China Minzhong: Share price to go higher.

Templeton International, Inc. became a substantial shareholder of China Minzhong last year in May 2012. Their additional purchase of 980 lots at 84.56c a share pushed their ownership from 4.91% to 5.08% of the company.

As of 10 Dec 2012, Templeton owns some 13.05% of China Minzhong's common stocks. They bought more when the share price sank and they have also been buying as share price recovered. They are accumulating continually and some might even say, aggressively.

Dr. Mark Mobius of the Templeton Emerging Markets Group said this on 11 Dec 2012:

Successful investing is not only about picking the right stocks, but also finding values others may not recognize. We think the best way to determine if a stock is a value really boils down to growth.

During market downturns many stocks can be cheap, but if there is no future growth potential, than that stock could be considered a value trap. If a company is inexpensive and growing (and our earnings projections for it look good), then there can be a good case to invest.

When the current market isn’t recognizing this potential and we’re able to buy stocks at a discount to what we think they’ll be worth five years out, then that’s where we see value.

During a severe market downturn, you’ve got to be willing to go into the market, then wait. The global market downturn in 2008-2009 is a good example of this.

Patience and a willingness to go against the crowd mentality is a very difficult thing for most investors to do, but we believe it is critical as a long-term investor.

It is also interesting that China Minzhong was mentioned in an email sent out by The EDGE.

Apparently, the Australian investment bank, Macquarie, thinks that China Minzhong is a prime beneficiary of the country’s move to modernise and promote large-scale farming under the Five-Year Plan.

“Its large-scale vegetables origination and processing business in China is well poised to grow given the burgeoning population and increasing urbanisation trend,” says Macquarie, which has a $1.40 price target on the counter.

I like the fundamentals of China Minzhong but I am also corrupted by technical analysis. So, looking at the chart, I see a natural resistance level at 99c, give or take a couple of cents, which must be overcome convincingly before we could see the next resistance level tested.

The last session's high volume white candle tested the immediate resistance level but failed to take it out. Could it happen next Monday?

In case of a retracement, I expect strong support to be provided by the rising 100d MA. That support if ever re-tested would be where I would buy more.

Related post:
China Minzhong: What are we to do?