over yet!
Unlike the case of VS Industry; very few people knew that I had been buying VS so aggressively until I became the 2nd largest shareholder, holding 102 million share, as shown in its 2015 annual report. The price of VS shot up 550% within 18 months.
Now I am in the lime light. The whole investing community thinks that I am crazy.
At the same time, they also know of my successful track record.
The road to my successful track record is knowledge, confidence, willing to take calculated risk and patience.
If you are patient you can buy cheaper or sell at a higher price.   
The reasons why I am willing to take the risk of buying so much of Xingquan shares are:
I visited Xingquan’s factory in Jinjiang, Fujian, China. Although I was so impressed, I did not start to buy Xingquan shares because I practise what I preach-patience! Patience! Patience!
Xinguan received more than Rm 100 million from the IPO and it spent it on building a huge factory with all the ancillary facilities and 7 blocks of flats to accommodate 3,000 workers on a very large piece of land given the Chinese Government for a song. The company also has 110 distribution outlets in some of the shopping malls in the larger towns and cities in China. All these assets would have appreciated by now and they belong to all the shareholders. All these solid assets cannot disappear in thin air.
That is why the audited account shows that its NTA is Rm 1.90 per share. Moreover, it has cash and no bank borrowings.
In early June, when so many people were rushing to sell before its suspension, I took the risk to buy 50.5 million shares, almost all the shares traded during the few days.
I was told the controlling shareholder is making preparation to comply with the rules of SC in order to relist the company.



Another possibility is that the controlling shareholders do not want to relist the company to avoid all the hassle. In this case, I will be holding shares of a Sdn Bhd company, just like most business men doing businesses in Malaysia.
I believe in human nature. Eventually, the controlling shareholders will want to realise their profit from their investment. As a result, I will get my share of the profit. I hope I am right!
 



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