Establishment Investment Share Discussion Threads

[greek islander] 29/2/2008 14:45

Yes longshanks you must be right - certainly a big demand for stock somewhere out there. Would be surprised though if it was an institutional buyer for a stock which is at such an early developmental stage but it could be. More likely to be an individual building up a stake.

[longshanks] 29/2/2008 12:25

If the MM's are absorbing that kind of quantity and coax a tick up to boot then I guess that is an encouraging sign. I wouldn't be surprised if there is a large institutional order being filled. Might see further gains over the next few weeks.

[greek islander] 29/2/2008 12:11

100k sell since I posted

[greek islander] 29/2/2008 12:04

Another tick up today on just two buys.

[greek islander] 25/2/2008 09:00

Everything you say slapdash is correct and is the reason I never normally invest these days in a company that is not already proving to be net profitable.
Partly for a bit of fun and partly as a considered gamble I am having a decent punt here simply because they have shown that the market is a fast expanding one and that they are capable of increasing their share in it as they improve sales at an impressive rate. As I stated very clearly when I wrote here, I shall need proof that the bottom line is improving fast also and that they can control costs.
However, in the formative years of any business this will always be the situation and ECT would be extremely unique to be showing a big profit when the turnover is increasing so exceptionally quickly and so soon after formation.
I also have yet to be impressed by the management but they seem to have so far done everything right. I particularly like the move into credit cards which shows that they are thinking laterally.
I would never recommend anyone to buy into a loss situation but my hope is that within the next twelve months that will not be the case any more and the economies of scale that are brought about by such a quick expansion in turnover will see any net profitability surge at a fantastic rate.
All speculation I agree and great optimism. This is probably the most dangerous of years for ECT though even if the cost controls prove to be not what they should be, such a fast increasing turnover could well buffer them against these dangers.
Whatever you say this is the most exciting stock I have bought since Geong when it was in the twenties back at the beginning of 2007.

[qs9] 24/2/2008 20:23

thanks longshanks....eps view ignores the valuation of their stake in the Chinese quoted company, so not a completely "true" view....IMO....agree they would do better to provide more detail, but trading updates from companies do not always do so....lets see how their IR team train them over the coming months and will give them benefit of doubt for time being.

[longshanks] 24/2/2008 20:17

Someone else thinks its worth a punt



For those without a subscription - here is the text:


ET China - SPECULATIVE BUY
Companies: ETC
22/02/2008

In a trading update, South China travel operator ET China said its balance between domestic and overseas package holidays helped it maintain fast growth rates despite a blizzardy holiday period.

Severe snow and ice storms, making it the worst winter in 50 years, pushed the Chinese government into clamping down on internal travel. However, claims chief executive Matthew Ng, ET's tour operating division was able to achieve an 8.7% increase in gross sales over the seven-day Spring Festival while competitors floundered 'because we are different – we have half domestic and half outbound'.

Domestic tours were reduced, but this was more than made up for by a 47% increase in the number of high-margin overseas tours and a 119% rise in those to Europe. Ng stresses that growing affluence in ET China's chief markets is a strong growth driver. He says that in the huge southern cities of Guangzhou and Shenzhen, 'people are richer, so they can afford to travel further away'.

In a fragmented tour market ET China's GZL brand is 'bigger than the second- and third-biggest competitors [in the region] put together', Ng declared, adding that last year's marketing push was behind a 69% surge in January sales year on year.

Annual 2007 results, set for release in March, are forecast to show pre-tax losses of £1.5m from £114.7m sales with a leap to profits of £4.2m from £160m sales suggested for 2008. That should produce earnings of 2.7p, placing the shares on a p/e ratio of more than 30 times. However, given expected growth rates, the rating isn't too demanding and the shares have speculative appeal.

[longshanks] 24/2/2008 19:43

Hi there slap. Agree in part with some of your analysis. Commenting on gross profits is a little deceptive and yes this is a terribly competitive business.

However, I suspect they are quoting gross figures because they haven't yet had the audit and really do not know what their overall figures will be. I am prepared to give them the benefit of the doubt. Progress of this young company appears very much on track and you cannot possibly expect them to be making profits if their business plan showed them as taking 18 months to achieve profitability.

FWIW their house broker appears impressed and that - if not necessarily a reliable indicator - is better than them saying things are not going to plan. Seymour Pierce feel they may have understated their forecast profits for '08 and if so then this company is undervalued on the basis used for its IPO. Avoid if you like but the price looks right to me and I suspect ETC could prove a very decent investment.

[qs9] 23/2/2008 19:04

Am in as well, looks like a great "in" to a fast expanding economy with more people affording to travel....

[greek islander] 22/2/2008 19:54

UK-Analyst this evening:

"Et-China (ETC), the travel services group focusing on Southern China, said trading at its tour operating businesses was robust during the 7-day spring festival, with gross sales at GZL rising 8.7% over the same period last year to RMB 95 million (6.8 million pounds). The company added that gross sales for GZL in January were up 69% over the same period last year, despite one of the worst winters in living memory. "The travel market in China, and in particular southern China, continues to grow at a rapid rate and as the economy maintains its growth, we are seeing more of our customers prepared to travel further and pay more," commented President and CEO Matthew Ng. Et-China shares travelled 1.5p higher to 90.5p. "

[greek islander] 22/2/2008 18:33

I am very impressed also by the expansive ambitious approach to trading with the management very lateral in looking for ways of extending its modus operandi.
Desperate for real figures to work out how far we are off net profitability.
Guess barring a sudden surge in sales which brings an unexpectedly early RNS, we shall have to wait at least a full 6 months and probably double that.
However I am long and can be patient.

[longshanks] 22/2/2008 18:22

all that good news and zero trades....this is truly off the radar. Like you, GI, I will be adding to these in due course.

[explorer88] 22/2/2008 08:28

morning GI - i agree.

[greek islander] 22/2/2008 08:23

This is such a fast expanding sector with virtually no limit to the potential that as long as the company can control costs sensibly then we are really on to a winner.
If things continue as they are going then economies of scale will really start to settle in and I can see the company not only profitable but hugely so, in a matter of two to three years. This stock could really start to motor and looks a potential three to five bagger. Really exciting.
I am spent up at the moment but opportunities to extend my investment should come in late March early April. Hopefully by then the share price will not have raced ahead too much.
When I was in Macao last year I was astounded at just how many tour parties of Chinese one saw and not just around the place but staying in hotels like the Mandarin Oriental - which though cheaper than the London version is only slightly so.
Huge money to be made in this industry and this is a unique chance to get in at the ground level. Just hope the management is on the ball in every way!
I see improvement organically but also by acquisition. This really could become the Chinese 21st Century Thomas Cooks.

[greek islander] 22/2/2008 08:13

Chinese New Year Trading


Worth posting this.
Apart from the excellent news re the update it is the fact that the company are keeping us informed that is so impressive.

" RNS Number:5242O
Et-china.com International Holdings
22 February 2008


For Immediate Release 22 February 2008

ET-CHINA.COM INTERNATIONAL HOLDINGS LIMITED
("Et-china", "the Group" or "the Company")

HOLIDAY TRADING UPDATE

"GOLDEN WEEK" FOR SALES OVER SPRING FESTIVAL

Et-china.com International Holdings Limited, the leading travel services group
in the fast growing region of South China, announces robust trading figures for
its tour operating business during the Spring Festival, the first Golden Week
holiday in the Chinese holiday calendar which runs from 6th to 12th February.

The Company's tour operation division, GZL, achieved gross sales of RMB95m and
an 8.7% increase in income over the 7 day period, compared to the same period
last year, despite the widely reported extremely unusual adverse weather
conditions which affected Central and Southern China. The weather led to a
reduction in number of domestic and inter-provincial tours sold by GZL. However
this was balanced by sales of Outbound tours which were up by 19% on the
corresponding period. Overseas tours, excluding Hong Kong and Macau, rose by 47%
and tours to Europe increased by 119%. European package tours are 'high end'
products, typically costing between RMB15,000 and RMB40,000 and the strong
increase in sales indicates a growing appetite amongst consumers for this type
of product.

The Group also announces that gross sales for GZL during January 2008 were up
69% against the same period in 2007.

Matthew Ng, President and Chief Executive Officer, commented:
"I am delighted with the Group's performance over the holiday period and January.
Despite one of the worst winters in living memory, we have demonstrated how robust
our business model is and the strength of the GZL brand.

"The travel market in China, and in particular southern China, continues to grow
at a rapid rate and as the economy maintains its growth, we are seeing more of
our customers prepared to travel further and pay more."


Contact details for enquiries:
Et-china.com International Holdings Limited [phone]
Matthew Ng"

[longshanks] 22/2/2008 08:11

Hopefully there will only be successes ;)

...but yes explorer88...I agree. In fact I would say that growth of 119% in such "high end" business is far more than encouraging. I'd say that it is a taste of huge potential profits to be made and that we can expect similar growth rates for quite a number of years.

Like tp100 said above...ETC seem to be in the right business at the right time.

[explorer88] 22/2/2008 08:06

An encouraging update.

Notice that tours to Europe are up over 100% compared to last year. These tours cost between £1,000 and £3,000 and are higher margin business. The European tours will continue to grow strongly and achieve very substantial levels of profitability.

I sense that from a PR perspective - ETC is rather like GNG, keen to update investors as often as possible and tell us of their successes - a good sign, imo.

[explorer88] 21/2/2008 10:44

morning GI - that's around what i'm forecasting for 08 and 09 (small loss in 07?), which would give PEG of around 0.15 on 09 eps.

fwiw, i've taken an initial position in the company and will look to build this up over the next 6-12 months, so i'm hoping that we won't get the main re-rating too soon;-)

[greek islander] 21/2/2008 10:05

explorer
I would be happy with an eps of 0.5p net. That would signal a huge surge in the share price When a comparitively high earning cash generating company like this moves into net profit from a position of gross profit the market takes notice.
This is always the best time to be in a stock as the initial share price rises can be sensational. Re the eps - I guess the company is spending at a rate of knots as it grows. Much will depend on economies of scale, as turnover rises fast in this booming market. I think an eps of over 3p would be over optimistic though not at all impossible. I'd settle for that this coming year with hopefully a 100% more the following accounting period.

[explorer88] 20/2/2008 11:04

any thoughts on eps for 2008 and 2009?

[tp100] 20/2/2008 10:24

Not much of a bounce considering the news. I will be adding again for clients when funds become available. I think ET is in the right place at the right time.