I made two transactions on the stock market today. The first deal is sold China Merchants Bank at $23. The bank’s EPS in 2010 1H is 0.65 RMB and its book value is 5.79 RMB. By layman prediction, the earning reminds the same in 2H (actually it should be lower due to lower interest margin and tighten loan requirement). The 2010 estimated EPS is 1.3 RMB. The dealing price equals to 15X PE and 3.4X PB.
China Merchants Bank still is my favorite stock (so I still keep some). The selling today is simply because I need cash and the price is good at this moment. As the 6th biggest bank in China and the biggest non-government owned bank in China, it knows the way to survive and always can catch the chance to increase earning. Don’t forget it is still the so-called best service bank in China.
The second transaction is sold China Mobile at $83. I lose 13% from this deal. My first cut loses transaction. I had analyzed this company early this year. I still hoped I can get back my costs at that time. But my hope hasn’t come true at these ten months. The company itself is OK and it has a good dividend. But under the government unbalance policy, it only “allowed” to have a very slow profit growth. And after many years of discussion, it still failed to import i-phone while its competitor already earned a lot from it. Also, it has too much cash. I feel uncomfortable when I knew it developed its own phone and involved in banking business. They are just simply not their business. BTW, recently it had some progress for i-phone 4. This news may be the reason gives me a chance to sell it.
The company 2009 EPS is 5.67 RMB with a 2.3% growth than 2008. Very aggressive and random prediction, it makes a 10% growth in 2010, i.e., 6.24 RMB. The dealing price means 11.4X PE.
So, I had sold the best two stocks (China Life and China Mobile) suggested by Master Lam in his previous book.
On the same day, I changed my Canada dollar to HKD.