2007 Hong Kong Stock Recommendation - Kingboard Laminates Holdings Ltd (1888)

Kingboard Laminates Holdings Ltd (1888)

Background :
Kingboard Laminates Holdings Ltd is a subsidiary spinned off from Kingboard Chemical Group (148) which focuses in manufacture and sales of laminates and upstream component materials.

1. Is the industry has a growing demand? What is the relationship between demand and supply in the industry?
Ans : The demand for laminates is driven by the demand for PCB. The global laminates market was estimated to have a growth rate of 6~8% in the coming 2 years. The growth rate of China laminates market is around 20~30% in the past 3 years. This means the industry is still in a growing state. With the launch of Microsoft Vista and 3G in China, the demand for PCB is expected to increase in the coming years which in turn will increase the demand for laminates. Kingboard was rated no 1 in 2005 with 9.9% market share in global market and 31.7% in China market. With the large scale of economy, the company can achieve the cost competitive advantage stated by Michael Porter and gain greater market share in the future. In its growth to a larger capacity, it also creates greater barrier for new competitors to enter this industry.

2. Is the company profitable over a period of time and what are their average revenue and profit growth rates?
Ans : The company is profitable for the year 2003~2005 with a profit growth of 158%, 5.8% respectively. The half year result of 2006 has a growth of 58.4% over 2005. The revenue growth for the year 2003~2005 is 56.8% and 31.6% repectively. The company has experienced hard time in 2005 but the growth will continue in the coming future which is reflected in the half year result of it. The gross profit margins from 2003~2005 are maintained in a healthy state with figures of 23.9%, 33.1%, 28.3% respectively. The half year 2006 GP margin is 29.6%.

3. What is the company raising money for? Paying debts? Future development? etc
ANS: 60% of fund raised used for further development of factory production capacity in China. 30% of fund used for paying loans. 10% for working capital.

4. What are the major risk factors when investing in this company?
ANS:
a) The capacity of the company has reached nearly full operation. Its future growth relies on the increase of its capacity.
b) Rise in cost of raw material will damage its profit margin.
c) The tax examptions from Chinese government for some of its subsidiaries will expire in the coming years.
d) Management issues happen to Ocean Grands Chemicals Holdings Ltd may also happen to this company.

5. Are there any odd numbers in their financial statements?
ANS: Not yet find any odd numbers. But the debt rate is high in the past which can be improved after its IPO.

6. Is the IPO price reasonable when compared to its expected profits and dividends? Is it valuable when compared to those companies already get listed?
Ans : The IPO PE is a bit high when compared with other industrial company but it is quite difficult to compare with other companies in the same industry as many of the large competitors in the industry are subsidiaries of large electronics companies for which the results of individual subsidiary is not presented separately. For the dividend, Kingboard is expected to pay not less than 30% of its profits as dividend each year. With the forcast provided by the company for 2006 will not be less than 1623.8 million, the dividend yield will be around 1.95% at minimum. Not very attractive from dividend yield.

7. Find out some key ratios for study such as ROE, ROA, PE, PB, Debt to Equity ratio etc.

Ans:
ROE : 22.62% (2005)
ROA : 8.62% (2005)
PE : 15.4 (estimated 2006 PE based on HK$8.32 closing price on 29/12/2006)
(Assumption : Full 2006 profit : HK$0.54)
Debt to Equity Ratio : 162.3% (2005)
Gross Profit Margin : 29.6% (half year 2006)

As stated before, the debt ratio is quite high before IPO.

8. Any strategic investors? Which investment bank is the underwriter?
Ans : Two rich people in Hong Kong Mr. Cheng Yu Tung and Mr Lau Luen Hung have expressed intersts in buying the IPOs but no further information are disclosed that they have holdings in the company. Goldman Sachs is the underwriter and coordinator which has a good track record in the past.

9. Other Considered Factory

a) The company management have a good track record in managing the parent company of Kingboard Laminates. The chairman has stated the management target for Kingboard laminates is to double its revenues in the coming 5 years and seek proper acquisition opportunites to expand.
b) Kingboard Laminates is the most profitable part of Kingboard Chemical Group, its parent company. Its spin off for one reason is to lower the debt of Kingboard Chemical Group which provides a good opportunity for the market to have a more profitable investment. Spin off of subsidiary is one of the good factor as stated by Peter Lynch in investment.
c) The IPO price is set at HK$7.73 which is around US$1 for which it is clear to set the target for institutional investor holdings.
d) The Kingboard Chemical Group still holds 72.5% of Kingboard Laminates and the shares in the market after over-allocation is 825 million shares representing a market value of hong kong dollar 6.864 billion (calculated based on the closing price of HK$8.32 on 29/12/2006) which is not huge when institutional investors starting to buy its shares. However, the attitude of institutional investors to invest in such small medium enterprise may be affected by the issues happened to Ocean Grand Chemical Holdings Ltd. in 2006.

Conclusion :
After weighing the pros and cons of the company, I still believe that Kingboard Laminates Holdings Ltd (1888) is a company suitable for LONG TERM BUY and HOLD. See if it can be a "tenbagger" in the long run!

Reading Prospectus (con't)

In this section, we will take a newly listed company in Hong Kong Stock Exchange this year as an example for further explanation. We will use those data taken from its prospectus for analysis. This company is :

Nine Dragons Paper (Holdings) Limited (2689) - abbrev : ND Paper

Questions :

1. Is the industry has a growing demand? What is the relationship between demand and supply in the industry?
Ans : Yes, the industry has a growing demand. In the "Industry Overview" section, the company has provided a clear picture of the demand and supply relationship in the industry. The consumption of containerboard has exceeded its domestic consumption in the past five years and this trend is forecasted to continue at least to 2009. Furthermore, the entry barrier is this industry is high as it requires huge capital investment to install new production line. At the moment of IPO, ND Paper is at the highest volume in the country. This has provided them a great advantage. Even an average company can perform well in a growthing industry.

2. Is the company profitable over a period of time and what are their average revenue and profit growth rates?
Ans : In the "Summary" section, you can find that the company has an average revenue and profit growth rates of 46.6% and 65.7%. The profitable trend have continued for the past years. Such growth is exceptionally good.

3. What is the company raising money for? Paying debts? Future development? etc
Ans : You may find the answer in both the "Summary" and "Future Plans and Use of Proceeds" sections. Not more than 55% of capital used for establishing new production lines. Not more than 35% used for paying short term loans and the remaining used as general working capital.

4. What are the major risk factors when investing in this company?
Ans : These information are located in both "Summary" and "Risk factors" sections. Most of them are general statements. However, one point should be noted that the major supply of recovered paper is controlled in the hand of its chairman for which this supplying company is not included in the IPO. This means that the profitability of the listed company is controlled in the hands of its chairman who can earn her own money by adjusting the price of supplying recovered paper. Besides those listed, you should also pay attention to the type of management of this company which gives hints in the "Directors, senior managements and employees". Most of the top management are relatives of its chairman for which a family business may induce problem in its long term development.

5. Are there any odd numbers in their financial statements?
Ans : After reading the "Financial Information" section, it does not show any very odd numbers but the debt ratio of the company is exceptionally high. This may be the reason why they need to issue IPO instead of running as a private company.

6. Is the IPO price reasonable when compared to its expected profits and dividends? Is it valuable when compared to those companies already get listed?
Ans : In the "Summary" section, the company has provided a forecast of expected profit in the past half year. The expected PE is 13.6 if the IPO is set at its highest price. This is quite reasonable when compared with Lee & Man Paper (2314) which was trading at around expected PE ratio of 14 at the time of ND Paper IPO.

7. Find out some key ratios for study such as ROE, ROA, PE, PB, Debt to Equity ratio etc.
Ans : Some of the key ratios are listed below :

ROE : 13.7% (Year 2005)
ROA : 2.7% (Year 2005)
PE : 13.6 (expected)
Gearing Ratio : 53.4%
Net Borrowings to Equity Ratio : 212.7%

From the above, it is clear that the company is not operating in a highly effective way and has a high debt ratio. But the growing industry and IPO may improve these figures in the future.

8. Any strategic investors? Which investment bank is the underwriter?
Ans : The strategic investors are listed is "The Corporate Investors" section. There are three corporate investors including Ample Glory Limited (Mr Kuok Hock Nien), Chow Tai Fuk Nominee Limited (Dr Cheng Yu Tung) and Bestfull Limited (Dr Lee Shau Kee). They are solely investors but not involve in the company's management and Dr Lee has a good track record as being a strategic investor. The coordinator and underwriter of ND paper are BNP Paribas Peregrine and Merill Lynch which also give good track record in IPOs.

From the above, the analysis of ND paper is positive in IPO and this also explains why this company has a huge gain after its IPO.

Remember : Even an average company can perform well in a growthing industry.

Reading Prospectus

One of our reader has raised a question about which key factors of the listed prospectus of IPOs investors should pay attention to. I have to admit that with so many Chinese companies get listed in Hong Kong Stock Exchange, it is quite difficult for investors to study all thoroughly. However, I would like to stress on the point that investment is not an easy task. Remember earning money is very difficult and losing money is very easy. Therefore, investors should at least have a basic idea of the company before investing money in it.

In actual sitautions, it is very difficult to use one single method to analyse different companies because different companies and industries have their own characteristics. Anyway, I would like to share some brief reading skills of prospectus here. Normally a standard prospectus should consist of the following sections :

1. Expected Timetable

2. Summary

3. Risk Factors

4. Corporate Information

5. Industry Overview

6. Future Plans and Use of Proceeds

7. Financial Information including accountants' report and detailed financial statements.

If you have limited time, the most important section you should look at is the "Summary" section. In this section, the company will give a brief introduction of the other sections of the prospectus such as risk factors, industry and company overview and consolidated financial statements. With these information, you can have a brief idea of what the company are doing and performing. Furthermore, while you are reading the summary information, you may have further questions which you would like the company to answer. Generally, these questions can be answered in the following sections of the prospectus and you can just flip to the related section to find the answer. For example, you may find the expenses of certain category has dropped significantly before getting listed. You can flip to the "Financial Information" section which is well indexed for different expenses and you can find it out for yourself. In this way, you can read the prospectus more effectively and efficiently.

Normally, I will have certain questions to be answered before reading a prospectus and these questions help me to analysis whether the IPO is valuable to be invested :

1. Is the industry has a growing demand? What is the relationship between demand and supply in the industry?

2. Is the company profitable over a period of time and what are their average revenue and profit growth rates?

3. What is the company raising money for? Paying debts? Future development? etc

4. What are the major risk factors when investing in this company?

5. Are there any odd numbers in their financial statements?

6. Is the IPO price reasonable when compared to its expected profits and dividends? Is it valuable when compared to those companies already get listed?

7. Find out some key ratios for study such as ROE, ROA, PE, PB, Debt to Equity ratio etc.

8. Any strategic investors? Which investment bank is the underwriter?

If you can answer all the above questions, you will have a thorough idea of whether to invest in the IPO or not.

In the coming blogs, I will give some real examples for further explanations.

Business Ethic

Business ethic is an important concept that value investing relies on. Value investing relies on the integrity of management of the company to provide accurate financial and company information for evaluation. The basic concept of stock market is to separate the authorities of management and investors such that companies can effectively raise fund for their future development. In such system, management of the company acts as an agent of its stakeholders to take up the responsibility in managing the daily operations of a company. Management will release general company information on a regular basis for the evalution of investors. However, in recent years, this system has been challenged by some facts that the management has performed some cheating behaviors in order to get interests from their responsible company. The most famous one is Enron in the US for which many investors even the institutional ones were cheated. In Hong Kong, such cases also happened such as the Ocean Grand Chemicals Holdings Ltd (2880). The chairman has made use of the gaps between Chinese and Hong Kong monitoring authorities to generate fake transactions and exagerate the profits of his company. In general, it seems very difficult for a general investor to identify such cheating behaviors through their publized information. However, if you find a company with the following phenomenons, you should be very careful :

1. The major shareholder of the company is reducing his stake in the company even though the company is continuing its profit growth. This is because in general, the major shareholder should be the one who understands more of the company than the public. If under a profitable situation of the company, they still wish to reduce their stake. It should be a warning signal for all.

2. A company that always creates miracles in profits even when the economy is in a down turn or flattened. The management will either be very outstanding or cheating. You should find it out.

3. Firing its auditor for which may be because the auditor has found some faults in the company's financial statements and does not agree with it.

4. Raising fund for some projects that are not realistic such as some companies in Hong Kong have claimed to buy some mines in China for which the mines are non-existing or with much lower output than claimed.

Usually the stock prices of those companies with cheating management will continue to increase due to exagerated profits. Some people may not be able to resist such attractions and start to buy those stocks. However, you should be aware that you may lose all your investments when the profit bubble is blown up. In Hong Kong, a company which is a component of the Hang Seng Stock Index has some of the above listed phenomenons. If you are unable to understand their business model and how the profits be generated, it is better for you to avoid investing in it.

Remember :

According to Warren Buffet's investing strategy, value investors should invest in companies with excellent track records which also reflects their business ethics records in the long run. In such case, it will be much safer to invest.

Response to Comment on the Analysis of Chinese Banks

Thanks for the comment of an anonymous reader in my blog "Analysis of Chinese Banks Listed in Hong Kong".

The analysis of this blog is a general discussion of the banking industry of China. Agreed that more in-depth discussions needed for better understanding of those Chinese banks.
The reform of Chinese banks has just been started for several years and the historical data for a thorough analysis may not be enough. However, analysis should be based on historical data such that we have a better ground in predicting the future development. CCB had its IPO in Oct 2004 for which its performance in 2005 has mostly truly reflected the actual performance of this bank. I don't agree that the figures are solely for higher IPO valuation.

In the short run, the stock price can be affected by certain reasons such as the market atmosphere, demand and supply of stock during the time period etc. BoComm receives higher multiples in the stock market may be due to the following reasons :
1. HSBC as a strategic investor of BoComm has hold nearly 20% of its stock for which the supply in the market is more limited.
2. HK investors are very familiar with HSBC and trusted its management ability in partnering BoComm but not solely for BoComm's own management.
3. Beliefs that smaller companies may generate better growth in future.
However, the stock price in long run should reflect the effeciency and profitability of a company. 1~2 year does not mean too much in investment. Large size companies in banking industry in the long run should be able to outperform smaller size ones as banking is a capital intensive industry. Of course we need to make sure that the bank is well managed. CCB also has a strategic partner of Bank of America and BOA has also sent a team of personnel to CCB to help to improve their management but this is seldom mentioned by the media. Therefore, I believe that CCB will be able to improve their management to achieve better success.

NPL provision coverage is a good idea to be investigated. The NPL of Chinese banks has now been amplified by the market for which has become the major concern of investors. However, if you believe that the economy of China will continue with its rapid growth, NPL should not be a major barrier in investing in Chinese banks. In contrast, this provides a better opportunity for you to buy their stocks at cheaper price.

Economic Franchise

Economic Franchise is an important concept of value investing. A well managed company in a commodity business may not be able to sustain its growth in the long run but an average company with economic franchise can be with good performance for a long period of time. This shows how important economic franchise to a company. There are three characteristics of economic franchise :

1. The product or service are highly needed by its customers.
2. Customers can not find a similar product or replacement easily.
3. Customers of the product or service are not too price concerned.

Companies with economic franchise are more likely to sustain their growth in the long run and their performances in the future are easier to be predicted. Economic franchise can be in different ways of appearances such as branding (Coca-Cola, WD-40), state protected market dominance (Petro China) or market dominance through market (Towngas in Hong Kong) etc.

Branding :
Coca-Cola is a well known brand in soft drinks market throughout the world. Its brand is so well established that even you have got its secret formula, you cannot establish an enterprise with similar performance as Coca-Cola. This is because its brand has been successfully promoted with a representation of modern, tasty and in line with the American/Western culture image.

State protected market dominance
Petroleum is a strategic industry in China and China government will only allow pre-approved enterprise to do business within this area. Petro China is the largest state owned enterprise allowed to do the oil business in China. They can easily dominate the China oil market and turn economic franchise into huge profits.

Market dominance through market
Towngas in Hong Kong has the market dominance in Hong Kong through its management excellence. As an important element in Chinese cooking behavior, towngas have outperform major competitions from petroleum gas and electricity through their well established supply network and excellent service. Their economic franchise is granted by the market ie customers.

In general, market dominance granted by the market is more likely to sustain than state protected as the market not government is the ultimate profit origin in a free market.

Return On Equity (ROE)

After we have found out what the intrinsic value of a company, we can compare the market value of the company with it to see whether the company is value for money. However, value is not the only decisive factor to judge an investment opportunity. One also have to research the company whether it is well managed and run efficiently. One of the figure to reflect this is : Return On Equity (ROE). The calculation is simple :

ROE = (Return / Shareholders' Equity) x 100%

But when working out this ratio, you should be very careful to exclude some one-time factors which may be misleading. For example, the tax exemption from Chinese Government to Chinese banks before their IPOs will lead to a better ROE performance but this ratio will decrease afterwards with the cancellation of such exemptions. From a general idea, you can easily obtain these data from financial websites :

For Hong Kong Stocks : http://finance.yahoo.com.hk

For US Stocks : http://finance.yahoo.com , http://www.etrade.com

ROE is a correct measurement of the performance of the management of a company to show their effectiveness in getting the maximum return from available shareholders' equity. It is better than many other parameters such as Return On Asset (ROA), Earnings Per Share Growth (EPS) because it only takes into account the money invested by investors and truely reflects the return rate generated through these investments.

Warren Buffett is the one who really admire the power of ROE. He also stated that a company with a ROE above 20% can be good as the shareholders' equity will be doubled in 5 years if it can maintain a steady performance in ROE. Below is the ROE of top 5 investments of Berkshire Hathaway owned by Warren Buffett in 2005 :

1. The Coca-Cola Company (KO) : 30.41%

2. American Express Company (AXP) : 25.07%

3. The Procter & Gamble Company (PG) : 21.76%

4. Wells Fargo & Company (WFC) : 19.72%

5. Moody's Corporation (MC) : 185.6%

(Figures obtained from etrade website on 10th September, 2006)

Only one company ie WFC has a ROE slightly lower than 20%. The above figures are only the ROEs of the companies in the past year. In practice, please remember to average the ROEs of a company in the past years to get a steady judgement. Good Luck!

REMEMBER : Invest in a company with a ROE average better than 20% over a number of years will give an amazing return.

Intrinsic Value

One of the important concept of value investing is intrinsic value. We need to determine the actual value of an enterprise such that whether it is worth to invest in. In the Annual Report of Berkshire Hathaway 2005, Warren Buffet, the great follower of value investing, has clearly defined intrinsic value as the discounted value of the cash that can be taken out of a business during its remaining life. To be more simple, it is the discounted cash flow method we have learned in our accounting course. The general use of discounted cash flow is to evaluate the feasibility of a business project. If you don't know what it is, you may just pick an accounting textbook in the book store and all the details will be presented very clearly. Howver, though the method is simple, it is very difficult to apply the basic estimations in making actual calculations. To be correct, one has to understand the future of the industry and company very clearly such that he can correctly estimate the percentage growth in cash flow of the company in its remaining life or a long period of time eg 10 to 30 years. Therefore, Warren Buffet usually invest in companies with business which is easily understood and forecasted. On the other hand, the percentage used to calculate the present value of cash flow generated is also very important. Warren Buffet usually use the interest rate of 30 year US bond as the risk free rate in calculation. After we have successfully calculated the intrinsic value of a company, we can compare it with market value of the company to see whether we have the safety margin when buying its stock.

Book Value vs. Intrinsic Value
Someone may argue that looking at the book value can be a good method in evaluating the value of a company. For example, many analysts usually use the Price to Book Ratio (PB ratio) to compare the value of banks. However, book value can only tell you the present value of the company and the intrinsic value derived from the discounted cash flow method is more forward looking which has taken into account the future performance of a company. Therefore, intrinsic value should be more safe and accurate in evaluating valuable investment opportunities.

Foundations of Value Investing - a brief history

The foundations of value investing were set by Benjamin Graham who wrote the book "Security Analysis" together with David Dodd. The book outlined the foundamentals of value investing as a successful stategy in the modern stock market. Though Benjamin Graham has not been very successful in the stock market, his methodology has influenced many of his students to make use of value investing in the stock market to achieve great successes. The most famous two are Warren Buffett and John Templeton. Of course, in order to achieve great successes, they have finetuned value investing from the time of Benjamin Graham to cope with the actual market situation and making value investing to be more forward looking. John Templeton has been very famous with his successful investing in the emerging market and Warren Buffet is great in investing in the most promising enterprises to become the best investor in history. Both of them have not clearly stated sytematically how value investing work in evaluating investment opportunities. However, I will summarize their publicly anouncements and annual reports to get a closer look of their ways of successful value investing in the coming blogs.

Analysis of Chinese Banks Listed in Hong Kong

Banking is an important industry in modern economy. With the fast economic growth in China, the investment value of banks in China has become a major topic for investors who want to share the economic benefits from the growth of Chinese market. According to the policies in China, the largest banks are still state owned enterprise. The largest stake could be taken up by foreign investors should not be more than 20%. This is why HSBC could only take up a 19.99% share in the Bank of Communications. Up to now, the four major state owned banks are Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China, China Construction Bank (CCB) and Bank of China (BOC). The fifth one is Bank of Communications but of much smaller size than the big four. For the top five banks, three of them have been listed in Hong Kong Stock Exchange. Below are the comparisons of the three listed banks for their investing values . Major data was taken from their annual reports and prospectus in 2005. In order to give a more comprehensive idea of their performance, I also abstract some important figures from HSBC annual report 2005 which represent an internation performance standard for banks :

1. Major Business Focus

China Construction Bank (stock code : 939)
CCB develop their major business within China and their major loans are for infrastructure contruction and real estates within China. Therefore, their profits are closely related to the economics development of China.

Bank of China (stock code : 3988)
BOC is the best known chinese bank in the world as their major focus is foreign exchange service. Besides china, they also set up branches around the world. About 40% of their profit is from BOC Hong Kong. Therefore, the bank is expected to be more stable in profit but will face higher exchange risk and gets less benefits from the RMB currency rise.

Bank of Communications (stock code : 3328)
Bank of Communictions is operating in a smaller size than the big four and offers more general and customized banking services to the public. With their strategic cooperation with HSBC, the bank is improving their working effeciencies to give a better performance.

2. Size of Business

Loans / Deposits (RMB in Millions)
China Construction Bank : 2,395,313 / 4,006,046
Bank of China : 2,152,112 / 3,699,464
Bank of Communications : 758,773 / 1,220,839

Note : From the above, the China Construction Bank is operating at a higher loans and deposits from which they are more likely to generate more profits and better economy of scale.

3. Key Operating Figures

ROE (Return of Average Equity)
China Construction Bank : 17.99%
Bank of China : 12.14%
Bank of Communications : 13.68%
HSBC : 16.8%

Note : For the ROE, China Construction Bank gives the best performance which is higher than HSBC. Such outcome is reasonable as China is a fast growing economy. The performance of banks in such market should be better than the banks in mature economy. The performances of BOC and Bank of Comunications are quite unacceptable in such case.

Net Interest Spread / Net Interest Margin
China Construction Bank : 2.7% / 2.78%
Bank of China : 2.21% / 2.33%
Bank of Communications : 2.58% / 2.64%
HSBC : 2.84% / 3.14%

Note : The interest rate in China is controlled by the People's Bank of China which is the central bank. However, under such circumstances, China Construction Bank managed to give the best Net Interest performance within the three. In the coming year, the chinese banks are expected to give a higher Net Interest Spread and Net Interest Margin as the central bank has raised the loan rate but maintain the deposit rate unchanged.

Non-performing Loan Ratio
China Construction Bank : 3.84%
Bank of China : 4.9%
Bank of Communications : 2.8%
HSBC : 1.16%

Note : The non-performing loan ratio is one of the major issues concerned by investors as some of the loans have been political loans which may not be executed according to general economic rules. Therefore, the NLR of the three banks are relatively higher than that of HSBC. But Bank of Communications is the best performer among the three.

Cost to Income Ratio
China Construction Bank : 45.13%
Bank of China : 47.95%
Bank of Communications : 51.24%
HSBC : 51.2%

Note : The two large banks has a better percentage than HSBC due to the lower running cost such as lower salaries for staff and lower rent in China. However, Bank of Communication got a higher figure which may be due to their smaller size in operation. In this aspect, China Construction Bank gives the best performance.

From the above analysis, it is obvious that China Construction Bank gives a better performance than the other two and its share performance is more likely to outperform the other two in the long run.

Hong Kong Stock Blog

I am an amateur stock investor in Hong Kong and have been investing in Hong Kong stocks for more than twenty years. After years of loss in the stock market, I have shifted my beliefs from technical investing to foundamental investing strategy. Such shift has turned me into a more profitable investor. My favourite investing strategy is value investing and my favourite investor is Warren Buffet. I started this blog to discuss the general issues in Hong Kong stock market and the application of value investing in Hong Kong as Hong Kong stock market has become the step stone for chinese state own enterprise to raise capital for their future development which has created a lot of investment opportunities for value investors. Good luck, everybody!