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Tuesday, 20 May 2008

I trimmed my holdings on Super Coffeemix on 20th May 2008

Review on 1Q 2008 results

At first glance, Super Coffeemix's profit dropped about 27%. On closer look, removing other income or loss (mainly due to equity investments), net profit actually rose 33.5% from 7,543m SGD in 1Q '07 to 10.072m SGD in 1Q '08.

However, equity investment is a regular activity for Super Coffeemix, hence I can't ignore them this way. This only means their core operations is still doing pretty well and would have been better if they don't deal with the equity investments altogether.

Looking at the cash flow statement, at least cash flow from operations is still pretty strong.

Thus I can say the results are pretty encouraging, at least their core operations are still holding up in the midst of intense competition, pressure from runaway raw material cost and other operating expenses.

Rationale for trimming my holdings

While the results clearly showed good performance, I'm pretty skeptical these justify the current market valuation. To say its overvalued is just an understatement. However, my experience with Armarda and Golden Agri-Resources taught me not to underestimate the power of irrational market exuberance. So long as the market rumour on possible takeover is not formally clarified, I won't know what price it will aim for... and I'm not taking chances with my capital.

Thus, with today's run-up in prices, I'm happy to disposed about halve of my holdings at $1.15 a share, a neat gain of 78.3%, and almost covering my principal.

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Anonymous Penny Stocks said...

I believe many of the stocks in the coffee business are just fads.

12 December 2011 at 14:34  

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