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China Minzhong: Crossroads.

Sunday, July 8, 2012

China Minzhong's share price has been forming a base. It is clear that immediate support is now provided by the 20dMA which has stopped declining and is, in fact, gently rising. A rising MFI suggests that there is an underlying and growing demand while the sharply rising OBV suggests that smart money is moving back into the counter as its share price moves sideways with an upward bias.

The MACD, although rising, is still in negative territory. However, this could change soon as it could cross into positive territory next week, everything remaining constant. Could a change in trend take place soon? It looks possible.

The 50dMA is still declining sharply and we should see it crossing the 20dMA in the next week or so. If the share price is able to stay above the 50dMA then, we could see much more room for moving upwards.

A major resistance would be a gap fill at 82c which, incidentally is where the 100dMA and the 261.8% Fibo line are approximating. Before that, however, I expect resistance to manifest at 71c which is where the 161.8% Fibo line approximates.

Immediate support is at 59c thereabouts.


AK71 said...

CIMB visited China Minzhong and this is what they have to say:

We upgrade to Outperform on valuations. Minzhong is undoubtedly cheap at 2.5x CY12 P/E
vs. its peers at 3.3x P/E. We believe the strongest catalyst would come from dividends and a shift to a big-4 auditor.

For details, read: China Minzhong: Upgraded. 23 July 2012.

JCK said...

P/E at 2.5 is just obscene! :)

Why are food producer p/es so low?

AK71 said...


It could be Mr. Market has a very low level of trust and is discounting the earnings reported. So, this gives us a very low P/E. ;)

It could also be that the fortunes of farming businesses are more at the mercy of Mother Nature and Mr. Market demands a greater margin of safety.

With China Minzhong, if we are able to take a leap of faith, at the current share price, its valuation is even lower than the low valuations of its peers. So, fundamentally, it does look like a great buy.

Technically, looking at the OBV, I see longer term accumulation happening. The counter has found a strong floor, if not the bottom. So, I have added to my long position.

JCK said...

Thanks for the comments
i actually sold off 80% of holdings for a fast profit of
$7,000.... :)

Then just added back again....

too tempting :o)

AK71 said...


You are a nimble footed one. Congratulations! :)

JCK said...

Nice pop again.....time for profit taking again???

Decisions decisions...... :)

AK71 said...


Decisions indeed. Your call, of course. ;)

AK71 said...

What’s cooking China Minzhong: Investing For The Future.

Maintain Buy. TP SGD1.16.

We visited Minzhong’s Tianjin king oyster mushroom farm last week. Management showed us the whole stack farming process. In our view, this is a very important step towards the modernisation of the company’s agricultural operations and reducing its reliance on labour in the long run.

We expect a more balanced revenue split, which would not only reduce default risks of European counterparties’ but also improve overall gross margins.

We reiterate our BUY call with an unchanged target price of SGD1.16 after the company visit.

Revenue recovery and account receivables are two points investors should look at in Minzhong’s FY12 results in two weeks.

Kim Eng, 1 August 2012.

JCK said...

SGD1.16...... hehehe

Wish upon a dream.....

AK71 said...

When you wish upon a star
Makes no difference who you are
Anything your heart desires
Will come to you

If your heart is in your dream
No request is too extreme
When you wish upon a star
As dreamers do...


JCK said...

Closed at 63 cents...we are almost there!

Wish i had a chart on this stock.... ;)

JCK said...

Not wating for $1.16....sold 80% holdings for another $7,000 profit... :)

AK71 said...


Congratulations! You are making some very nice pocket money from this counter. :)

Th confluence of the 20d and 50d MA is at 58c. Overcoming that resistance, the next strong resistance could be provided by the declining 100dMA which is approximating 72c.

The 100dMA is still declining fast. So, I suspect that chart watchers might be more interested in the gap closing at 69c or so.

The MACD has just crossed into positive territory which signals the return of positive momentum. The worst could be over for China Minzhong's share price.

In very bullish circumstances, I see gap closing at 82c which is also where the 200dMA is approximating now.

JCK said...


Thanks for the technical updates!

Much appreciated!

AK71 said...


It is looking quite promising and I am crossing fingers that it could go higher. ;)

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