The Blackout Period Series
Profit Warnings, Financial Moves, and Some Filings That Just Make You Go “Wait, What?”
Try new things and yes it will change your life.
Today is Lantern Festival, the last day of the Chinese New Year. This means it’s time to shake things up a little bit and experiment with some new ideas here on the newsletter. You know, life is short try something new every day!
For example, I’m currently working on an article titled Mistress Economics, and let me tell you—it’s getting spicy. Exactly what you think it’s about, with a bit more on Chinese culture and some of the funny things I encounter living in China. But that’s for another day.
So, here’s the deal: I’m not sure if you’ll care about the filings I’m going to write about as much as I do, but I’m going to take the plunge anyway. If you’re reading this and thinking, “This is probably spamming my inbox,” let me know in the comments, and I’ll stop. If you’re into it, though, let me know that too!
Blackout Period
It’s the blackout period—this is the time when companies go into stealth mode before dropping their earnings bombs. With it comes a treasure trove of profit warnings, strange financial moves, and filings that are either a complete mystery or, if you’re lucky, an absolute goldmine. This is a bit of a departure from what I usually write about, so let’s be honest here—I’m stepping into new territory. Normally, I write detailed reports on companies. But this time, it’s a little different: I’ll be writing about companies I don’t know well, but whose recent filings have caught my eye. Could be garbage, could be a 50% jump in a couple of days—who knows?
But I’m doing this research for myself anyway, so why not share it with you and see if you guys like it?
Profit Warnings, Financial Oddities, and Filings That Make You Go - Wait What?!
These filings essentially come in three different shapes and forms, and I’m giving just one example for each here—don’t want to overwhelm you in the first post about this, after all.
Profit Warnings – The Good, the Bad, and the “What on Earth?”
I’ll be reporting on both positive and negative profit warnings—whatever catches my interest. If a company suddenly predicts better-than-expected profits (or worse), it’s worth a look. Could be an opportunity, could be a red flag, but either way, it’s worth talking about.China Starch (HK: 3838) might not be the sexiest stock out there, but it’s certainly punching above its weight. The company just announced that it’s set to earn twice its enterprise value in 2024, and it’s already sitting on a healthy cash pile. With a valuation trading near its net current asset value, it’s one of those hidden gems that Hong Kong can occasionally deliver if you know where to look.
Massive Financial Moves
Some companies seem to operate in a parallel universe where common sense doesn’t apply. Selling a subsidiary for multiple times the entire company’s market cap, for example. It may make you scratch your head, but it also makes for some fascinating discussion.
Silver Grant International $171.HK (market cap: HK$200 million) is pulling off a huge move—they’re selling off their non-performing loans to Guangdong Zhuguang for a potential HK$509 million gain.That’s more than 2.5 times their current market cap. The deal involves offloading a pile of overdue loans worth HK$2.43 billion—a smart play to reduce the company’s debt burden and financial risk. In addition to the loans, they’re also transferring some car parking spaces (yes, you read that right there are always some car parking spaces or shopping malls involved in HK deals!). These properties in Guangdong are valued at around HK$353 million, and although they’re currently vacant, Silver Grant hopes to lease them out for future rental income.
The deal’s goal? To clean up the balance sheet, offload bad debt, and take on less risk. If everything goes smoothly—approvals, due diligence, and all that jazz—this could be a game-changer for Silver Grant. But with the market conditions and execution risks still in play, this is a high-stakes bet. Let’s see if they can cash in big on this move!
Weird Filings and Red Flags
And then there are the filings. Some things in financial reports just stand out—either in a “Wow, that’s intriguing” way, or a “Oh boy, that’s a red flag” way. Think of it as your personal guide to spotting the good, the bad, and the downright ugly in company filings.
Perennial International $725.HK, a company specializing in the manufacturing and trading of electronic cables and wire products, has just sold HKD 15 million worth of Alibaba shares. That’s notable, considering the company’s entire market cap is just HKD 120 million. So, why does this small cable company even have Alibaba shares in the first place? Quite the odd situation but with a PE ratio of only 7, it’s your to take.
The blackout period series will, of course, be more of an occasional thing—if there’s nothing interesting in the filings, then there’s simply nothing to write about. But let me know: Do you want to see more of this, or are you thinking, “Meh, not really my thing”? I’d love to hear your thoughts!
Good call! Went up already 24% today.