David, Paul, Ron, and other DSWLF investors:
I have started following DSWLF lately, and on the verge of becoming shareholder. However, two things worry me a lot, and I would like to hear your thoughts:
1. The currency issue related with Hong Kong dollar.
Unlike what has been suggested in some of the earlier posts, I think that the currency issue of Hong Kong dollar could pose a very serious threat to DSWLF. According to the company's annual report, the sale of its plastic and metal business is in Hong Kong dollar. That is about 60% of DSWLF's sale. Considering that DSWLF only has 51% interest in the electronic business, it means that DSWLF has an effective exposure to Hong Kong dollar in 75% of its sale. If the currency traders have their way (who think that Hong Kong dollar should be devalued by 20-30% relative to US dollar), the consequence to DSWLF will be material. [Some costs are in Hong Kong dollar as well. But, I do not think that it will offset the sale percentage.]
2. Possible competitions from companies like NTAIF
If NTAIF does not buy DSWLF, given its cash position, there is a real possibility for NTAIF to set up a plastic parts business of its own. If a company knows how to do business in China, and the company has quite a bit of cash, there does not seem to be any barrier for it to enter the business. [NTAIF qualifies on both.]
Steven |
