Thoughts on Star Pharmarceutical Limited

9 years 2 weeks ago #22017 by sykn
Hi Joe, thanks so much for your tips. I took your advice on Valuetronics earlier on and have done very well indeed. Just a couple of quick questions. Would you still recommend buying Federal despite it's not doing so well recently in view of the oil problem worldwide? Also for Star P, how do you cope with fraud? I've had some really bad experience with S-chips like Eratat where I lost everything I put in. Thanks in advance.

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9 years 2 weeks ago - 9 years 2 weeks ago #22018 by josephyeo
Hi Sykn,

1. Federal. i had stopped following Federal after i sold off all my shares last year, so i am sorry i am unable to comment on it.

Normally, i invest in a counter based on certain story line. When the story change, i change accordingly. My sales of Federal was due mainly to their loosses in the last 2 quarters. I could accept the loss on the first quarter but when they reported another quarter of loss, though it was mainly impairment losses, i gave up on the counter.

One positive development is that the director/shareholder have gone to the market n bought up some shares. They bought in from 1.2 cts to 1.6 cts from 12th mar to 31st mar.

They still look profitable at the operational mlevel and if they have no further impairments the company should be profitable.

2. Star Pharm.

Star Pharm is an s-chip. And being an s-chip it carries the stigma of all other s-chips. However from my observations, most fraud cases for s-chip occur within the first 5 years of it's listing. Star Pharm is different. It been around since 2006, almost 10 year old. Most fraudulant cases come from "hot stocks" .. stocks which were hype up and become popular stocks. Star Pharm is a very low profile stock.

Further Star Pharm had been loosing money for quite a number of years. It started to turn around after a change in top management.

In the earlier years the company was in debts. The cash that we see now was accumulated only recently .. from the last 6 quarters, partly from sales of assets, improved profits and better collection of debts.

Though there is no quarantee that it could not be fraudulant I am quite confident that this is a proper company. Again, anything can happen in the market. So invest with care n with what you are comfortable with.

All the best!!!
Last edit: 9 years 2 weeks ago by josephyeo. Reason: additional info
The following user(s) said Thank You: Joes

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9 years 2 weeks ago #22019 by sykn
Joe, thanks very much for your kind advice. I will certainly take some time to have a closer look at Star Pharmaceutical. With the exception of China Merchant Pacific, all my other investments into S-chips have sad endings; so I do approach such counters with some trepidation. I guess even if I eventually go in, I'll probably keep the quantum of investment small, using an approach somewhat similar to that of Walter Schloss. Have a great weekend.

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9 years 1 week ago #22041 by Joes
Illiquid stock, hard to get anything. But just curious, how did the business become profitable?

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9 years 1 week ago - 9 years 1 week ago #22055 by josephyeo
Hi Joes,the turning point for Star Pharm was in year 2012 with a change in top management. That year the company took a huge loss of 113.6 mil rmb on impairment loss through termination of RD patent right acquisition and others.

Since then the company was able to focus on more important issues like improving sales, optimising expenses and allocating resources to more productive uses. The result was improvements in bottom line.

The improvements were quite clear as can be seen in the quarterly results. See below ...

2013 revenue in RMB
1Q - 20214
2Q - 20453
3Q - 20502
4Q - 27198
2014 revenue in RMB
1Q - 22409
2Q - 23437
3Q - 24096
4Q - 27628

2013 profits in RMB
1Q - 1851
2Q - (1211)
3Q - 383
4Q - 2889
2014 profits in RMB
1Q - 4603
2Q - 32923
3Q - 3245
4Q - 9108

It appears to me that the new management is more focus and profits orientated ... concentrating on improving sales and profits while having a good grip on the expenses.

Above are just my views and perceptions and could be wrong. Pls do your own analysis and come to your own conclusion. Also note that there were one-offs gains in 2Q n 4Q 2014 results. Details are in my earlier posts on the same thread.

For safety purpose, you may want to wait for another 2 quarters to confirm the trend.

Hope you find above helpful.
Last edit: 9 years 1 week ago by josephyeo. Reason: grammar n sentence construction

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6 years 10 months ago - 6 years 10 months ago #23859 by Joes
Relieved to see RMB3.9 m profit in 1Q. Operationally it was a good improvement yoy, with revenue up 28%.

Market cap only S$8 million on today's price of 18 cents.
net Cash alone is about S$12+ million!
Last edit: 6 years 10 months ago by Joes.

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