This trade was sent out to our subscribers on 27 June 2013. This stock is sitting on 12% profit now.
The Company is engaged in lottery system and games development business, distribution and marketing of lottery products in China. Lottery and gaming are growing businesses in China, see here.
Rexlot is listed in Hong Kong exchange. Today I had bought Rexlot at HKD0.540.
It operates in two segments: Lottery business and Financial services.
The lottery business consists of development and production of lottery machines, related operating software system and networks for lottery industry, the distribution and marketing of lottery products and development of mobile value added services for lottery business in the People’s Republic of China.
Its financial services segment consists of broking, securities margin financing, corporate finance and asset management, as well as money lending.
We like undervalued stocks that pay good dividend. Currently this stock has a dividend yield of 3.37%. This means that the company is paying the investors some returns while waiting for the share price to go up. Not only is the dividend yield attractive but it is also rising.
Good stocks are seldom cheap. Because good stocks will usually gather the attention of investment community. Good stocks are cheap only for 2 reasons: 1. They have a temporary problem. 2. They are too small to be under the radar of investment community.
In my opinion this company has not been discovered yet. It has all the characteristic of a good stock: Rising revenue, rising earnings, generate healthy free cash flow, and low debt level. Dividend payout has been rising every year. What more can you ask for?
Actually you can ask for more. This stock is trading at price to book value of 0.77. This means that the stock is trading below liquidation value and hence it gives a margin of safety to investors.
Thanks to the falling equity market, this will allow value investors like myself to buy quality stock at cheaper price. Our calculation shows that the fair value of this stock is HKD1.00. This gives us almost 100% potential upside from our entry price.
Are you convinced that the company is undervalued? If you are not, its ok. The company management is convinced! The company has been implementing share buyback since 13 May 2013. The announcements below is found in the company website.
Share buyback is an indication that the company’s management thinks that the shares are undervalued. When a company implements share buybacks, it is also telling that market that “We find no better investment than our own company”.
BL, CEO of Tactical Trading Academy – For Your Profits, Your Success Is Our Success!
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” – Winston Churchill