Re: What do you guys think about
<<Why is it trading at a really low price?>>
It looks like they recently guided down for the year, to the surprise of some analysts. Pork prices are off and this is apparently significant to their profitability.
Of course, if this is truly a solid company such reasons for price declines are a value investor's dream and I have made most of my money on companies with good long term histories and poor recent short-to-medium term results.
See MCD in Q1 2003. The Motley Fool piled on to the pack that wrote off the company that invented fast food just as the price went under $15/share (as I recall). I read a lot of huffing and puffing about how Wendy's at 6% market share was eating McD's lunch (ha, ha) at 50% market share. McD's subsequently released several hit new products and the rest, as they say, is history.
It was very similar to analysts writing off Coke at a time when Coke still had 6 of the top 10 drink products as Pepsi made all sorts of noise and the book "How Pepsi Won the Cola Wars" was released.
All this said, every time I see a Chinese company that appears to be a great value, I immediately start to wonder when that company that exposes Chinese sham companies will release a photo of an outhouse that's carried on the balance sheet as $1B worth of real estate.
It's unfair, but there are so many scams it's hard to sort them out. I think that this, and to a greater extent, the speculative general expectation for Chinese companies has conspired to whack the price.
If you can confirm that the company's reporting is accurate, this looks like a pretty good situation for a value investor. |
