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Blast Investor
Real-time Plus
by
Henry Lu
Election, USG NTES CHK
11/03/2004
Election - USG big winner
Today President Bush defeated Sen. Kerry and won the presidential
re-election. In the Senate election, Republicans defeated
Democrats and increased their majority in the Congress.
Well, maybe I should declare USG stock as true winner of election
instead of Mr. Bush. USG is up 26% today at the closing price and
it is up 51.8% from the entry price of the model portfolio in just one
month.
USG was part of Bush index in a financial magazine. Therefore USG stock
price has been up or down following the polls of Bush's winning chance.
However, USG today's run up benefited more from Senate election result
rather than the presidential election result. Senate Minority Leader
Tom Daschle lost his seats to a Republican. Now that Republicans have
more control of Congress, the prospect of passing a more
investor-friendly asbestos trust fund bill looks better than before.
Right now the difference between Democrats and Republicans on asbestos
trust fund bill is not very big. The main issue is whether to allow
existing lawsuits to continue after the bill becomes law. The bill has
bi-partisan support and Republicans had criticized Mr. Daschle for
obstructing their agenda. Now Mr. Daschle is out and I look forward to
more positive actions in Congress on this bill.
USG earning, valuation
USG reported a blow-out 2004 3rd quarter earning recently. USG 2004 3rd
Q earning is $2.10 per share(EPS) compared with 0.89 EPS same quarter
in 2003. 3rd quarter revenue increased 22% year over year and its 3rd Q
earning more than doubled year over year.
With past 4 quarters' combined earning of $6.35 per share, USG is still
trading at PE = 4.4 even after the big rally at $28.00 stock price. USG
intrinsic value is between $40 to $50 per share by my estimate. Because
USG is still very under-priced, I continue to hold USG for the
long run while waiting for bigger reward ahead.
NTES earning
NTES reported pretty good earning today. 2004 Q3 revenue was $28.8
million,
up 15% quarter over quarter, 63% year over year. Earning is $0.40
per share, up 20% year over year or 10% quarter over quarter.
Online game - double digit sequential growth
Online game revenue showed strong growth this quarter with $19.4
revenue, which accounted for 67% of total revenue. Online
game growth was mainly from Fantasy Westward Journal, which accounted
for 42% of total online game revenue. The next Q growth for the
online game business is also expected to come from this game.
The next quarter online game revenue growth estimate is expected to be
slower than current quarter growth. This is mainly due to seasonality
of game business and it is not big deal.
Ads
Internet ads was up 25% sequentially with $5.6 million revenue, which
accounted for 19% of total revenue. Although NTES can still grow
and improve its internet portal ads business, its ads revenue only
accounted for small portion of its total business. NTES is mainly an
online game stock.
Wireless
Wireless division continues to disappoint. NTES 3rd Q wireless
revenue decreased 16% sequentially to $3.8 million revenue, which
accounted for only 13% of total revenue. Wireless business
also has lower profit margin so that it has even less impact on total
earning. Because wireless business is only small part of NTES total
business
going forward, NTES risk on wireless is almost gone.
Future update - new game release, ads price hike
update from NTES earning conference:
- New Korea game "Fly for fun" is likely to be a similar success in
terms of user base compared to Fantasy Westward Journal game. The
game will start to charge fees in Jan 05.
- 2 more new games early next year.
- Price hike of 8% - 10% for internet ads price.
CHK earning
CHK reported excellent earning 2 days ago with double digit organic
production growth and blow-out cash flow. CHK PV-10 NAV is $32.5
per share as of Oct 2004 price (N gas at $6.5 and oil at $40), which
means $3.25 per share true business profit.
CHK is mainly a natural gas stock. Natural gas business accounted for
90% of its total business. Natural gas price is very volatile and it
just moved from low of $4.5 to now high of above $9.0. Therefore,
quarter over quarter cash flow and earning will be up and down zigzag
too. So far CHK management has executed very well with accretive
acquisition and low-cost drilling programs and CHK has generated
consistent strong cash flow quarter over quarter with pretty good
hedging program.
Currently CHK only trades at close to annualized 30% cash flow yield, a
significant discount even to its peers. CHK current stock price is
trading at PV-10 NAV as if N gas is at $4.2. Right now natural gas
price spiked above $9.00 and CHK can do better than $3.25 true profit
with better hedging price going forward.
Oil stocks such as WLL moved up a lot over past year while natural gas
stocks such as CHK lagged. This can not continue forever as natural gas
price spikes higher and higher. I believe natural gas stocks will catch
up with oil stocks and CHK continues to be one of my favorite
energy stock.
Blast
Investor Model
Portfolio Update
(as of 11/03/2004)
Model
Portfolio - Performance
|
|
Portfolio inception date
|
12/31/2003
|
Portfolio inception value
|
$89,000
|
YTD Performance
|
36.70% |
S&P500 Index YTD Performance
|
2.61% |
Model
Portfolio - Open Positions
| Symbol |
Last |
Shrs |
Value |
Paid |
Gain |
| ADGO.OB |
1.07 |
9,000 |
$9,630.00 |
0.78 |
$2,600.00 |
+36.98% |
| CHK |
16.77 |
1,100 |
$18,447.00 |
13.90 |
$3,147.00 |
+20.57% |
| EXXa |
1.59 |
6,500 |
$10,335.00 |
1.638462 |
-$335.00 |
-3.14% |
| HRB |
48.62 |
350 |
$17,017.00 |
54.00 |
-$1,893.00 |
-10.01% |
| LIBHA.PK |
4.60 |
1,200 |
$5,520.00 |
5.10 |
-$610.00 |
-9.95% |
| NRG |
28.75 |
670 |
$19,262.50 |
23.05 |
$3,809.00 |
+24.65% |
| NTES |
48.84 |
250 |
$12,210.00 |
36.60 |
$3,050.00 |
+33.30% |
| SOHU |
16.61 |
700 |
$11,627.00 |
24.882857 |
-$5,811.00 |
-33.32% |
| USG |
28.00 |
950 |
$26,600.00 |
18.425789 |
$9,075.50 |
+51.79% |
| WLL |
29.85 |
600 |
$17,910.00 |
22.683333 |
$4,280.00 |
+31.40% |
| $$CASH |
-26,896.5 |
-$26,896.50 |
- |
- |
- |
|
|
$121,662.00 |
|
|
|
|
Model
Portfolio
Transactions
| Date |
Type |
Symbol |
Shares |
Price |
Comm |
Amount |
Notes |
| Oct
19, 2004 |
Buy |
EXXa |
1,500 |
1.60 |
10.00 |
2,410.00 |
-
|
| Oct
6, 2004 |
Buy |
EXXa |
5,000 |
1.65 |
10.00 |
8,260.00 |
-
|
| Oct
6, 2004 |
Sell |
NEN |
100 |
80.00 |
10.00 |
7,990.00 |
+ 48.15% |
| Oct
5, 2004 |
Buy |
USG |
250 |
18.75 |
10.00 |
4,697.50 |
-
|
| Oct
5, 2004 |
Sell |
NTES |
100 |
39.12 |
10.00 |
3,902.00 |
+ 6.9% |
| Sep
30, 2004 |
Buy |
USG |
700 |
18.31 |
10.00 |
12,827.00 |
-
|
| Sep
29, 2004 |
Sell |
NEN |
100 |
79.65 |
10.00 |
7,955.00 |
+ 47.5% |
| Aug
5, 2004 |
Buy |
WLL |
250 |
23.50 |
10.00 |
5,885.00 |
-
|
| Aug
2, 2004 |
Sell |
NEN |
100 |
69.95 |
10.00 |
6,985.00 |
+ 29.5% |
| Jun
17, 2004 |
Sell |
HCA |
250 |
40.30 |
10.00 |
10,065.00 |
- 4% |
| Jun
17, 2004 |
Buy |
NRG |
670 |
23.05 |
10.00 |
15,453.50 |
-
|
| May
24, 2004 |
Sell |
ADGO.OB |
13,000 |
1.55 |
10.00 |
20,140.00 |
+ 98.7% |
| May
10, 2004 |
Sell |
HCA |
250 |
39.97 |
10.00 |
9,982.50 |
- 4.8% |
| May
10, 2004 |
Buy |
SOHU |
200 |
15.59 |
10.00 |
3,128.00 |
-
|
| Mar
5, 2004 |
Buy |
WLL |
350 |
22.10 |
10.00 |
7,745.00 |
-
|
| Jan
26, 2004 |
Sell |
WRP |
700 |
17.40 |
10.00 |
12,170.00 |
- 5% |
| Dec
31, 2003 |
Buy |
CHK |
1,100 |
13.90 |
10.00 |
15,300.00 |
-
|
| Dec
31, 2003 |
Buy |
NEN |
300 |
54.00 |
10.00 |
16,210.00 |
-
|
| Dec
31, 2003 |
Buy |
HRB |
350 |
54.00 |
10.00 |
18,910.00 |
-
|
| Dec
31, 2003 |
Buy |
NTES |
350 |
36.60 |
10.00 |
12,820.00 |
-
|
| Date |
Type |
Symbol |
Shares |
Price |
Comm |
Amount |
Notes |
| Dec
31, 2003 |
Buy |
SOHU |
500 |
28.60 |
10.00 |
14,310.00 |
-
|
| Dec
31, 2003 |
Buy |
LIBHA.PK |
1,200 |
5.10 |
10.00 |
6,130.00 |
-
|
| Dec
31, 2003 |
Buy |
ADGO.OB |
22,000 |
0.78 |
10.00 |
17,170.00 |
-
|
| Dec
31, 2003 |
Buy |
HCA |
500 |
42.00 |
10.00 |
21,010.00 |
-
|
| Dec
31, 2003 |
Buy |
WRP |
700 |
18.30 |
10.00 |
12,820.00 |
-
|
| Dec
31, 2003 |
Cash
In |
- |
-
|
-
|
-
|
89,000.00 |
Inception |