Hi guys,Thought I should drop a note after a long hiatus from...

Hi guys,

Thought I should drop a note after a long hiatus from the forum. As I've mentioned the last time round, ETC is a stock for investors with patience. A couple of worthy points of note:

1) I've noticed there is a lot of talk recently about a big seller in ETC. As far as I am concerned, there has not been one standout seller over the past 2 weeks. I've had a look at the brokers executing the trades over the past 2 weeks and it was a sprinkling of brokers. Please note I can only see the identity of brokers on trades which were done 3 trading days ago, so I cannot see which brokers have been selling this week. What this tells me is that selling has been conducted by professional individuals/ traders who have loaded up on the stock in last year's placement or loaded up recently and trimming positions. There may still be an insto. seller, but based on the sprinkling of brokers who have executed the trades in the past 2 weeks, it seems highly unlikely that it was an insto. pushing the stock down. (I doubt an insto. will use various brokers to execute a trade in a stock like ETC)

2) There are rumours about fraud and investors not believing the story about ETC's contracts. It's always: "I heard from a mate who's in the industry/ who's an insto...... that there may be a chance that the contracts sound too good to be true" Personally, I don't buy hearsay. I do believe the company has a track record, given they are not an "overnight startup". They have been audited many times in the past and before the Nexbis acquisition, they already had a very profitable European business.

3) There's also been plenty of talk about doing business in Asia. i.e. asian contracts are not worth the paper they are written on. Well, let me put this to you...... Would you have preferred ETC having conducted large deals with corporates in Europe/ USA over the past 18 months, only for the GFC or banks to crush their lines of credits, subsequently leading to cancelled deals. Even though it may sound weird, countries like China (and to a certain extent, Malaysia) have better fiscal positions than USA and certain parts of Europe. The governments in Asian countries have built up surpluses over the past decade. They have had their financial crisis in '97-'98 and they have since learnt from that experience. We should be more open minded to various contracts around the globe. In my humble opinion, any contract that provides returns for shareholders is a good contract. If it gives you any confidence, we are dealing with the Chinese and Malaysian government. We are not dealing with XYZ Pty. Ltd.

4)As for the options granted to managament & employees. I have some reservations to the strike price of the options. When they were issued, it was pretty much at the money. I do believe management and staff members should be motivated. However, at the same time, they have to strike a balance with the interest of investors too. It would have been much better if the strike price was set above the market price (for e.g. $0.70). That would have given the investing community a sense that they believe in the long term outlook of the company. Anyway, this is done and dusted, so there is no point brooding over this issue. That said, I do draw some positives from the options issuance. Normally when a significant options scheme is launched, there tends to be positive developments in the company within 6-8 weeks. Management cannot be seem to be issuing options just 2 weeks before a major announcement.

5) There is more than AUD$10 mil in the bank. There is cash, no debt, stock is priced cheaply and has potential for further growth. In my books, that sounds like a good recipe for success. There might be an issue with timing of cash receipts, however, I stress that it is just a timing issue. If the Chinese and Malaysian governments carry out the contracts (which I expect them to do), then it is just a matter of WHEN the cash is received.

6) Just as a side note, I read a newswire article today stating that a former Sinopec manager has been sentenced to death for wrongdoing. Lucky for him, he gets a 2 year reprieve. If he does not committ another crime within 2 years, he does not have to die. I'm serious. No joke. So, if ETC's management were not legit, then they have something to worry about. I"m pretty sure management are fine and they are doing their best for shareholders.

7) An insto. selling stock does not equate to the end of the world for the company in question. Each insto. has a different agenda. They may be selling due to strict guidelines about trading. They may be selling just purely to bank a profit. They may be selling because they have recently changed fund managers. The list goes on. All I need to do is to jog your recent memory of QIC dumping their ETC stock around $0.20. What is their rationale? I guess it was a change in fund managers. It could just be that.

8) For investors who keep on questioning the credibility of the company, as per my points above, I doubt there is fraud involved. If you are still not convinced, maybe you are overweight the stock and you should lighten.

I think I have covered off on quite a few points. At the end of the day, there is no 100% certainty on any particular stock. I have nothing against investors who question the credibility of the stock. However, I do believe in rational judgement and based on the fundamentals in front of us, it is a matter of patience. I believe ETC will re-rate in due course when the results start coming in.

Hope this helps clears any confusion. Time to grab some rest.

As always,

Happy investing.