Watchlist Counter #2: Foreland Fabritech ($0.13) (A S-Chip Company)

One of Foreland's end customers (or so they claimed)

Definition of a S-Chip: Chinese companies listed on the Singapore Exchange, whose business are predominantly based in mainland China.


What general public associate S-Chips' with: Accounting irregularities and fraud


List of former S-Chip "market darlings" that currently suspended or busted: Sino-Environment, China HongXing, FibreChem, China Milk, China Sun, China GaoXian, SinoTech Fibre, Hongwei etc etc...


So why then even be bothered with S-Chips: Valuations are incredibly low, because investors (or rather skeptics) have grown so disillusioned that they believe "if it seems too good to be true, then it probably is."


So why do people at Kiasu Investors (KI) think otherwise? No we don't.


But you are recommending to keep an S-Chip on Watchlist!
This is purely for punting (ok, it's gambling, we admit! This is EPL off-season and we are suffering a bout of withdrawal symptoms, and being Singaporean, we simply cannot afford the $100 levy to enter our (in)famous casinos.


So why Foreland and not any other S-Chip? Because we like the fundamentals...


But you just mentioned that for S-Chips, fundamentals doesn't mean a thing! 
Yeah, but here is a brief summary anyway:
NAV: $0.1995
Rolling PE: $4.626
Dividend Yield: 2.72%
Gearing: Net Cash


Definitely not the cheapest among S-Chips.. 
Recent placements caught our attention. First placement was to a group of local (SG) investors at $0.1235. Notable among the placees: (Asdew Acquisitions - Founded by ex-Kim Eng head of research, SG star broker Han Seng Juan). For second round of placement at $0.16 (33% premium over previous closing price) to a major customer and a mysterious investor. Also, they produce umbrella fabric, not your typical sports wear fabric producer..


But other now dysfunctional S-Chips also had prominent investors, FibreChem had NewSmithCapital and Hongwei had Tembusu Partners just to name a few... 
Yeah, hence we say this is at best a punt, and if do decide to gamble, do make sure you get in at a decent price (preferably lower than first round of placees. So far $0.125 was the lowest since we first mentioned Foreland in our article on Wing Tai)