Net Cash(m) Net Cash p/s Share price
China Ouhua 125 19 12
China Stationery 864 70 77
XiDeLang(in RMB) 304 42 21
XingQuan 326 106 79
HB Global 131 28 32
K-Star 79 30 16
Maxwell Intl 221 55 31
Multi Sports 223 43 31
The above based on the numbers from The Edge:
- Net Cash: in millions RM, Cash minus Borrowings
- Net Cash p/s: net cash per share in Sen
- Share price: in Sen
Would it make sense to buy a basket of these stocks? To me it doesn't, if for every company that goes to near zero another company is taken private at say 30% premium, the returns just don't add up.
Investing is for a large part based on trust, trust that the balance sheet and profit & loss accounts are correct, the trust is obviously not here.
Bursa and SC have clearly improved the quality of recent Malaysian IPO's. I also have to admit that not yet one China listed company in Malaysia has actually gone bust or had any financial scandal. I am pretty sure that will happen, but things can take a lot of time to pan out.
To me, things must make sense, founders list their companies because:
- They are good, reliable companies
- The companies can use the new money injected to grow further
- The founders want to take some money of the table (understandable, since often a huge percentage of their wealth is tied to this one company)
- It offers a liquid market to their employees who might own shares or options in the company
- Investors pick up the IPO shares since there is some value at the IPO price, taking into consideration the risk involved (companies that have just IPO-ed are notoriously more risky than companies that have listed 2 or more years ago).
Given that, which founder would list its company, knowing the share price will most likely go south after the IPO?
And for SC and BM, enforcement in Malaysia has already been proven to be so difficult, why make it even more difficult by listing Chinese companies?
Eight very depressing share charts of the Chinese listed companies in Malaysia: