An already cheap stock is getting a whole lot cheaper..
We have written earlier about this company. The shares have experienced a meteoric rise, but that was wholly justified, in our opinion as they were really ridiculously valued earlier in the year. They’re still very cheap for a stable growth company with hardly any debt.
Have the Chinese suddenly stopped buying jewlery? That is very unlikely, especially considering the fact that there is a shift from export led growth to more emphasis on domestic consumption. The jewlery market grows by some 20% per year. We don’t think this is going to change any time soon..
The likeliest explanation for the sell-off is that it is related to fund selling big winners to net the tax effect with closing losing positions as well.