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
Puda Coal, through its subsidiaries, supplies premium high grade metallurgical coking coal used to produce coke for steel manufacturing in China. The Company currently possesses 3.5 million metric tons of annual coking coal capacity. The Company has recently moved upstream into coal mining, as a consolidator and acquirer of coal mines in Shanxi Province.
On March 24th 2010, Puda Coal announced its announced its 2009 fourth quarter and full year financial results.
Check out the full details below:
HIGHLIGHTS
Fourth Quarter 2009 Highlights
— Fourth quarter revenue totaled $60.2 million, down 6.6% year-over-year
but up 7.4% from $56.1 million in the third quarter of 2009
— Gross profit was $5.3 million, down 11.5% year-over-year and down 1.2%
from $5.4 million in the third quarter of 2009
— Operating income totaled $4.9 million, up 8.0% year-over-year, and up
20.9% from $4.0 million in the third quarter of 2009
— Net income was $2.3 million or $0.14 per fully diluted share, as
compared to $3.4 million, or $0.22 per fully diluted share, in the
fourth quarter of 2008 and a net loss of $0.6 million, or $0.04 per
fully diluted share, in the third quarter of 2009
— Excluding the $1.5 million in non-cash expense related to the fair
value loss of derivative warrants, adjusted net income was $3.7 million,
or $0.23 per fully diluted share, as compared to $3.3 million, or $0.22
per fully diluted share, in the same period last year and $2.8 million,
or $0.18 per fully diluted share, in the third quarter of 2009
— Sales of cleaned coal totaled 535,000 metric tons (MT), down 0.6% year
over year
— Average selling price of cleaned coal was $113 per MT in the fourth
quarters of 2009 and 2008.
Full Year 2009 Highlights
— Net revenue was $214.1 million, down 11.7% from 2008
— Gross profit totaled $18.2 million, down 40.1% from 2008
— Operating income was $14.5 million, down 41.7% from 2008
— Net income totaled $5.5 million, or $0.36 per fully diluted share, down
67.9%, as compared to $17.1 million, or $1.12 per fully diluted share
in 2008
— Excluding the $5.0 million in non-cash expense related to the fair
value loss of derivative securities, adjusted net income was $10.5
million, or $0.68 per diluted share, as compared to $16.7 million, or
$1.09 per diluted share from 2008
— Sales of cleaned coal reached 1.9 million metric tons, down 17.6% from
2008
— Average selling price of cleaned coal increased 7.8% to $111 per MT in
2009, as compared to $103 per MT in 2008 (after adjusting for exchange
rate differences)
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