ChinaKangda, is this quiet counter waking up??

Counter broke out of wedge resistance formed since August 07. Volume spiking previously, someone accumulating?? Something to look out for. Lets take a look at their fundamentals...

Business: Processed food, rabbit meat, chicken meat --- relatively resilient business

• Price 17c
• Net asset value 28c---price/NAV 0.6x
• Price / earnings 3.4x
• Dividend yield 5.6%
• Net margin 13%
• cash/total debt 11.34x

Company trading below book, common for many china companies at the moment. Net margin reasonable for a firm in the food industry.

What's attractive about this counter is their healthy fundamentals:

• cash rich, ease concerns over ability to repay their short term debt which is a major issue for many smaller companies
• strong operating cash flow, ensure sustainability of firm's operations
• healthy balance of capital structure: between debt and equity balance

Risk: lack of analyst coverage, low volume --- this is a common factor in causing stocks to remain undervalued for a long long time

1st target 23c

**Reply: Cut loss point for this trade.

---this counter being relatively illiquid can easily be manipulated, which is a risk for low volume stocks. Bad in the sense technical cut loss points might be unnecessarily triggered by mere low volume volatility, good in the sense of sharp price rally when "players" finish accumulating, assuming there are "players" already interested in this counter. An alternative to trading such low volume counters is to wait for volume break outs before buying.

---Minor support 16c while key support at 12c, a low formed in october. Cut loss points are usually placed 2-3 bids below support regions depending on how volatile the counter is.