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 COMPANYJA Solar Holdings Co. Ltd (NASDAQ: JASO)
JA Solar Holdings Co., Ltd. is a leading manufacturer of high-performance solar cells. The company sells its products to solar manufacturers worldwide, who assemble and integrate solar cells into modules and systems that convert sunlight into electricity for residential, commercial, and utility-scale power generation.
On February 11th 2010, JASO announced its financial results for its fourth quarter and full year 2009, ended December 31, 2009.
HIGHLIGHTS:
- Revenue in the fourth quarter of 2009 was 238.4 million, an increase of 23.4 percent from 193 million reported in the third quarter of 2009 and an increase of 66.2 percent from $143.4 million reported in the fourth quarter of 2008.
- Gross profit in the fourth quarter of 2009 was $48.9 million, compared $32.3 million in the third quarter of 2009 and 1.4 million in the fourth quarter of 2008.
- Gross margin was 20.5% in the fourth quarter of 2009, compared with 16.7% in the third quarter of 2009 and 1.0% in the fourth quarter of 2008.
Most importantly, the company reported earnings of $0.22/share. If you extrapolate that over the year, you have a company with ~ $0.90 EPS, yet trading at just over $5.00. You do the math but that sounds like pretty good value to me. Check out the full details below.
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