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Z-Obee's factory in Shenzhen.
Aries Consulting file photo
 

WE NOTE with astonishment the non-stop ascent of Z-Obee Holdings in the past couple of months to become the top performing stock of 2009 – and the year to date.

The stock was up 700% in 2009, and is up another 46% so far this year!

Z-Obee (www.ztt.com.cn) was 3 cents at the start of 2009 and hit 24 cents at the end of the year.

It rose further and closed yesterday (Jan 26) at 35 cents - which makes it nearly a 12-bagger, ie, it has gone up 12X in value!

As background, Z-Obee is a full-set solutions house that provides complete design services spanning the entire handset design cycle, which involves industrial design, mechanical design, software design, hardware design, procurement of hardware, prototype testing, pilot production and production support.

We have no comment on the stock valuation, but a question we asked ourselves recently was: Did any of our readers highlight this stock early enough in the forum?


The answer, after we did some searching through our archives, is yes!

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David Yee

The early postings went as far back as Dec 2008, when the stock was 2.5 cents and ‘Morpheus’ pasted a wire story on Z-Obee, starting a forum thread on the stock.

About two weeks later, ‘Tony Adams’ pasted a financial analysis of Z-Obee done by a David Yee in another forum.

Now, David said he had done the analysis after reading about Z-Obee on NextInsight! Talk about something coming back full circle!

David Yee’s Dec 2008 analysis is fascinating: Let’s revisit it to understand how he spotted a potential multi-bagger, so we can learn something about fundamental analysis.



Z-OBEE HOLDINGS (analysis by David Yee in Dec 08):

#1 Cash much higher than market cap

Current Market Capitalisation - US$ 8.6 Million
Cash On Hand and Bank Balance - US$25.7 Million (3X market capitalisation)

#2 Extremely low PE

Profit for 1st Half 2009 - US$3.9 Million
Assuming 2nd Half 2009, the company does not make any profit or any loss, it is trading at PE of 2x.

#3 Net assets much higher than market cap

Current Assets - US$72 Million
Current Liabilities - US$31 Million
Net Current Assets - US$40 Million

Non Current Assets - US$15.7 Million
Non Current Liabilities - US$ 2.5 Million

Net ASSETS - US$53.9 Million vs Market Capitalisation $8.5 Million



The above analysis led David Yee (aka ‘erelation’ in the forum) to invest in the stock. It was a value buy. A key catalyst for the price run-up came in Aug 09 when Z-Obee announced a plan to dual-list in Hong Kong. (Z-Obee management thought the stock was a value buy too and its shareholder value would be enhanced via a dual listing).

A question you may have next is: Has David Yee posted his optimistic views on any other stock in the NextInsight forum?

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Chua Thian Poh, chairman of Ho Bee Group.

He has done so on a few others, including Teckwah Industrial.  He liked it when it was at 18 cents, posting his analysis in our forum in August 09.

Now Teckwah stock is 28.5 cents, and it recently emerged that Singapore property tycoon Chua Thian Poh (of Ho Bee Group) had liked it too.

He had been buying Teckwah shares and has just become a major shareholder the company, which provides printing and packaging and logistics services in the IT value chain.

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