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Values in RMB but for this purpose it's not vital. Year one: Base Case Trading profit (assumes no change in trees value from previous year) 500mil no yield or fruit price change; trees value 2,000mil (2bil). Year two: Trading profit 200mil as yield falls 19% and prices 4%; trees reduced in value by 25% 500mil. 200mil trading profit minus 500mil = 300mil overall loss. Year three: Trading profit 100 mil as yield falls by 3% and prices by 1%; trees reduced in value by 5% 75mil. 100mil trading profit minus 75mil = 25mil overall profit. So a fall in prices and yield in year three leads to a move from loss to profit QED I hope this is clearer than the previous cock-ups. Gla Orphan
The maths is correct though............................ apart from year two 200mil minus 500mil = 300mil overall loss. Shouldn't have done it in a hurry, should have waited till this evening, should have had a glass or three of wine first, should have sold at 45p, should have.................................................. Gla Orphan
Doh! For base case tree value read 2,000 mil (2bil) I couldn't decide whether to type 2,000,000,000 or 2,000mil or 2bil and ended up cocking it up. The maths is correct though. Gla Orphan
It's sat on very long term trend line(s) plus the failed bounce from c16p suggested c12p as the next leg down (as I mentioned at the time) so I'm back in again - hopefully this is it! :)
I agree it's bewildering and it's nothing to do with our volumes affecting the price of oranges. It's about the continuous evaluation of the "biological assets"....trees ;-) Probably best understood using round numbers/approximations and full rather than half years. Values in RMB but for this purpose it's not vital. Year one: Base Case Trading profit (assumes no change in tree value from previous year) 500mil no yield or fruit price change; tree value 200,000mil (2bil). Year two: Trading profit 200mil as yield falls 19% and prices 4%; trees reduced in value by 25% 500mil. 200mil trading profit minus 500mil = 400mil overall loss. Year three: Trading profit 100 mil as yield falls by 3% and prices by 1%; trees reduced in value by 5% 75mil. 100mil trading profit minus 75mil = 25mil overall profit. So a fall in prices and yield in year three leads to a move from loss to profit QED Of course it's not quite so simple in practice ;-). The half years don't overlap neatly but in simple terms, we're somewhere between years two and three. This gets really interesting when you get a yield/price increase in a year after a bad year.......the overall profit goes through the roof as the trees are revalued upwards. The BoD allows for these radical changes in tree valuation by paying dividends only out of the underlying profit. This is a long term holder as the fundamentals are sound as the Company is no longer dependent on oranges. They've planted grapefruit and bananas to broaden the mix but, more importantly, the Company draws much of its revenues (and recently most of its profits) from its two processing plant with a third just coming on stream. I hope/trust this is a bit clearer. Good luck all holders and posters, Orphan
How do you read this? The share price has been going down continuously for three years now - you might find fundamental reasons for a bottom line given the asset value, but technically the direction seems pretty clear and pretty bad.
You fundys need to get your head around the fundy guff for the next 6-12 months imo cos chartwise this looks a nailed-on buy at 12p at this point in time ...
If you look at the last half year report, you'll read 'It remains too early in the financial year to judge the materiality of the challenges highlighted above to the Group’s likely fully year performance, which in the second half year will reflect the price achieved for the Group’s summer orange crop and the impact of weather on the volume of fertilisers and pesticides used by the Group. In this respect, in order to maintain production volume we do expect a higher level of direct costs to be incurred in the short term to alleviate the leaching of soil nutrients caused by the heavy rainfall.' As per the latest update, sales prices will drop by 1 % (in an inflationary environment), output will not increase and cost are likely to increase due to inflation and increased spending for fertilizers etc. IMO, the impact on the stock price is pretty consistent with the news. Like burg1, I have been invested for some time, but I cut my losses last year. I agree that the cash available should have been a solid bottom line for the share price, but the company is not willing to give some of it to shareholders.
Thanks for analysis. You've lost me here though : 'The other point which must be borne in mind is that even a small drop in yield would lead to a large rise in profits!' Smaller yield = less oranges = less sales = less profit. Surely we're not so large that a drop in our yield is going to affect the price of oranges if that's what you mean. Please re-explain. Anyway, bad show all round and this looks like sitting in, at best, the doldrums for the next 6 months.
Not quite.........production has stabilised "As of the date of this announcement, the Group has signed supplier agreements to supply a total of 57,000 tonnes of summer oranges in the first half of 2014, which is comparable with the production output of 57,367 tonnes achieved in the same period last year." There are a number of ways this can be analysed. Primarily, the signing of supply agreements (prior to harvest) means that the Company is confident of a minimum yield of 57,000 tonnes. Imo this suggests that the final production will probably exceed 2013, albeit at a marginally reduced price (-1%), implying revenues this year level or even up on last year. The tonnage should really have increased, given the age profile of the producing trees, as more trees became more mature. The BoD did themselves, and us, no favours by the inclusion of the words "The production yield from Hepu Plantation has yet to return to volumes reported prior to the citrus canker infection reported last year." The 2012 yield to which they are referring was about 20% higher than 2013. They had to report this, I suppose, as they had looked forward to a return to such levels. The other point which must be borne in mind is that even a small drop in yield would lead to a large rise in profits! Counter-intuitive, yes, but apparent when the impact of yield and pricing on the value of biological assets is taken into account. Second half 2013 saw a huge reduction in such values of RMB247mil. A drop of, say, 5% this year in price/yield would lead to a reduction of about RMB100mil in the value of these assets. In other words an increase in profit of c RMB 150mil over the second half compared with 2013. This would bring the interim losses on such valuations in the first half (RMB583mil) down to somewhere in the region of RMB440mil. Last, and by no means least, is the performance of the summer harvest relative to other profit centres. We have two very profitable fruit processing plants plus a third currently ramping up production. Their contribution to the overall performance of the Company is significant and increasing. The Market may not like it this morning but, imo, when everyone's done their analysis they will like it a lot more. After all, we're currently trading at a level which gives a capitalisation of 75% of the cash holdings of a profitable, cash generative company. It makes me wonder what some investors are looking for in the way of bargains ;-) Gla Orphan
Continuing drop in production and profit and the market does not like it.
last 2 years + this share has declined, I just cant see any upturn, my av is 36p.Believe any upturn is a year away.Little chance of breaking even for me.
Just made the comparison on Bloomberg and the graphs look identical virtually. We're down 59% in 12 months and HK down 58%. http://www.bloomberg.com/quote/73:HK then 'compare' with ACHL LN Surely approaching the bottom?!?
Being buying all the way down, thinking that we have reached the bottom. The price is now less than the cash in the bank, when is this dog going to stop going down. Weather is weather, lets hope this season it all goes in our direction. This is now really hurting.
tav - think the 5mil was a share swap? It didn't move the SP either way. n3
5000000, something happens
I bought 500.000 shares, eat that tav.believer, such a 'steal' at this price!
just bought 50000 more at 13.75; soon we'll be at 20p
It's not often I'm right but I got it wrong again :-( Tong family control has been weakened and Tommy has not got the big Chair as I'd anticipated. However, Mr Tony has not retired completely, which was implied by the announcement with the Interims, but will act as "Consultant" for a few years. The departure of the old CFO is occurring without further comment but I suspect that the new BoD want a fresh start; at least I hope that's what it is. As I am not familiar with the new officers it will have to be wait and see but, imo, it looks like a healthy mix of continuity/consolidation with freshness/diversity. Time will, of course, tell. GLA Orphan
Well that spike seemed to come from nowhere - I wonder if some/the pressure was suddenly lifted?? ECR - Yes, it's all going on over there, I'm +50% there in a fortnight in a falling share and only going long, way to play the spikes lol! It's 0.22 or 0.16 for the turnaround imo ...
Interesting - duly noted, thanks.
I've noticed that the directors collectively own stock options (for an equivalent of about 2,500,000 shares, of which Mr Tong Wang Chow owns 1,5 mil) that expire the 26th of July and are exercisable at 20,45 pence. Could it be that there is a higher probability for short term catalysts (e.g. news about an acquisition with the excess cash) since this date is slowly approaching? What do you guys think?
Like everyone else, I'm not an expert, but the increase today may be because some chartists have a key buy or sell point at the 20 day SMA or EMA? Just a suggestion - comment is not financial advice.
Hello back, Bonker. Yes, some of us still have our heads above water. As HarryMoon said "Today, I have mostly been liking ECR". Fun & games over there....sp took off for no apparent reason....Crock thought she was pregnant (false alarm fortunately).........Brick has left the Dark Side and is now ramping for all he's worth....all human life is there. Despite the excellent performance by ACHL the BB is a tad too quiet for my taste. Yes, I should get out more...which is what I'm doing in 10 mins. Off to the shires for the w-e. Early dart, miss the traffic. Hope the rises continue without me staring really, really hard at my screen. ;-) Have a good week-end. GLA Orphan
THAW!