In fact, other than inflow of capital into the China market, many China based companies are actually listing in stocks market away from China, and these stocks are called the “Red-Chips”. This is partially due to China has a nick name internationally as “Red China”, thus Chinese Companies listed in foreign countries are called “Red-Chip”. There were a few “Red-chips” listed in Malaysia, and these companies are designers and manufacturers of sports apparel and sports related products, and they have factories in China.
XinQuan [5155]
Chart 1: XinQuan, chart from 10/07/2009 to 4/3/2010.
When XinQuan first listed on Bursa Malaysia on the 10thof July 2009, its stock price went up to its peak of RM 1.91, but since then, it has been trending lower, and had never returned to this level. As shown on chart 1, price of XinQuan was supported at RM 1.31 level and consolidated there for about 3 months.
As indicated by A, although XinQuan attempted to break away from the downtrend, due to the lack of volume, the break out was not sustainable, and price of XinQuan returned to below the 14, 21, 31 EMA, and even broken below the RM1.31 support level, and resumed its downtrend, with the 14, 21, 31 EMA still serving as the dynamic resistance.
As indicated by B, price of XinQuan found a temporary support at RM 1.06 level and rebounded. But then again, no substantial increased of volume, and the rebound has failed to push the price away from its downtrend. If price should break below the RM 1.06 support, it would be making another new low, thus suggesting that the downtrend is still intact. Therefore, it is a signal to cut-loss.
| 4 Q Rolling PER | 2.38 times | Dividend Yield | 0% |
| Dividend | Net Profit | Earning Per Share | |
| 31/12/2009 (Q2) | 0 sen | 30,611,000 | 9 sen |
| 30/09/2009 (Q1) | 0 sen | 23,611,000 | 6 sen |
| 30/06/2009 (Q4) | 0 sen | 21,988,000 | 10 sen |
| 31/03/2009 (Q3) | 0 sen | 24,921,000 | 11.58 sen |
Table 1: XinQuan Quarterly Earning Per Share, Dividend, and Net Profit.
Msports [5150]
Chart 2: Msports chart fromm 19/08/2009 to 4/3/2010.
As shown on chart 2, Msports was listed on the 19th of August, 2009, with its price hitting its highest level at RM0.89 on its first day of listing. However, it was only an intra-day high, and since then, price of Msports has been falling. There was a sharp rebound in November, 2009, but it was rather short-term rebound, without follow through, and price soon fall back, and found a support at RM0.475 level.
As indicated by A, with the price now still below the 14, 21, 31 EMA and testing its support of RM0.475, the immediate technical outlook for Msports is still bearish biased. If price should break below the RM0.475, it would be a new low, thus suggesting that the downtrend has resumed, and it would be a signal to cut loss.
| 4 Q Rolling PER | 2.69 times | Dividend Yield | 0% |
| Dividend | Net Profit | Earning Per Share | |
| 31/12/2009 (Q4) | 0 sen | 20,939,000 | 6 sen |
| 30/09/2009 (Q3) | 0 sen | 12,157,000 | 4 sen |
| 30/06/2009 (Q2) | 0 sen | 13.636,000 | 15 sen |
Table 2: Msports quarterly Earning per share, Net Profit and Dividend.
XDL [5156]
Chart 3: XDL chart from 11/11/2009 to 4/3/2010.
As shown on chart 3, XDL was listed on the 11th of November, 2009, with its daily high reaching RM 0.765 level. Just like the above two Red-chips, price of XDL has, since then, been falling, and never returned to the previous height.
Price of XDL was supported by the RM0.49 level, and consolidated there for about 2 months. However, price of XDL was mostly resisted by the 14, 21, 31 EMA, thus suggesting that the technical outlook was mostly bearish biased.
As indicated by A, price of XDL broke below the RM 0.49 support, and marked a new low, with the 14, 21, 31 still falling while serving as the dynamic resistance. Therefore, it resumed its downtrend. Until now, price of XDL is still making new low, thus the downtrend is still intact. Therefore, technically, there is no buy signal at all, and in fact, when a stock is constantly making new low, it is a signal to cut loss, for there are now reliable support until a valid rebound.
| 4 Q Rolling PER | 2.15 times | Dividend Yield | 0% |
| Dividend | Net Profit | Earning Per Share | |
| 31/12/2009 (Q4) | 0 sen | 10,175,000 | 3 sen |
| 30/09/2009 (Q3) | 0 sen | 21,304,000 | 7 sen |
Table 3: XDL quarterly Net Profit, Dividend, and Earning Per Share.
Conclusion:
In conclusion, the above 3 “red-chips” has been trending down since the were listed, and until now, no signs of a reversal yet. Despite their earning is showing a positive result, the only logical reason for one to hold on to their stocks is capital appreciation. Therefore, if there is no capital appreciation, and yet there is no historical proven data showing that these companies are worth holding for long term, one should find little reason to invest in these counters.
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