As many of you know, we are very bullish on the long-term future of Chinese small cap and mid cap companies for two reasons:
1] The obvious reason – China is the fastest growing economy on the planet and nothing is going to slow down its ascent over the next 50 years and beyond. Investing in growth companies there just makes too much sense.
2] Great Results and Valuations – Many Small Cap Chinese Companies are listing in the US (OTCBB, NYSE Alternext and NASDAQ) with great financial results. Unlike many dubious US Small Cap Companies, Chinese Companies don’t seem to believe in losing money or failing to execute in a business plan. As such, 7-digit revenues and profits are very common.
From a valuation point of view, many Chinese companies became a victim of their own success in Q4 2008 and Q1 2009. Why? When the world needed to start liquidating, one of the first places they looked were China where most investors had significant gains to sell into. This resulted in the proverbial baby being thrown out with the bathwater and some great valuations.
TODAY’S FEATURED COMPANY
ReneSola is a leading global manufacturer of solar wafers. Capitalizing on economies of scale, low-cost production capabilities and technological innovations, ReneSola leverages its in-house virgin polysilicon and solar cell and module production capabilities to provide its customers with high-quality, cost-competitive solar wafer products and solar module OEM services. The Company possesses a global network of suppliers and customers that include some of the leading global manufacturers of solar cells and modules.
On May 10th, 2010, the Company announced its financial results for the first quarter ended March 31, 2010.
Check out the full details below!
First Quarter 2010 Financial and Operating Highlights
— Total solar product shipments in Q1 2010 were a record 242.4 megawatts (“MW”), an increase of 12.6% from 215.2 MW in Q4 2009.
— Q1 2010 net revenues were US$206.6 million, an increase of 14.8% from US$179.9 million in Q4 2009.
— Q1 2010 gross profit was US$35.3 million with a gross profit margin of 17.1%, compared to a gross margin of negative 0.6% in Q4 2009.
— Q1 2010 operating income was US$21.2 million with an operating margin of 10.3%, compared to an operating margin of negative 11.4% in Q4 2009.
— Q1 2010 net income was US$11.8 million, representing basic and diluted earnings per share of US$0.07, and basic and diluted earnings per
American depositary share (“ADS”) of US$0.14.
— The Company generated strong positive cash flow in Q1 2010 and reduced inventory carrying cost to US$54 per kilogram at the end of Q1 2010 with an average carrying cost of US$60 per kilogram during the quarter.
YOUR RESEARCH STARTING POINTS FOR CHINESE SMALL CAP AND MID CAP COMPANIES
We’ve provided investors with two great starting points to research great Chinese small cap and mid cap companies.
1. ChinaSecurities.com – ChinaSecurities.com tracks 250 of the best small cap and mid cap companies trading on North American exchanges. It provides you with the best of the best in two ways. First, the front page lists the best news of the day coming out of the space. It does so by giving you a text view of the best press releases by industry and via Chinese Stocks TV, a 5-minute broadcast every morning just after the open. Chinese Stocks TV is archived, so you can catch up on shows you missed.
Second, if you want to research each of the 250 companies to find candidates for your portfolio, it has a very intuitive directory that lets you quickly review each company on the master list, or parse it out by industry and exchange if you have a particular sector of interest. Cool stuff.
2. Right here on AGORACOM, you can refer to our China category for other featured Chinese Small-Cap Companies. As always, we will disclose any IR relationship with any public company. Given the sheer number of great Chinese Small-Cap Companies out there, you can expect us NOT to have an IR relationship with most of these companies.
Regards,
George