Member Info for bumpylane

Oh dear! Now even better value at 146 to buy.

I'm happy to buy at 150. It's a good price. There's a seller out there and when he/she is done we should see a decent rise in the share price.

They must have had some GBP on deposit. And I think about 10% of the clients are in the UK. SO I suppose there is a small degree of Brexit-related risk.

Beamer - OK. That's interesting to know.

Beamer1 - I agree that Ivan Teh's strategy seems to working well. The really impressive thing in these results for me is the rapid growth in the client base. 48 new clients in H2 is amazing. These clients are across the whole Asia Pacific region, they seem to be mainly blue-chip businesses and they are on subscription-based contracts which means that FXI gets recurring revenue. This company looks like great value to me. It comes with zero Brexit-related risk, which is something I like. It has no exposure to the UK consider. It also has a very solid balance sheet. I'm surprised it's not up a bit more. I assume there's an institutional seller out there. Always irritating in the short-term, but it's giving us a chance to buy into this cheaply.

It's possible that investors are too negative about AFG. There's plenty to like in this story - decent director buys last year (about £30k-wortth), appointment of a good CFO wth experience outside China, a very solid business model, a dividend, etc, etc. There's one real negative, but it's a big one - the record of Chinese companies on AIM in 2015 that turned out to be frauds. But that caused a lot of embarrassment to the Chinese authorities and there seems to be a lot more vigilance now. It's unlikely the same would re-occur here, IMO. . Personally I'm confident that this company is the real deal. If the Q4 update is 'in line' or a bit better (which means revenues of 250m RMB or above, and net margins steady around 11%) we should see a return to at least the 25p area, and then a rise to more like 40-50p after the finals.

Last year the AFG trading update for Q4 came on March 1st. I wonder if they will get it out a bit earlier this year? I'm hoping for Q4 revenue of 265m RMB (which would be about 12% down on Q4 2015 in RMB terms), and gross profit margin at 24.5% or slightly higher. The net margin should remain steady at 11% and cash on the balance sheet should rise from 432m RMB to about 440M RMB. I doubt if they'll give a guide on the final dividend. We'll get that when they publish the final results in March/April. Hopefully they will pay at least 0.5p final divi.

It's good to see that sales volumes are gently rising and gross margins are stable around 25%, despite more spending on advertising. Despite what they describe as 'challenging market conditions' the company has generated a significant cash flow over the quarter. There are some interesting commments about the company actively looking for ways to spend the £51m cash on the balance sheet, either on an acquisition or on a new factory and processing facilities, or perhaps both. I'm still a happy holder here. Not the most exciting share to own, but i think patience will eventually be rewarded. When this begins to rise it will rise fast. It's interesting to see that the dodgy Chinese companies that pulled out of AIM last year now face official action against them, supported by the Chinese authorities. See www.chinaresolutions.com. Seems to me very unlikely the same would/could now happen at AFG.

There doesn't seem to be much in the way of a Donald Trump effect over here at AFG! The very big spread and the unexpected cut in the divi at the interims seem to have put off even risk-tolerant investors from doing any buying. Last year AFG put out a Q3 trading statement in mid-November. Hopefully that will happen again this year.

Looking at the interims from yesterday in more detail, they don't look too bad. PBT has fallen from about 100m RMB in H1 2015 to about 50m RMB in H1 2016, basically because the imported fish is costing a bit more, but they have been dropping prices to keep market share. But that's still a £5.6m profit before tax for the half year and volumes are up about 6%. On the the plus side, the cash on the balance sheet at June 30th is 417m RMB (= £48m GBP). This is up sharply from March 31st. It's up even more sharply in GBP terms. So they are generating loads of cash. Volumes are up, gross margins margins are stable (24.5%). There's a strong hint that they are looking at expansion via an acquisition. There are 2 contracts with Scottish mackerel suppliers - Northbay Pelagic in Peterhead (615m tonnes of mackerel), and Lunar Freezing of Fraserburgh (517m tonnes of mackerel). Ms Lo Ping, the new CFO in now in place (she was previously at West China Cement, which is a good place to have been) has 500k options from about 35p, from memory. She wouldn't have taken this job if she didn't think the management and operation were respectable and above-board. She's not going to risk her career on some dodgy business that tries to cheat its shareholders (in my opinion). What a pity the board had to massively reduce the interim dividend, and have indicated they are going to to the same with the final dividend. Seems totally unnecessary, and will delay the recovery in the share price to IPO levels (around 60p). But it still seems to me a good solid business in an expanding sector, and I'll continue to add if the offer price comes any lower than it is now..

Robrob It could be that the spread on AFG is kept deliberately very high to deter short-sellers. Also, in reality the spread is a bit closer than indicated on the screen. You could probably sell right now for 11p or 11.5p (as opposed to the .10 on the screen). I've been building up a holding in these since earlier this year and now have quite a decent number. My lowest purchase was at 7p, but that was well off the low. My highest was at 17p. It's a decent, solid business in a good sector. Profitability has fallen over the last year but I'm sure it will recover. It's a pity that they've cut the dividend (which was generous) but Chinese management do this kind of thing. They think of dividends as a kind of bonus payable in a good year, and if there's any problem at at all it's the first thing they cut. Seems crazy to us wen they have so much fas in the bank, but it's a different mentality. Much more 'safety first'.

I've asked brokers about why the spread is so big. Never a good answer. They usually say 'because there are only 2 market makers', who kill the volume by keeping the spread so wide. I can't see how this in their interest. A huge stead like this usually just means the price is wrong. So ignore the bid and watch the offer. The offer hasn't come down below 15p for several months. If that happens I'll buy more.

Looks ok at a glance, but what a pain to reduce the interim divi from .7p to .2p. That saves a mere £500k but does loads of damage to investor sentiment. Travelling today. Will take a closer look this evening.

Hinkais - I'm expecting the numbers to be flat on last year, or possibly a bit weaker. Any growth will be a nice surprise. In 2015 Revenue was 44.4m RMB for the combined Q1 and Q2. I'd be surprised if it was higher than that in 2016, as Q1 was 21.35m RMB I'm hoping for profit before tax for H1 to be around 100m RMB. Flat on last year in RMB terms, but quite a lot higher in GBP terms. The most important thing is that there are no nasty surprises.

Good to see some buys today. They spread has temporarily narrowed to 16-18, still big but not the prohibitive 14-18 we have have had for the last week or so. We should get some news soon. The Q2 trading statement must be imminent, and in late September we should get the Interim results. From today's RNS I see that the new CFO Po Ling is already in place. She is probably working now on the Interim results.

Seems a bit incompetent, but nothing worse than that. Probably linked to AFG having no CFO for the last 6 months. Hopefully the new appointment will ensure that these glitches don't re-occur.

The offer has come down a bit this morning and I've added 10k shares at 16p. Ignore the bid price here. It's the offer you need to keep an eye on. Buy on any weakness. It's really impressive that we've managed to get Pol Ling, ex CFO from West China Cement. A brilliant appointment. WCC's a very good company. It made serious money for a lot of UK investors in 2010, including myself. Went up about 5 times when it transferred from AIM to the HKSE. There's no way that Po Ling would have accepted this job without thinking that AFG was above-board and going places.

It's very good to see the RNS this morning announcing the appointment of a new CFO. She looks very well-qualified.

AFG goes ex-div from tomorrow morning, I think. We might seem some selling when it goes ex-div, but the announcement of a new CFO, which has got to happen in the next few weeks, should bring in some buyers.

simonm - unfortunately no-one asked a question about what the corporate plan is at AFG. They raised about £9m at the IPO (I think), but they haven't actually done anything with the money. Are they intending to make an acquisition, or buy a new factory? All a bit of a mystery. With £35m approx cash on the balance sheet there's definitely scope for an improved dividend.