Featured Report: K&N On Sino Hua-An Part II

It's about an year ago, 18 Aug 2009, I wrote the following posting: Featured Report: Kenanga On Sino Hua-An

Let me highlight what I wrote then..... >>>>>>>>>>>>>>>>>>>>>>

Last night Hua-An's lost some 13.279 million and year-to-date losses were 36.911 million.

And Hua-An stock price is also 0.545. :p2

Despite losing money, Kenanga insist that the prospect is bright! (losing less money is good eh?)



Viola!

Kenanga still have a buy on Sino Hua-An but with a lower target price.

Yeah.. losing less money is good. :D

So who wants Hua-An?

>>>>>>>>>>>>>>>>>>>>

Today... Sino Sua-An price is at 35 sen and Sino Hua An is finally making money!

Yes, Sino Hua An announced profits in its quarterly earnings notes last night. It made a profit of 4.844 million for the quarter and year-to-date, Sino Hua-An made some 2.362 million!

Guess what is K&N's recommendation today?

SELL!

Yes you heard me correct. It's a SELL with a target price of 0.26 sen!

LOL!

In short... :P

Aug 2009: Sino Hua An made less losses! (yes less losses) and Hua An was at 0.545. K&N called it a BUY with a target price of 0.63.

Aug 2010: Sino Hua An finally made money and Hua An is at 0.35. K&N now calls it a SELL with a target price of 0.26!

Now correct me if I am wrong here but isn't K&N suggesting that Sino Hua An is only worth a BUY when it's losing money? ( :p2 )

How?

Me?

I just LOVE this game!

:D

OSK On Sino Hua An

Posted the other day.. Update on Sino Hua An Losses

I made the following remarks:

• As mentioned in the early posting, OSK's previous earnings forecast for Sino Hua An was much, much higher than KN, at rm 100.3 million. I am disappointed because I have yet to see OSK make an update on Sino Hua An's earnings today. I wonder... why... hmmm....

Today, OSK finally loaded their report on Hua An.

They downgraded their earnings forecast by a whopping 62.9%!!!

Totally unreal.

And more incredible if you take their Jan earnings forecast of 120 million into consideration.

Here's OSK recommendation.

• Downgrade to NEUTRAL. The exceptionally poor earnings visibility prompts us to trim our earnings forecast for FY10 and FY11 by 62.9% and 53.8% respectively.

So from an earnings forecast of 120 million in Jan 2010, it was lowered to 100 mil on 1st March 2010 and now to a mere 37.2 million.

So in a span of 4 months, the earnings forecast was lowered by a whopping 82.8 million!

Holyyyyyyyyyy singing cow!

And it continued....

• The murky outlook also suggests that we switch our valuation to PBV, which reduces our fair value from RM0.70 previously (7.8x PER FY10 EPS) to RM0.40, based on 0.6x FY10 BVS.

Aikkkkkkkkkkkkkkksssss!

So from using a PER valuation, valuation is now done using PBV!!!!!!!!!!!!!!!!

Holyyyyyyyyyyyyyyyy cow!

Go figure out why I like OSK so much!

• We downgrade our call to NEUTRAL from Buy previously.

Ahem.

Let me see if I get this correct.

On January 2010: Rising demand to benefit Sino Hua-An. Sino Hua An was at 52 sen. OSK called it a buy with a Target price of 87 sen.

On 1st March, Sino Hua An was 48.5 sen, OSK gave it a buy with a Target Price of 70 sen.

Today, Sino Hua An is at 38.5 sen. OSK calls it Neutral with a target price of 40 sen.

WOW!

Sino Hua An's Press Conference After AGM

I made a couple of postings on Sino Hua An yesterday. Update on Sino Hua An Losses and Sino Hua-An Lost Money.... Again

On today's Star Business: Sino Hua-An eyes coke plant



Smiling faces.

Here's the link to their annual report Annual Report 2009

• The financial results of the Group for the financial year 2009 have been rather vacillating whereby months of recoveries, albeit small and gradual, were met with periods of pullbacks. As a result, in the full year consolidated financial result, the Group had to succumb to registering a loss for the year of RM20.6 million.....
• If we look at this result from a recovery standpoint, this RM20.6 million loss for the full twelve months is significantly lower in comparison to the RM83.6 million loss that was suffered just in the fourth quarter 2008 alone, the amount of which had the depth and intensity of wiping out almost the entire profits earned in the earlier nine months of 2008.
  
  

ps: Last fiscal year? The company made 545 thousand.

Update on Sino Hua An Losses

Update on Sino Hua-An Lost Money.... Again

So Sino Hua-An lost money... again. I know it's just only 2.48 million. Yes only rm 2.48 million.

What's the big deal? Nothing really. :D

Anyway, as mentioned in the posting Sino Hua-An Lost Money.... Again, KN Research said the following back on 1st March 2010.

• Outlook. We remain positive of the China’s economy robustness.According to the Worldsteel, China will continue as the biggest driver of world steel demand, however, the domestic steel industry is expected to grow at moderation and at 5% growth . Nevertheless, we are lowering our FY10 net estimate by 9% to RM64.7m as we revised marginally lower of our assumption of coke price. We are also introducing our FY11 earnings estimates with net profit of RM70.6m. The pricing sluggishness of coke and short-term steel demand volatility remain as key risks to our earnings forecasts.
  
  Maintain BUY with lower target price at RM0.58 based on FY10 PER of 10x (in line with the small-to -medium size Malaysian steel players and 30% discount to its China’s peers).

Here's the screen shot.

Now with Sino Hua An losing 2.48 million and KN's estimates at 64.7 million, I wonder what KN will say in their report.

Sino Hua An back then, on 1st March 2010, was 48.5 sen. KN gave it a buy with a Target Price of 58 sen.

Sino Hua An is now 40 sen.

Will KN lower their ratings and target prices?

The answer? Yes they did.

The rating is now a HOLD with a target price of 37 sen.

• FY10 net forecast trimmed lower by 29.4% to 42m. We maintain our expectations of Hua-An turning a profit in FY10. Despite lowering our FY10 net profit by 29.4% to 42m given a weak 1Q10, we are expecting a profit turnout in 2Q10 boosted by swift recovery in steel demand and favourable pricing of metallurgical coke at above RMB1,976 per tonne. Additionally, we are maintaining our net profit in FY11 at RM70.6m based on assumed annualised average price of RMB1,900 per tonne of coke and RMB1,240 per tonne of coal in our forecast. The unfavourable pricing of coal and short-term steel demand volatility however, remain as key risks to our earnings forecasts.
  
  Downgrade to HOLD with lower target price at RM0.37 (previously RM0.58) based on FY10 PER of 10x (in line with the small-to-medium size Malaysian steel players and 30% discount to its China’s peers).
  
  
  

Hmm... they lowered the net profit forecast by 29.4% to 42 million.

Hmmm... I dunno... do you think the net profit is still rather high?

Do you think this company is really, really under performing?

----------------

As mentioned in the early posting, OSK's previous earnings forecast for Sino Hua An was much, much higher than KN, at rm 100.3 million. I am disappointed because I have yet to see OSK make an update on Sino Hua An's earnings today. I wonder... why... hmmm....

Sino Hua-An Lost Money.... Again.

Sill losing money. That's the three words that best describe Sino Hua An's earnings reported lasted.

On the Edge Financial Daily: Sino Hua-An posts smaller net loss of RM2m in 1Q

( ps: They probably say 'smaller loss' is good again. Doesn't matter if it still losing money because losing less money always better than losing more money!! )

• Sino Hua-An posts smaller net loss of RM2m in 1Q
  Written by Melody Song
  Monday, 17 May 2010 23:43
  
  KUALA LUMPUR: SINO HUA-AN INTERNATIONAL BHD [] posted a smaller net loss of RM2.48 million for the first quarter ended March 31, 2010 (1Q10) compared with a net loss of RM23.63 million a year earlier because of the rising prices of its products.
  
  Its revenue was 20.1% higher at RM373.59 million from RM310.95 million a year earlier while loss per share was 0.22 sen. The company is involved in the production and sale of metallurgical coke and its by-products.
  
  "The average prices of metallurgical coke, ammonium sulphate, crude benzene, tar oil, coal slime and middlings during the current quarter under review have increased by approximately 23%, 4%, 157%, 80%, 57% and 13% respectively compared with the preceding year's corresponding quarter," it said in a statement to Bursa Malaysia Securities on Monday, May 17, adding the price of coal gas has remained consistent.

Hmm.. so many factors mentioned. Sorry can't help by laughing for a moment.

The average prices of metallurgical coke, ammonium sulphate, crude benzene, tar oil, coal slime and middlings during the current quarter under review have increased by approximately 23%, 4%, 157%, 80%, 57% and 13% respectively compared with the preceding year's corresponding quarter....

Anyway the article continues..

• It also attributed the 13% rise in the cost of sales to RM367.9 million to the 29% increase in average price of raw materials, namely coking coal.

13% rise in cost of sale.,,

• However, it said the gradual recovering trend in the coking steel industry helped the company to record a gross profit of RM5.7 million in 1Q10 from a gross loss of RM1.35 million previously.
  
  On the company's prospects, Sino Hua-An said it was hopeful of seeing prices for metallurgical coke increasing on the back of gradually returning demand.
  
  "Although it is recognised that the prices of coking coal may also rise in tandem, the group is hopeful that the extent of its hike is less than that of metallurgical coke, thus enabling the group to achieve better financial results for the current year," it said.

Damn... so many factors involved... sounds like a not very profitable business to be in!

I dug out KN's last comments made on Hua An back in Feb.

• Outlook. We remain positive of the China’s economy robustness.According to the Worldsteel, China will continue as the biggest driver of world steel demand, however, the domestic steel industry is expected to grow at moderation and at 5% growth . Nevertheless, we are lowering our FY10 net estimate by 9% to RM64.7m as we revised marginally lower of our assumption of coke price. We are also introducing our FY11 earnings estimates with net profit of RM70.6m. The pricing sluggishness of coke and short-term steel demand volatility remain as key risks to our earnings forecasts.
  
  Maintain BUY with lower target price at RM0.58 based on FY10 PER of 10x (in line with the small-to -medium size Malaysian steel players and 30% discount to its China’s peers).

Their fy 10 and fy 11 earnings estimate for Huan An are 64.7m and 70.6m. Hua An started the year, losing 2.48 million. At this rate, the earnings estimates look way beyond, yes?

These are OSK comments made in Feb 2010.

• Looking forward. Although the 4Q numbers were not impressive due to a pullback in China’s steel production, we see better 1Q numbers as we discern a sustainable uptrend in steel prices after the Golden Holiday, with coke prices averaging at RMB1,900 per tonne, which is around 18% from the recent low. As such, we reckon China’s domestic steel prices should continue to go up, at least in 1HCY10. Moreover, given that crude oil is trading at around USD79 per barrel, Huaan’s by-products may continue to benefit as they are highly correlated with oil prices.
  
  Maintain BUY. While we remain positive over 1HFY10, the volatility of the commodity cycle has obscured the company’s earnings visibility in 2HFY10. Hence, this prompts us to reduce our earnings forecast for FY10 by 20.1% to RM100.3m. Nonetheless, we reduce stock’s fair value to RM0.70 based on 7.8x FY10 EPS. As investors are forward looking, our bullish view for the next six months supports our BUY recommendation on Sino Hua-An.

LOL! OSK earnings forecast is rm 100.3 million. Mind you they said they lowered it by 20.1%.

How?

Past postings can be found here: Sino Hua An

Sino Hua An's Earnings Turnaround

Here's Sino Hua An's earnings.

The turnaround is positive.

Indeed it is.

The balance sheet weakness mentioned in earlier postings highlighted in the posting Massive Losses Posted by Sino Hua-An has seen all round improvement.

(ps: don't start assuming. I have no idea if you can lose money in this stock, ok? )

From the company's notes:

• Review of Performance
  
  For the third quarter ended 30 September 2009, the Group recorded consolidated revenue of approximately RM349.8 million. The cost of sales for the quarter under review amounted to approximately RM326.1 million.
  
  Given the gradual recovery phase experienced in the coking industry since the early part of the year, the Group has managed to return to profitability in the current quarter after recording three consecutive quarters of losses since the fourth quarter of 2008, stemming from the consequences of the economic downturn and challenging business environment in the said fourth quarter of 2008. This was mainly attributed to the spread between the prices of metallurgical coke and that of coking coal that have widened adequately coupled with the gradually improving prices of the by-products during the current quarter under review.
  
  During the current quarter under review, the Group’s revenue reduced by approximately 29.6% to RM349.8 million from RM496.9 million in the preceding year corresponding quarter. This was mainly attributed to approximately 37.9% reduction in the average price of coke in current quarter under review compared with that of the preceding yearcorresponding quarter.
  
  The cost of sales have also reduced by approximately 31.3% to RM326.1 million in the current quarter under review from RM474.5 million recorded in the preceding year corresponding quarter. This came about as the average price of coking coal had eased downwards by approximately 38.1% in the current quarter compared with that of the same quarter of the preceding year. Premised on the above, the Group registered a gross profit and net profit after tax of approximately RM23.7 million and RM18.5 million respectively for the current quarter under review compared to that of registered in the preceding year corresponding quarter of RM22.5 million and RM11.7 million respectively.
  
  

Featured Report: Kenanga On Sino Hua-An

Posted last night: Update On Sino Hua-An

I chuckled when I see the market liking the 'losing-less-money' factor.

Who cares it is losing money? Most important it is losing less money! - lol.. does this even sound logical?

Yeah but then this is the stock markets and in the stock markets, the spin masters can make anything bad sound good. Am I right or perhaps am I flawed?

I do not know.

However, my mind is telling me to use another perspective.

Imagine this...

Picture this little girl telling her mum.

Little Girl: "Mummy, I failed my Maths but on the bright side, I got less wrong answers!"

Now do you think the Mummy should reward the little girl for getting less mistakes or should a fail be a fail?

I do not know about you but what I do know is that a fail is a fail. Which means a bloody red mark is stained on the report book!

So should one jump up for joy that a company is losing less money?

I wrote on Hua-An exactly a year ago, last August, Regarding Sino Hua-An. In that posting I was bemused and puzzled by the following issue.

• The earnings are decent no? But there is NO Growth and now earnings margins is under massive pressure.
  
  And would this be one reason why potential 'investors' or buyers would be worried about?
  
  And what about the company's product? IMHO this is also a huge concern because the past couple of months, metallurgical coke and its by-products have had one MASSIVE bull run. Prices had been extremely favourable and logical reasoning would suggest that this favourable coke prices would have boosted Huann's bottom line. But as we can see above earnings table, this coke bull run did not translate to better earnings for Huann. Would this be a concern since we have here a company whose key product is having one hell of a bull run but yet the company produces flat earnings. What does this say about the Quality of the company and the Business? Not very good yes? Do you reckon such reasoning is flawed?

It was a bull run for the metallurgical coke and its by products.

However the bull run never resulted into huge fortune for Hua-An.

And the local pros are suggesting to buy based on a recovery story? You know this makes me wonder because when times were so good last year, Hua-An earnings slumped. Now they want us to buy Sino Hua-An???

Sure boh? How Hua-An is at 0.545 sen. Who wants?

And then it so ironic.

Back exactly a year ago, I had a copy of KN Kenanga report on Sino Hua An. Price of Hua-An was also at 0.545!

Dejavu. :P

Now on the previous day back in August 2008, Hua-An reported earnings of 36.916 million and half year earnings was at 72.484 million!

And this is what Kenanga wrote in their report.

Despite calling it a BELOW expectations, Kenanga still gave it a BUY rating and a target price of 0.88 sen.

Remember Hua-An year-to-date earnings were 72.484 million.

Last night Hua-An's lost some 13.279 million and year-to-date losses were 36.911 million.

And Hua-An stock price is also 0.545. :p2

Despite losing money, Kenanga insist that the prospect is bright! (losing less money is good eh?)



Viola!

Kenanga still have a buy on Sino Hua-An but with a lower target price.

Yeah.. losing less money is good. :D

So who wants Hua-An?

Update On Sino Hua-An

Blogged previously: Featured Report: RHB On Sino Hua-An

My other postings on Sino Hua-An

1. Update On Sino Hua-An
2. Massive Losses Posted by Sino Hua-An
3. Sino Hua An Q3 Earnings.
4. Still Who Wants Huann?
5. Who wants Sino Hua-An?
6. More On Sino Hua-Ann
7. Regarding Sino Hua-An

And then there were so many 'positive' news on Sino Hua-An: Upbeat outlook on Sino Hua-An's diversification

OSK boldly called Sino Hua-An the real China play in its latest report.

No joke!

Here's a screen shot.

Sino Hua-An announced its earnings tonight.

Want to guess how Sino performed?

Yup company still recorded losses!!!

Yeah, I know... the losses are less. lol! ... Expect more spin on the stock yo!

Featured Report: RHB On Sino Hua-An

I got a copy of Sino Hua-An research report. Since I had blogged many times on this stock before, I was rather interested to read what this pro had to say.

Firstly, my past postings on Sino Hua-An can be read here. (Latest posting is listed first)

1. Update On Sino Hua-An
2. Massive Losses Posted by Sino Hua-An
3. Sino Hua An Q3 Earnings.
4. Still Who Wants Huann?
5. Who wants Sino Hua-An?
6. More On Sino Hua-Ann
7. Regarding Sino Hua-An

I was surprised by the 'upgrade'!

As you can see RHB Research upgraded Sino Hua-An to OUTPERFORM. What I am baffled by is the timing and pricing of this UPGRADE. As you can see, Sino Hua-An opening price is at 0.52. And the target price is a mere 0.60.

I was left scratching my head.

This is an EIGHT SEN stock upgrade!

I am very sure sceptics will be baffled and left wondering why RHB would be bothered with such a minuscule upgrade and considering the fact that Sino Hua-An stock priced had rallied rather so strongly since March 2009.

The following chart shows the recent performance of Sino Hua An.

Here is RHB's reasoning for its upgrade on the stock.


And then I was left more confused with what RHB analyst said next.

• Earnings forecasts. We are lowering FY12/09 net profit forecast by 23.0% to RM38.7m to reflect lower average selling price assumptions for Sino Hua-An’s by-products.

WOW!

RHB Research is lowering the fy12/09 net profit forecast by 23% to rm38.7m!!!!!

( Recap: For the first quarter fy2009, Sino Hua An reported a net loss of 23.6 million. See Update On Sino Hua-An )

The stock is estimated to make less money by some 23%.

Yet the stock is upgraded to OUTPERFORM!

Fair value upgraded price is 60 sen.

A mere 8 sen from 52 sen.

So how my dearest?

Are you enjoying what you are reading?

Do you want to buy this stock as recommended by RHB for a gain of 8 sen?

Update On Sino Hua-An

Sino Hu Ann announced its earnings last night. As expected losses were made.

I had blogged on this stock several times already.

1. Regarding Sino Hua-An
2. More On Sino Hua-Ann
3. Who wants Sino Hua-An?
4. Still Who Wants Huann?
5. Sino Hua An Q3 Earnings.

And the last one I wrote was Massive Losses Posted by Sino Hua-An

I was more curious now on the issues I posted on that blog posting. Let me reproduce the table on the issues mentioned.

See the much higher trade receivables?
See the much lesser bank balances?
See the much higher trade payables? (why is Sino Hua-An not paying its trade creditors?)

Here's a screen shot on the same area from Sino Hua-An's latest earnings.

Let's look at issues again.

See the much higher trade receivables? Much improvement! Receivables only totals 78.327 million compared to 154.635 million the last quarter.
See the much lesser bank balances? Bank balances improved to 45.733 million compared to 28.754 million the last quarter.
See the much higher trade payables? (why is Sino Hua-An not paying its trade creditors?) Payables rose to 142.098 million compared to 95.240 million. Now this massive increas would put a doubt on the bank balances issue. Reasoning is simple. If one does not pay its creditors, than one surely will have more money. However, needless to say, all debts have to be paid.

Given these 'facts', would you 'invest' in this stock?

In the posting, Would You Have A Punt On The Steel Stocks?

I highlighted a newsclip where RHB mentioned.

• “While we anticipate Sino Hua-An to report a dismal first quarter in financial year 2009 (1QFY2009), we view the company as the best proxy to invest in the booming steel sector in China, given that the demand for metallurgical coke is tied directly to China’s steel output,” said RHB.
  
  RHB has an indicative fair value of RM3.02 for Ann Joo, RM1.25 for Kinsteel and 60 sen for Sino Hua-An.

Fair value of 60 sen for Sino Hua-An and as mentioned, they HAD already priced or discounted in the possible dismal earnings.

Priced in or priced up...

Let's see would you buy? :p2

The bad earnings, the losses are as expected. Hua-Ann balance sheet looks like there are improvement.

Let's see.. Sino Hua-an closed at 46 sen yesterday. Let's have a look and see how Sino Hua-an has been trading lately.

Like ALL the other steel stock, Hua-An had rebounded from its March lows. (ps did you also see the massive losses posted by Malaysia Steel Works and Lion Diversified?)

But its March lows was 17.5 sen! It's now 46 sen!

How?

But RHB said fair value should be 60 sen!

How now my dearest Brown Cow?

Another buy high sell higher strategy?

Sino Hua An Q3 Earnings.

Blogged previously:

1. Regarding Sino Hua-An
2. More On Sino Hua-Ann
3. Who wants Sino Hua-An?
4. Still Who Wants Huann?

The key issue said was..

And let's look at the company's net profit margins.

1) 07 Q4 Revenue 233.375 million. Net Profit 37.442 million. Margin = 16%.
2) 08 Q1 Revenue 290.798 million. Net Profit 35.567 million. Margin = 12.2%.
3) 08 Q2 Revenue 434.426 million. Net Profit 36.916 million. Margin = 8.5%.

How would you interpret such earnings?

Look at the revenue, its sky rocketing but the company has NOT been able to turn the extra, extra revenue into more cash and instead the net margins are deteriorating. From 16% to just 8.5%.

How? How would you evaluate such earnings? Good? Average? or Poor?

Sino Hua Ann reported its earnings tonight.

The following was its performance.

08 Q43 Revenue 496.993 million. Net Profit 11.711 million. Margin = 2.3%!!!!!!!!!!

Now surely this is a concern, yes?

You have earnings declining at a drastic pace and the margins right now is razor thin!

Balance sheet, check out the trade receivables! Did you see how it rose from 72.308 million (a quarter ago) to an incredible 203.3 million???

And the cash is depleting too!

How?

Who wants Sino Hua-An?

Ivan's investing diary wrote the following on the posting Regarding Sino Hua-An

• Huaan might not be a growth stock . But at the level of 44 cent now it was a value stocks. Coke price has dropped 20%. However with capacity expantion of another 50% (added 60 to the current of 120) it shld overcome the price dropping issue.
  
  Where you find can find a stock with pe "<" 4 , cash rich, price/nta <1 and attribute dividen of at 20% from its profit every year? It might not be a grow stock. But definetly a value stock to hold for middle long term.

Dear Ivan,

Many thanks for your comments.

Let me share some of my flawed views on Huann yet again.

Regarding Huann as a value stock at 44 sen.

In my humble opinion, yes, every stock will have some sort of value at a given price. However, just how valuable is such 'value'? Here we have a stock that has no growth, which means an average company. Would you agree on this issue? And would buying an average company at a cheap price equates the best investing strategy? I don't know about you but some would prefer to buy an excellent company at a cheap price as a better alternative, yes? And usually excellent company's are companies that are able to earn more and more money each year. Isn't this what we all want if we do own a company? And if so, why should investing be any different?

Now let's look at how average is this Huann. I had made another posting on it, More On Sino Hua-Ann

See the following part.

And let's look at the company's net profit margins.

1) 07 Q4 Revenue 233.375 million. Net Profit 37.442 million. Margin = 16%.
2) 08 Q1 Revenue 290.798 million. Net Profit 35.567 million. Margin = 12.2%.
3) 08 Q2 Revenue 434.426 million. Net Profit 36.916 million. Margin = 8.5%.

How would you interpret such earnings?

Look at the revenue, its sky rocketing but the company has NOT been able to turn the extra, extra revenue into more cash and instead the net margins are deteriorating. From 16% to just 8.5%.

How? How would you evaluate such earnings? Good? Average? or Poor?

Now that would be rather poor yes? The declining margin places a huge question mark over Huann's ability to generate better profits and if you ask me, in an environment where its main product was enjoying a bull run, Huann's performance was terribly poor. Hey, that's my blunt and flawed view on it.

Now regarding PE.

As it is, right now, based on current earnings, most stocks are looking cheap.

That's a fact.

However, for the market, most of the time, the market is only interested in what the stock can earn in the future.

Which means, one has to address the sustainability of Huann's earnings.

Firstly, as listed company here, Huann's earnings track record is simply too little.

And the biggest issue in my opinion is Huann's products itself. It's clearly cyclical and given the fact that most commodities prices have turned south in a dramatic fashion, it's most likely that Huann's products would command a much lower pricing. Is this not possible?

And last but not least, I have to repeat yet again, when Huann's products was in a bull run, Huann's earnings was flat. And if that is the case, if Huann's products turn 'soft', surely Huann's earnings would decline, yes? Is this not possible? And if that would happen, surely Huann's earnings per share would decline. So what appears cheap now in relative to PE, might not appear cheap later if the earnings decline.

Hope my flawed second opinion helps.