Chews

Chew is an exciting story, abeit a boring business. This stock was in my watch list for a very long time due to its easy to understand business, impressive profit margin, low debt and good cash flow.

I held off buying the stock as it had just recently divested it's chicken farm in lim chu kang, and is holding on a huge pile of cash. It's pe ratio appeared cheap but I wanted to monitor it's usage of its capital and future developments before cashing in. A monopoly in eggs in sea cucumber in Singapore counts very little as there are much more cheaper alternatives in neighbouring countries such as seng choon in Malaysia. The nature of Singapore's high land cost and poor economics for poultry rearing made its long term economics highly uncertain. Sure, dangui and codecyps eggs sound cool, but there are not a required input in most dishes, and from a cost perspective they are simply unable to compete with rivals with lower costs of production.

Unfortunately, speculators have gotten word that a likely takeover of chews is possible or some kind of special dividend will be provided. Given its poor dividend history and emphasis on capital retention, I have thought it is extreme unlikely, as they will need to build reinvest their proceeds into some alternative egg production facility. To my alarm, the price went higher and higher to unsustainable heights and I thought this is yet another multibagger that I missed due to my hesitation, just like top glove and Suntec REIT . I mournfully parked it away to my run away checklist. Well it crashed right after the doubts are cleared, and now it is back in my watchlist. To be frank, it is depressed to unreasonable lows as the momentum speculators are forcing it to irrationally depressed levels. Now, it presents a value play and buy and hold opportunity .

I might pull out my spreadsheet and review it's financials and go through my financial checklist. This is most likely an asset play with its rich cash position though its earnings growth remain uncertain. There is also no rush to invest now as the factories will not be up in the near future and the discount season from December effect have not materialised yet. I sure hope that these eggs can add a few more zeroes to my investment proceeds. Not vested until then!