Friday, March 4, 2011

What a red flag looks like....

China Hongxing. With hindsight:
  • Steady increase in receivables over the years. The YoY doubling in 3Q09 would be the tip-off here.
  • Change of auditors in Oct 10. Lesson here is to go through the past 5 years SGX filings before buying.

Also, institutional ownership was no help (BT, Mon 28th):
  • China Hongxing has a strong institutional following that includes Skagen Funds, Fidelity, JP Morgan Asset Mgt and State Street.
  • Singapore based private equity Tembusu partners has invested in Hongwei.
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