Bluestar Secutech Share Discussion Threads

[saucepan] 02/10/2012 16:26

It has been a long while since I have been in BSST, but it seems to offer a classic lesson for investors: when a stock is in a strong downtrend it takes a lot of reversing. I seem to recall I got out around 15p to 20p levels and some people thought the bottom was in then.

A bowl probably needs to form over a decent period before there is much chance of a sustained rise. No sign of that, I see.

[bill182] 02/10/2012 16:20

The company is now valued at virtually the net cash position, and the drop shows no sign of abating. With no financial news expected for a while and the MM's not willing to buy, except on a negotiated trade, you wonder how much further it could drop. Current mid-price 3.62p!

[bill182] 11/9/2012 09:47

Well...that explains the relentless drop in the share price..a 1m sell at 5.00p. That will keep the price down for a long time given the limited trades history!

[bill182] 10/9/2012 15:08

Haven't posted here in a while, but have been reviewing the latest information in light of the recent drop in the share price.

The issues still remain over the size of the debtors and the time taken to collect, although part of this is explained by the accounting treatment of posting revenues before the total completion of a given contract. It will be interesting to see if the company has any luck in convincing the banks to pay more quickly, as alluded too in the results.

I think it will be a while before confidence returns here, but I also believe the drop has been overdone based on fundamentals. Looking back at the recent trades history, there has not been a wholesale sell-off, and I would expect to see a recovery in the share price as more contract wins are announced.

I have bought back in today, but only a modest amount, and will review the situation on the next announcement.

[stewjames] 22/7/2012 01:40

These Chinese companies are certainly interesting. It makes me (casually) wonder whether the supposed Chinese economic growth we hear about is equally illusory.

[edmundshaw] 20/7/2012 18:50

Quite. Total outstanding debtor days up from 357 days to 475 days. Ye gods, don't banks in China ever pay for anything??? Makes Geong look tightly run. Dividend was bound to go.

Still, the CFO has gone. And they are "requesting" the banks to pay in instalments rather than several eons after project end. Some hope I suppose for remaining shareholders... of which I am not likely to be one again.

I suppose one has to experiment with new investment ideas, but the failures are stll painful...

[longsight] 20/7/2012 09:15

Results out - as bad as you might imagine.

[edmundshaw] 06/2/2012 18:46

A propos, problems are more predictable where management is dodgy (cf MUBL amongst many other UK companies; also Mayflower, where I did actually see some warning signs about management in time). An issue with chinese companies is that it is harder to spot dodgy management; and due to the different culture, harder to spot dodgy management practices.

[edmundshaw] 06/2/2012 18:42

Ah. Aviva. Another of mine :-)

Forecasters (and analysts), as usual, too keen to predict problems (just as they are too keen to predict wonder growth stories). The true outcome is usually more banal... and that is one of the secrets of my investing strategy. Oops, did I say secret? :-(

[masurenguy] 06/2/2012 15:52

David - there has been a reversal in sentiment on Chinese companies since the credit crunch in 2008 plus some negative stories about accounting scams in several US listed Chinese companies. There have been one or two Chinese company scams here but probably no more than with AIM listed UK or Israeli companies on a pro rata basis.

You could say the same about Indian companies. Look at EROS - it is currently priced around its IPO level from over 6 years ago and is almost 60% below its 2007 high. Likewise DQE which is 50% below its IPO. These are profitable companies with low PER's but the valuations are depressed by current negative market sentiment toward Indian, Chinese and other Asian AIM listed companies (CSFG is another example too).

Sentiment and valuations can go up and down according to trends and cycles as we all know - who would have believed a few years ago that a large FTSE 100 company like Aviva could be priced at a PER of circa 7 !

[davidosh] 06/2/2012 15:35

I am certainly not suggesting BSST is bust nor that every single chinese investment will end in tears ! However I doubt there are many that are now higher than their listing prices or exited the market higher than they entered it ? That does not mean that clever trading of the initial euphoria and dash for some of the growth stories would not give profits to some but the vast majority have had problems whether,cultural,scam induced, cashflow or simple genuine trading.

It would be interesting to see a full list including float price and initial market cap, total funds raised and market cap now...I doubt it will be a good risk/reward indicator and certainly many investors are scarred by past experiences and will not now go near these even when trading below cash....just look at what happened at Sinosoft Technology two years back ?

[edmundshaw] 06/2/2012 15:15

Yes, BSST profitable now and may well even end up being a good, profitable investment long term. Especially if you can buy low and sell high!

But that doesn't make for such dramatic press, and people do seem to love slagging off chinese companies.

I've made very good money with CHNS, ACHL (still invested there), WCC. On the other hand lost a fair bit with RCG and Haike. Overall, returns have been very uneven (and quite volatile), so diversification has been pretty essential to derisk the overall chinese portfolio. But for every chinese company that has lost 40, 50 or 60%, I can show one that has made 200, 300, 1000%. Overall happy, but you have to be sanguine about the losses.

BSST business returns are not even. Ergo there will be good periods and bad ones. Provided cash collection ensues, however, and the company itself is kosher (which I think very likely), it does seem a pretty regular, solid business model. I shall keep my small holding here for now. Hopefully the dividend will continue to provide some returns while I am waiting for better times.

[masurenguy] 06/2/2012 13:48

davidosh - 1045: I do wonder how much money in total has been raised in IPOs and subsequent additional placings and how much value is the left in the chinese companies that remain after that mass of listings on AIM about six years ago ?

I sold my residual stake BSST (post# 989) at a good profit last year so I have no axe to grind here. However I think that there are some misrepresentations of the situation here following todays profit warning. I know Davids comment was a generalisation, rather than being specifically directed at BSST,
but nevertheless I think it is appropriate to establish some proper perspective here.

BSST raised £11.1m through their original IPO almost 5 years ago. They have not raised any more money since then so there has not been any further placings or shareholder dilution whatsoever.

Over the past 4 years they have paid shareholders £2.3m in dividends

They were still in a net cash position - circa £3.5m - at the end of the first half this year (Sept 11).

The company has been profitable since listing on AIM and todays trading statement indicates that this will continue to be the case albiet at a level well below market expectations.

Their cash position has declined from circa £11.5m in March 2008 to circa £3.5m in September 2011. This is almost entirely due to increases in receivables, inventories and R&D investment over this timeframe which has partially been funded by profits and partially by original IPO funds.

Whilst the RNS today will clearly be a great disappointment to all existing shareholders, the notion that a company with a net cash balance and which continues to be consistently profitable (even at a reduced level) is on the brink of collapse is a complete distortion of its financial situation.

[davidosh] 06/2/2012 12:28

I do wonder how much money in total has been raised in IPOs and subsequent additional placings and how much value is the left in the chinese companies that remain after that mass of listings on AIM about six years ago ?

I suspect AIM has somehow funded the Beijing Olympics...lol !

[jak1] 06/2/2012 12:21

Typical Chinese. I now get out an extra long barge pole when it comes to Chinese companies. I never trust there numbers...

[stegrego] 06/2/2012 12:12

Will the last one in please turn off the lights...

[saucepan] 06/2/2012 12:07

What a dreadful profit warning this morning!

This has turned out to be a classic example of the share price action already telling the story that bad news was on its way.

[zangdook] 06/2/2012 11:48

fwiw I think that 'no Chinese' rule is a bit of an over-generalisation. WCC, for example, seems to have been a life-changer for some investors. Of the current AIM batch TAIH seems promising medium term - none of the receivables nonsense which has chewed up the share price here and at GNG, though it's true that it's still in the doldrums, trading well below apparent value.

[the diviner] 05/2/2012 01:49

Thanks to all for the useful opinions.

These Chinese companies do tend to pop up on value trawls and they often have good numbers. The problem seems to be that they can be in the permavalue zone in that they always appear to be quite attractive on the numbers and they rarely live up to expectations.

Up to now I have been lucky with all the Chinese shares that I have bought/sold as I have made a small profit on them all including GNG, CWO, CBI and CHNS but in hindsight my making a profit out of Chinese companies may have been more luck than judgement. (Also the profits were small in percentage terms and were not what I had hoped for when I bought. - When I bought those shares they looked like they had the potential to be multi-baggers and had I not sold, due to my instincts, then I would probably have lost money on them).

Liarspoker's policy of avoiding all Chinese companies is definitely worth noting and it is probably a policy that I will now try to keep to myself.

Regards,
TD

[saucepan] 04/2/2012 21:12

I saw my name mentioned, so I thought I had better chip in. I occasionally look into BSST as it keeps coming up on my ShareScope value/growth trawls. I sold out shortly after buying: sorry I did not post that information on this thread at the time. I cannot remember quite why, but I suspect the price moved through a pre-determined stoploss. I vaguely remember, too, being spooked by some of the negative insights on here, which I think were good ones.

The relentless downtrend has to be confirming that something is far from right.

Liarspoker makes a good point about avoiding Chinese companies, I feel, and especially in current markets. There are plenty of other low PEG and low P/E opportunities out there at present with seemingly far less risk associated with them.

[liarspoker] 04/2/2012 20:16

There is something very wrong with both BSST & GNG imo as well as PMHL. An investment tenent I have is to avoid all Chinese companies - it has served me well from when I established it. :O)

[the diviner] 04/2/2012 20:11

Hi Masurenguy,

Thank you for that.

FWIW, I had random batch read/scanned through a number of the older posts on this thread before I raised the questions and I was still confused.

I saw the worries about delisting but that does not explain why a company that claims to make oodles has a share price that has been in almost constant decline since 2008.

I had recognised a few of the names of the posters on this thread and I was looking for a reason to buy but up to now I have not found one and I plan to move on and will keep an eye on how BSST progresses from a distance.

I am presently doing the same at with GNG: I sold GNG at around 38p and I am glad I did.

Regards,
TD

[masurenguy] 04/2/2012 19:22

TD - I sold out almost 10 months ago - my reasons are here.



Also checkout liarspoker posts #981 & 982

Saucepan also produced some good statistics in post #1005



My view on the comparison with Geong



Otherwise read through the last 100 posts starting with liarspokers view some 15 months ago in #928.