All Entries Tagged With: "emerging markets performance"
China Life Insurance (LFC)
China Life Insurance Co. Ltd. (LFC)
China Life Insurance is a leading provider of individual life insurance products in China.
What I Like
With LFC share price currently at $53.05 its shows the company is on an uptrend when valued against the 50-Day Moving Average, which is $45.72. With a 52-Week High of $69.25 (May 08) and a 52-Week Low $33.45 the stock has seen the share of volatility that the markets have experienced. I foresee LFC rapidly expanding much like China is and grasping a larger portion of the market share as more Chinese individuals begin to purchase Life Insurance. With the increase of China’s individual GDP the amount of individuals who will be in need of Life Insurance will double offering LFC a golden opportunity. One thing China has is money right now, which they are willing to spend and boost the Chinese economy. Look for LFC to be a player and take in large amounts of capital as they continue to expand. Daily Volume is above 100,000, which is the threshold in which I set. The thing I like about LFC is it is still quite unknown and sheltered which makes it a great time to buy. As China continues its economic dominance more and more investors will be pursuing Chinese stocks and LFC will be one to benefit. It is only 6% institutionally held. Wait until the Hedge Funds find out about this stock, the share price will soar.
What I Don’t Like
Return on Assets 1.76% and Return on Equity 15.88% are lacking yet as Individual Insurance Sales begin to normalize with the strengthening of the overall global economy I look for these numbers to rise.
Overview
Overall LFC is a strong Chinese company with mass potential. There still have a large untapped market among the Chinese population, which makes it a very dangerous stock. LFC gets my BUY rating all the way up to $55. I foresee the stock ending the year at around $62-$64. Make sure you don’t miss your chance to ride the Chinese markets.
G20 Roundup
Success. This is a word we can derive from the G20 meetings. Going in I had my concerns with whether or not anything would be initated as summits usually are not the place for Financial Regulations to be set. Times started off turbluent with the French President Nicolas Sarkozy threatening to walk out of the summit if his plan for tighter global regulations wasn’t adopted. For Sarkozy ultimatums are not the smartest way to go especially when he is going up against the heads of much larger nations. In the end, however Sarkozy left satisfied with the G20 taking a step in his direction. Going back on the idea of what was accomplished I think the big winners from the Summit where the smaller nations. The $1 trillion dollars will help credit flow and revive the economies of these small nations who are unable to create their own money supply by printing money. This contribution will help global liquidity and help the currency-crisis countries trade credit. As for the U.S., I believe there was much anger directed towards us, since we are the one who created this problem. The U.S. will not benefit as much from the money as we are such a large nation with so many needs yet every penny helps. I agree with tighter global regulations as long as it doesn’t come at the expense of a list of restrictions on the U.S. We need to regulate the economy and watch over it, but not control it and pave the path it shall follow. The worst thing that could have come would have been global restrictions on the economy especially for the U.S. Plus Foreign nations need to stop blaming the U.S. for this crisis. Yes we started it, however if you had an independednt economy that did not rely on the help of the U.S. it should have never affected you. A key note is the outlook from the general population after the summit. I feel a sense of optimism and positive attitude towards the strength of the economy, something that did not exist a short while ago. Times are still going to be tough with the unemployment rate at a 25 year high, major holes among the Financial and Auto Industries yet we have managed four straight weeks of Wall Street reporting positive gains. Never has Wall Street seen such success since 1938. Its crazy, idiocracy, the ups and downs we are seeing. So reffering back to the word success I wold classify the G20 as a success. The set of changes which are poised to happen will make a big impact on strengthing the global economy.
Below is a interactive chart breaking down how the G20 nations stack up.
Chinese Market Plays
China was shocked this week by the 5% decline in the country’s Consumer Price Index. As a result, they are on a full fledged mission to bring that number back in 2009. The start was the investment of $2 trillion dollars. Now we know where the majority of that money will be going it is a better market indicator and we know how to play China now. First, the Chinese have managed to stabilize the commodity market. We have seen this in the increases of Freeport, BHP, Vale, Rio Tinto, and various other commodity firms. Other plays we have seen in China are the large infrastructure projects for telecom. This makes CHL, the world’s largest Telecom provider and the sole provider to China, a bullish play. They still have a large untapped market as many chinese people don’t use cell phones the same way we do in America. Other Chinese plays are Petro China (PTR) which is a large petroleum producer who is receiving much love from the Chinese investors. If you want a way to play all these then check out these two Chinese based ETF’s: PGJ & FXI. China is a bull market now so make sure you can ride the wave.
Barron’s Top 10 Picks
This week, Barron’s came out with the list of the Top 10 companies/stocks for the next decade. Topping the list was Google (GOOG), a company that has dropped half its value since 2007, who was liked because of their large Growth opportunity in Online Advertising and lack of Debt. I to love Google and am a shareholder as they have a strong upper management that has been making strategic acquisition and cuts to better position the company for the future. The company has also shown resilience after putting up strong revenue numbers and gross profit in 2008. Other companies topping the list included Microsoft (MSFT) and EBay (EBAY). These two companies I am not as wild about but are boosted by Long-Term Growth Opportunities and Large Cash Holding. Other companies on the list included: Cerner Corp (CERN) Database Builder, Wynn Resorts LTD (WYNN) the Las Vegas and Macau Resort Giant, CVS Caremark Corp (CVS) the rapidly growing Pharmaceutical Retailer, Ace LTD (ACE) the Insurance Company, and Fernsa Latin America’s largest Bottler and Brewer. The most intriguing company on the list and one that I have full confidence in for the future is the Security Company EMC (EMC). EMC currently has a great PEG, P/E, and EPS which is supported by strong Long-term outlook. The company has continued to put up great revenue numbers and the balance sheet is looking great especially in current harsh times. Its supported by a high analyst ranking and is a steal at current times. Let it fall to $9 and then grab it.
Mongolia’s IVN’s Outlook
An active reader recently emailed me asking what i thought of the stock IVN. His concerns where with the Long-Term/Short-Term Outlook along with what will happen with the current Buy-Out situation. Below is the abbreviated Analyst Report i wrote.
IVN Ivanhoe Mines Ltd. (USA)
What I like
With IVN’s share price currently at $4.42 it shows the company is on an uptrend when valued against the 50-Day Moving Average, which is $3.29. With a 52-Week High of $13.88 (Feb 08) and a 52-Week Low $1.55 (Oct 08) it has seen the same type of volatility in which most Mining Companies have felt. Although unlike some Miners, IVN bottomed out in October and has shown a steady increase since as it has gone up 185% in the past few months. IVN is 49.6% institutionally held which is strong numbers as generally the quota you look for is between 30-70% for a company. Daily volume levels are above 100,000 which is a threshold i usually set. The fact that the company has zero debt excited me as i stay away from companies with large amounts of debt especially now-a-days. Right now it seems to be undiscovered as it is followed by few analysts which gives it a large growth potential. The fact that it is in Mongolia and is located in an untapped emerging market is a bonus.
What I Don’t Like
IVN’s income statement scares me. Currently they are reporting a -27.49% Return on Assets and a 68.43% Return on Equity. Yes this is partly the result of weakened commodity prices yet compare to other competitors like (TGB, RTP) they are slightly below par. Concerns with inflation and weak global economy also have to be taken into consideration.
Overview
Overall IVN has mass amount of potential. Depending on which route the company takes will decide whether or not it will become a short-term investment or long-term investment. If the talks with Vale (RIO), Rio Tinto (RTP), Xtrada (XTA), and (BHP) heat yo then this could become an interesting bidding war with IVN ending up on top. With talks of Chinese, Russian, and Korean Companies also looking to acquire IVN the price could get steeply inflated and they might overpay for IVN which will be great news for Investors. As of right now the Prized Mongolian Coal Company is estimated to be worth $2 billion yet we could see that rise to $2.2 billion when the companies potential is considered along with an increase in the price of coal. The difficulty right now is with the Mongolian government who recently hired Deutsch Bank and JP Morgan to help handle the Merger. Complicated Mongolian Mining Laws have pushed back any set date or time table. Another route IVN could take is to borrow capital from the Government and Investors to grow the company to become a Large World Coal Producer. This is unlikely though as they have drawn a lot of interest and have had a struggling Revenue Stream in recent quarters. If the Buy-Out is successful expect a sharp incline in the stock price skyrocketing to high levels. If the deal falls through the stock will drop temporarily yet if structured right the long-term aspect will help investor confidence. Either way it looks good as they have the assets to grow long-term and the interest to be successful short-term. I rate this Stock as a BUY due to the high chance of a Buy-Out. If the deal unexpectedly fell through still stick with it as it has the potential to grow quite large.
