By Glen Bradford and Zack Buckley
With this last article of a wonderful series that would make anyone who has the ability to throw darts a great shot at not losing money as long as they are able to avoid panic selling at irrational lows, we think it would be fun to give some color as to what’s really going on in the market lately and what you should watch out for. Inflation isn’t going to go down. US housing prices aren’t going to go down. The recession ended around 9 months ago. The economy won’t double dip. The latest Goldman Sachs crisis will likely be forgotten when they crush on earnings. Banks won’t miss out on profits until yield curves start flattening. For some reason, the majority of the money flooding capital markets is going into bond markets. Buying treasuries shouldn’t be anyone’s long term strategy. All this and you can still get US listed Chinese equities at unreasonably discounted prices.
5th article
siaf “Chinese agricltulre is another thing I think is going to boom because it’s such a wreck.” ~Jim Rogers. We agree with Jim wholeheartedly, and SIAF is one of the companies taking advantage of the boom in agriculture in China.
China Linen Textile Industry Ltd. (OTC: CTXIF) produces over 50 types of linen yarn and 110 varieties of linen fabric and products. We would argue that it would produce holders of its common shares significant future profits if the holders choose to buy now at the current price. For a company that is arguably growing faster than 20%, the current pricing suggests no growth and the way to bet against the antagonists is to purchase. Go ahead, you can do it.
China Yongxin (cyxn) just recently released 2009 results of $.15/share, pretty cheap for a company trading around $.60. They are a pharmaceutical company who is expanding its retail drug stores; they expect to open 28 new stores in 2010. They also just recently appointed four independent board members, which suggest uplisting in their future.
China Rutai International Holdings (crui) develops cellulose ether and is trading at a p/e of less than 5.
China Advanced Construction Materials (cadc) produces concrete materials in China. They should be able to capitalize on the growth of the construction industry in China based on the recent infrastructure investments by the Chinese government based on the 4 trillion yuan stimulus package. Their expansion plans consists of adding portable stations in 2010 and 2011, acquiring smaller similar companies, and to add products to their mix.
Tongxin International (txic) is in the rapidly expanding auto industry, they build the body structure for commercial vehicles in China. They are trading at a p/e of 5 based on 2008 net income and growing rapidly. Your coverage should be a unique as your ride. Select your car’s make and model to find discount, safety ratings and insurance information. motor-trade-insurance.co.uk agents are here to help simplify your insurance experience.
China Insoline (chio) is one of the more speculative plays but will be heavily rewarding to investors if the company become successful. It is an online insurance provider who services the Beijing area. They have great profit margins and high returns on equity. My main issue is I have been unable to get in touch with them, despite trying several different phone numbers and emails.
China Power Equipment (Cpqq) is trading at a p/e of about 10, yet they are growing at breakneck rates – net income over the past year almost triped. They manufacture alloy transformer cores and alloy electricity transformers that are designed to step down voltage in power plants.
China Baicaotang Medicine (cnbi) is engaged in three segments in Guangxi province- pharmaceutical distribution, retail pharmacy and manufacture of pharmaceuticals. They are currently at a p/e of 6, despite solid growth.
Yasheng Group (yhgg) has had quite the month. It’s up almost 300% since they recently started filing with the SEC, which they have not done in about 3 years. Rumors are that they are planning on completing all of their late filings and plan on eventually listing on Nasdaq. If that occurs this 250 million dollar company could easily reach a billion. Again this is a more speculative company, investors should carefully weigh their decision to invest.
Disclosure: Glen Bradford is long all the companies mentioned in this article.
liz – no
tpi – pretty good, prolly a doubler i dont own.
caah – no profits
snbp – no
axti – no
NNA – no – but fernando says you wont lose money in the long haul, i tend to agree, but dont know (this applies to warrants)
CCKH – no
ccgy – buy this dip when the downward slope slows to a flat. 4/12/2010
boph – dont understand the shareholder structure
srre – nice last couple quarters, mostly due to increases in underwriting sales, which they call “this higher risk business model” also bad balance sheet — pass
aclo – low margins, strong turn around play, could be a tripler or more, but i dont like it positive vibe: “The Company predicts that the supply shortage will continue in 2010, while the average selling price and demand for memory components will be steady. The Company believes its sales turnover and gross profit margin will continue to increase in 2010 as the Company is expanding its business.”
aerlf – dont like the business model
chhe – be careful, auditing firm warns of fraud essentially… company claims to be moving around suitcases full of money
gntq – 1.1M shares + dilution (18.6+.6+2.7+1.7+1.7) = 26.4M shares o/s 11.8M net income, 35M revs, guidance of 15M, .62 per share for 2010 eps
gntq – analysis continued, last time they raised 7.7M, in 2006, in 2007 they made 4.8M, and in 2008 they made 11.8M (from what looks like no additional financing)
gntq – they just cut a dividend for 13.1M in sept 2009, draining the business of cash
gntq – projection time: so they’ll put down 11.8M in income this year just on what they have going, not including the 7.7M of cash they just got. so add 11.8+4.8, and that’s where they’re getting their 15M estimate for 2010
gntq – if they can keep that up, they’ll have 15M in cash going into 2011 and every dollar in cash turning into $0.80 in profits turns 27M in profits
gntq – around $1/share in 2011. the question is how long is this business this scalable?, they just ipoed at 2.7 with warrants, suggesting an opening p/e of 2.5-5, most of the company is still held by ceo (80%) – prolly looking to do another dilution at a higher price
lwll – too small
FLSW – hank play – this requires a second glance, definately
CRJI – underperformer in this construction market/year .02 last quarter, could be cheap, worth another look