Ann: Half Yearly Report and Accounts, page-29

Nice earnings report. Own a basket of foreign Chinese shares, but have become cautious buying as they always seem to get cheaper. Though once in the range of P/E 1-3, they seem to stop going down.

Australians, in general, will turn their noses up at all these companies. There's the usual apprehensions about the Chinese buying up all our land and property. Furthermore, it is a communist country that has supported rogue nations like Pakistan and North Korea. Then there is the island building... I think an understandable and defensive reaction. Legal, probably not, but understandable? Yes, with how the US military and government conducts itself. Then there is the government corruption in China, and the ability of the Chinese Communist Party to change or bend the rules at will, and heavy intervention and ownership in China's pseudo free market.

Many of these small growth Chinese stocks would probably be valued at 20-30 P/E in the gambling casino were they listed on the local Chinese market. Instead, they are on the ASX. Most of these companies have a book value several times their shares price. Some pay dividends. And profits, for most are increasing.

For XPD. The earnings report is solid. Or it is what I expected. Once the refurbishment program stops, profits should soar. I'm glad to see someone mentioned revenue increased by 8% in the Chinese Yuan. If that is the case, that's about what I expected. Continual growth somewhere in revenue somewhere around 5% - 10% per year. Another $6 million has been added to shareholder equity. I hope at some point to see that pile of cash invested to increase profits. I know they have talked about vertically integrating and purchasing shoe sole manufacturers, which is a service that is profitable, but they presently outsource.

I guess it comes down to this. Do you believe it is all smoke and mirrors, as many Australians do? Or do you see the world's next super power and a 5,000 year old civilisation that has some very distinct advantages over the misery we suffer at the hands of our self-interested and lying politicians. Have a look at China's high speed rail network. Think about the manufacturing industry they have built. Have a look at their transition toward renewable and nuclear energy. Consider the one billion person market size and the potential for future market growth. Though their debt is a serious concern.

I'm not trying to sell this to anyone. This is why I hold these companies despite some of them dropping 75% in value. This is a long term game for me. And for me, it is logical why many Australians won't touch these. It is just I see value, and growth potential where many see trash. That's how investing works. You figure out a coherent strategy, you do your research, and you take your risks. And the risks/volatility are presently ridiculous.

These companies are listing on the ASX because of the prestige it brings them in China. One of the main reasons is because Australia is fairly non-corrupt and the ASX provides an assurance of accountability and good governance these companies can use to get government contracts and impress potential business customers back in China. This is also why they list only a minority of their shares. This is why they list when they clearly have excess cash already. And this is why they list even if half the float price gain ends up being lost in listing fees.

Again, I'm not selling this. In fact, I mainly wrote this to remind myself of the coherence and logic of my investment strategy, in the face of the fact that short term it is not particularly successful. Thankfully my pick of sie.ax has offset the losses of my Chinese shares. That has been a 600% gain. That is the same kind of potential I see in these other Chinese shares. I may be right. I may be wrong. But I see the investment option of a lifetime. I see a logical story as to why these companies are unloved and ignored. I see a logical story as to why these companies are listing on the asx, despite having no need of a share listing or additional capital.

However, one needs to do a lot of research and digging to see this. I may be wrong. I may fail spectacularly. That's why that majority of my investments are diversified elsewhere. But... I see value and growth in these unloved foreign shares. I may be wrong. I, and anyone else invested in these companies are clearly in the minority. Going against the crowd. But... that's where you profit, if you are in fact right, and saw something others will only see years later, and after the opportunity has passed.

I will wait. This financial report is the step in the right direction. I look forward to a profit jump when they finally make some vertically integrated acquisitions. And maybe we'll even see some dividends