Agoracom Blog Small-Cap Company Feature: FUQI International, Inc.

Posted by AGORACOM at 1:09 PM on Friday, May 15th, 2009

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.



Based in Shenzhen, China, FUQI International, Inc. is a leading designer of high quality precious metal jewelry in China, developing, promoting, and selling a broad range of products in China’s large and expanding Chinese luxury goods market.

On May 15th, the Company announced their financial results for the first quarter ended March 31, 2009.

Read Full Press Release

China Stocks TV Segment


  • Revenues up 41% to $109.4 million
  • Net income up 52% to $9.7 million, or $0.45 per diluted share
  • Cash and Cash Equivalents of $54 million


I did a quick calculation regarding the last point. This means the Company’s got about $2.50 per share in CASH. So you’re buying the Company for $6.50 but they’ve got $2.50 in cash so you can really buy this business right now for $4.00 a share. That’s the calculation I’m doing but make sure you go do it too. Here’s why this is even more important. Financial outlook for the year. Revenue they are calling for between $442 – $465 million. The BIG number, net income of approximately $32 -$35 million. That will put their earnings per share between $1.49 – $1.63. If you compare this to $4.00 earnings when you strip out the cash, there is unbelievable value here unless there is something sitting in the closet so you got to make sure you do your own due-diligence. Company closed yesterday at $6.49

As always, this is my view in a snapshot.  It is intended to give you a running start into your research.  Now, you have to do your own due diligence to make sure the valuation is not impaired by other factors including balance sheet items, lawsuits or any other negative events.

If you have any comments, I’d love to see them below.


We’ve provided investors with two great starting points to research great Chinese small cap and mid cap companies.

1. – 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. Chinse 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.


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