Wednesday, 28 January 2015

Morning Mumble: Wafers...treading on thin ice &

Good Morning,

Hanergy Thin Film Power Group will be in the press a lot over coming months be it a squeeze or drop. The FT runs with Breakneck growth of Hanergy raises question. It’s a different twist on the repeat in the solar cycle for China. There's been significant consolidation, but do the earnings and receivables having a similar whiff about them. It’s a tightly held stock with the founder holding circa 70% of the stock, 5% out on loan, there could be a difficulty covering any short positions in a further squeeze.  

The article does not go into the trading elements on the market, Hanergy's (HNGSF) price has appreciated by a significant short squeeze. A stock which most traders have been waiting on the side lines to about turn and ride down circa 80%. 

For those not short-selling of any form HNGSF is one for the packs, its already at a pivotal point and the shorters have (please note past tense) clambered over themselves to obtain stock. This stock is worth no more than 1.30HKD on a good day and the FT will no doubt be reporting in due course about its share price movements in more detail. 

The accounts are not the only issue with HNGSF. Would HNGSF like to clarify what development grants are within the accounts including any Government payments? HNGSF's position may also be fuelled by the closure of positions that had been previously rolled over in the Chinese brokers now under review and suspended from taking new clients? Of course the China Securities Regulatory Commission (CSRC) inspections will find no issues at all...but with Shanghai and Shenzhen holding around $175B of leverages shorts it does not bode well if the industry got a regulatory slap. 

HNGSF as a listed solar companies is unusual, due to its HKEx  listing. You do not have to be too shrewd to find a way on to the train. Normally OTC stock via NYSE, or alternative derivatives but its globally available via even the most basic retail spread-betting portals. 

One illiquid delayed trade that has been been good for long until the trend now being at significant risk is the CSOP CES China A80 ETF (SEHK). Fairly simple product and one that mirrors Chinese Pref A Equities. With Chinese industrial profits falling, the market is falling back/stagnating until further stimulus is announced. 

In the land of the AIM, it’s amusing to see the markets pricing in so backward with Mosman Oil and Gas (MSMN). For those readers now aware of MSMN, (EMC: Up the creek), if you know a long holder, it might be wise to lock their drinks cabinet and submit them for drug testing. Is there any reason why this stock is above 2 pence? If you are wishing to email about MSMN please don't the sympathy departed in December 2014. 

We have another, Bagir Group (BAGR) (EMC Bagir Group May 2014 Sarcasm) today with their trading update , which comes with no surprises. Ever since the IPO the warnings have come out, the revisions downwards and the company I suspect will at best break-even. Listing at 56 pence, there's not much further for them to go. (Disc: no position now). There should be some serious questions asked about the timing of the BAGR listing and when they knew about the material downturn in trading so shortly after listing, from memory 1 month after listing a warning was out.

The disparity between Brent and WTI is not without sense, with various opinions going round about $50/bbl being the new ceiling or floor. If $50/bbl is the new floor, how is WTI trading at $45.47/bbl and Brent $49.06/bbl. 

Iron ore really starting to put the boot in on the listened smaller entities, those with higher leverage FMG (Fortescue Metals Group) and Atlas Iron (AGO: ASX). Whilst it was with some hilarity someone attempted to point out why AGO's a buy based on dividend yield. If there is one? Christmas was your exit, you've missed the boat!

JMAT (Johnson Matthey) today give the Q3 trading statement. The refinery additives and diagnostic division is going to come under further pressure being reliant on the petrochemical industry. The industry is currently sick as a dock and expenditure being scaled back, why would JMAT be exempt?

The outlook for the car and haulage industry varies but the majors guiding to a decline in production of circa 1% and as a result a drop in earnings, stagnation is likely for JMAT at best until the cycle changes. The technology premium for JMAT should be under review. Emission Control Technologies the kingpin of the company is reliant on on industries peaking or little growth. There seems to be an echo of EMC just getting it write (scuse the pun) EMC JMAT above its money and under pressure. One could argue there’s no viable benefit in holding JMAT until oil is 40% up…JMAT still missing their AAL (Anglo American) fees! 

Little time for the other items...

Atb Fraser


Thank you for the well-wishers for my daughter, she's not playing again today and didn't sleep well. Being off on business soon I hope she recovers from the lurgies. 

4 comments:

  1. Fraser- Hi- hope the littleun is up and about and back to her old tricks again soon. Perhaps if u sing that Frozen song to her it will help?? :-))

    Re Oil- yes, no floor yet but a bit of a squeeze possible given the capex cuts that the big boys are due to announce in the next week, with Shell tomorrow and Chevron and Exxon before the weekend too if memory serves well. The mkt expects big cuts now, but history says they should think ahead and not be too tight, especially given the cash and bkg facilities they have in place so I may well buy the one that cuts least after the results are out.

    Re Copper- hit again yesterday but prod delays are coming through now on a regular basis (AAL today announce grade declines re two major copper mines) and ANTO guiding for 710t in 2015 against 705t in 2014 so not much growth and no wriggle room re issues either there. I know you were negative copper but I cant see much of a surplus or deficit for 2015 from here. That's mildly positive for me. Any thoughts?

    Re OXS- they will get 1 weeks advance notice and given todays move they must be positive as they would want more cash and sod the dilution if they had negative vibes, even if it meant they paid their wages for an extra month. So v positive for me but still expecting a rush for the exit on day one, and a big spread of numbers possible here, so lets see...

    Cheers. The Leggie

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    1. Afternoon Leggie! My singing is on en par with my gambling, need I say more. She's improved significantly and now laughing whilst asking for grape. She has been stating "daddy goes away bye see you later thank you for coming!" haha....

      Oil CAPEX and those looking to acquire may be more valued than battening down the hatches. When I put my feet up I'm hope to spend some time looking at them.

      There's a lot of contradictory information in the market at the moment with some lumpy buys not even pulling the price more than 3¢ so for me it's looking for direction. Rather like gold was for some time. Grades declining is a global issue supply is significantly better than stated. ANTO wasn't as bad as the market suggested, coming in on the guidance. With the market contracting in the “minnow” suppliers at marginal cost, it’s likely copper will see $6300/t this year near 10% upside on the current $2.50/lbs to $2.85lbs. Allow fluctuations in that of around 7-8%.

      OXS, some speculative gossip nothing more nothing less at the moment. The resolution of the EFF from Darwin is a positive. Perhaps Friday will be an advanced warning...one hopes they've been more realistic about recovery of costs and losses than a certain power company (RUR).

      I was guilty of gambling on Igas Energy today!

      Atb Fraser

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    2. Fraser- nice to see she is getting back to normal and I hope you are peeling those grapes for her :-)) My dad worked away a lot and I called him "Uncle Daddy", I was 3/4 at the time and cant remember it but Mum told me when I got older. Its funny what kids say.

      I caught the IGAS trading bug too-- Not long at all but the move was obvious to me too so perhaps some of your trading bent is rubbing off on my normal stale long stance :-)) I may even do a short this year-- you never know!!

      Cheers. The Leggie

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  2. Perhaps the commentators with the view "onthemarket.com" was flat and limited risk will be publishing the views which represent their trading styles today. Tut tut...

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