Wednesday, November 02, 2005

GSH and some comments

First the comments, I miss sleeping in!
I bought a few hundred shares of JSDA yesterday and the spread was incredibly high (around 14 cents or so). Of course there was barely any volume. I put in my order and it took about 30 seconds to fill, and then I looked at the Time and Sales (this shows all the orders throughout the day) and saw my order there. After about one hour there was only one more trade placed. So this is a long term investment, which means I shouldn't have to check the price constantly (but of course I am).

CFA: The studying is going well, but I still think I need more time. I have less than a month to go and while this seems like a lot if you break it down by available hours it's really not too much time.
I feel that I'm strong on the equity and economics parts. My weakest parts have to do with financial accounting (I thought I was finished with debits and credits after college...) and the fixed income section. I also need to review parts of the math sections because I haven't used the Bayes formula in about five years. Overall I think I have a so-so chance of passing. It all depends on how I use the next few weeks (especially weekends, when I can get a lot done).
If I don't pass, I'm fairly sure I will pass in June. I would be more confident if the test was in January rather than the beginning of December, but oh well.

Guangshen Railroad (GSH): I can't remember how I came across this one, but it was awhile ago. If the dividend information is accurate, it has a 4.7% yield.
It's really hard to find info on this company, but I did manage to find one report.
Here are the highlights:
-60% of all freight and 35% of all passenger traffic in China goes by rail
-railroads haul over 700 million tons of coal per year
-they are expanding their railroad network fairly fast and total investments earmarked is about 38 billion (which seems kind of high, this isn't definite)
-GSH deals mainly with the Guangzhou and Shenzhen regions; they are the sole operator
- the rail line is considered an integral part of the PRC national railroad system
- through the first half of 2004 revenues rose 36%, net income rose 66%, profit margin was 23%, ROE was 6.6%, no long term debt (which may explain a lower ROE), and they had about $300 million in cash (US $)
-then the report ends with a note about how passenger travel is up, freight travel is up, and both are expected to rise

It's a pretty interesting company, although I wish I had more information. I might look into it more, but there are a ton of risks. First is the country risk (who knows what China is going to do), then the fact that it's a Chinese company presents risks about their financial information. Chinese companies (and the country) are still known for kind of shady financials.
The lack of information is a big risk and as well as the coverage. It may be a great stock, but with an average volume of 18,000 shares per day it's going to take a lot to move it up.
The dividend is interesting if it's sustainable. I saw some information off Reuters and their cash flow seemed to fluctuate a lot, but this may not be accurate data. Basically the dividend yield is catching my eye, because if it's sustainable then you have a growing company in a growing country with a ton of cash and no debt.
I'm going to try to find some more info, and I'll post it if I do.

*note if you do look up GSH on Yahoo you will notice a div yield of 9.6%. A quick way to see if this is real or not is to look up Historical Prices on Yahoo and then select Dividends only. Assuming this information is correct, it looks like the company pays out a dividend around once per year and Yahoo calculated the yield by adding the last two payments (which was technically over one year's time, but it's close to two). I guess you can look at it both ways because of the timing.

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