Our “Asia on the Ground – April 2012” newsletter is now available for download.

In this edition we report about our latest trip to China.

During this trip we visited around 25 companies primarily in the consumer, shipping/ports, industrial, mid/downstream gas supply. The vast majority of companies suggested that they had passed the low point in Nov/ Dec/ Jan. Since then the availability of liquidity in the economy is seen to have considerably improved.
At a corporate level, companies reported about positive new order momentum, strengthening cash flows and stabilized or even gradually improving profitability levels. Most companies expect solid top line growth mostly in the low to high teens – a bit lower than in recent years – which should result in a solid growth in earnings in 2012.

Link to the full report:

ASIA on the Ground – April 2012  (PDF, 590 KB)

ASPOMA Newsletter

Newsletter Summary:
Sentiment among management teams was generally (cautiously) optimistic (with the exception of sectors with specific issues such as solar or shipping).
Most of the companies experienced a tough Q4 2011 which dragged down full year results (often below expectations). Reason for this was the extremely tight liquidity situation in Q4 which strangled the overall economy.
The vast majority of companies suggested that they had passed the low point in Nov/ Dec/ Jan. Since then the availability of liquidity in the economy is seen to have considerably improved. At a corporate level, companies reported about positive new order momentum, strengthening cash flows and stabilized or even gradually improving profitability levels. Most companies expect solid top line growth mostly in the low to high teens – a bit lower than in recent years – which should result in a solid growth in earnings in 2012.
With regards to Q1 around half of the companies we visited suggest that first quarter would still look weak due to a high comparison base and still weak January and February. Approximately half of the companies suggested that they intended to implement their original growth strategies as planned. The other half suggested that they were thinking about pushing capital expenditures back by one year and rather focus on increasing the
utilisation of existing capacities. With a few exceptions the balance sheet of the companies we visited is strong (there is of course a selection bias).From a valuation perspective most sectors and stocks are cheap with Price-Book-Ratios below 2008-09 trough levels (as none of the companies we visited is loss making, Price-Book-Ratios should be a fairly robust measure compared to more volatile earnings). The only exceptions are energy and in particular consumer companies which trade on average 20-30% above 2008-09 lows.
In the newsletter we present a selection of meeting summaries representative for the current business conditions across various industries in China.
Asia on the Ground – April 2012 (PDF, 590 KB)