Agoracom Blog Home

Archive for the ‘China’ Category

« Older Entries
Newer Entries »

ChinaSecurities.com Small-Cap Feature: General Steel Holdings Inc.

Posted by AGORACOM at 9:30 AM on Friday, November 6th, 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.

TODAY’S FEATURED COMPANY

General Steel Holdings (NYSE:GSI)

Gsi

General Steel Holdings, Inc., headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 6.3 million metric tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including rebar, hot-rolled carbon and silicon sheet, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality.

On November 6th 2009, the Company announced reported that net revenues advanced 31% to $17,976,529 from $13,735,376 in prior year.

Check out the full details below:

Read Full Press Release

Chinese Stocks TV Segment

HIGHLIGHTS

  • Aggregate shipment volume increased 67.2% year-over-year to a record 1,036,076 metric tons
  • Total revenues increased 17.8% to a record $484.8 million from $411.5 million in the third quarter of 2008
  • Net income was $10.4 million, or earnings per basic and diluted share of $0.23 and $0.22, respectively

MY COMMENTS:

As always, these are my own views and conclusions.  Do your own due diligence.  I know this is one company that would benefit from online investor relations.

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

Regards,
George

Net income was $10.4 million, or earnings per basic and diluted share

of $0.23 and $0.22, respectively

Posted in China | Comments Off on ChinaSecurities.com Small-Cap Feature: General Steel Holdings Inc.

ChinaSecurities.com Small-Cap Feature: China InsOnline Trading At Just 4X Earnings.

Posted by AGORACOM at 9:30 AM on Wednesday, October 14th, 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.

TODAY’S FEATURED COMPANY

China Insonline Corp (NASDAQ:CHIO)

Chio

China INSOnline Corp., incorporated in Delaware and headquartered in Beijing, is a rapidly growing licensed insurance agency in The People’s Republic of China. Representing major insurance underwriting firms in China, the Company offers online automobile, property and life insurance services through its industry web portal, www.soobao.cn.

On October 14th 2009, the Company announced reported that net revenues advanced 31% to $17,976,529 from $13,735,376 in prior year.

Check out the full details below:

Read Full Press Release

Chinese Stocks TV Segment

HIGHLIGHTS

  • Net revenues advanced 31% to $17,976,529 from $13,735,376
  • Net income grew 10% to $9,177,601 compared with $8,336,357 in the prior fiscal year
  • Earnings per share for the year ended June 30, 2009 were $0.23 on 40,000,000 weighted average shares
  • Trading at $1.00 at time of report on Chinese Stocks TV.

MY COMMENTS:

Unless I am missing something, this Chinese stock is a no brainer.  Top line growth, hefty profit margins ($9.1M income on $17.97M in revenue) and – best of all – EPS of $0.23 for a company trading at just $1.00.  At 4X earnings, this stock is cheap.

I also love the company’s product line.  A mix of Web 2.0 and insurance.  That’s a winning combination for a company growing in China and has all the makings of a long-term winner!

As always, these are my own views and conclusions.  Do your own due diligence.  I know this is one company that would benefit from online investor relations.

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

Regards,
George

Posted in All Recent Posts, China | 1 Comment »

ChinaSecurities.com Small-Cap Feature: e-Future Information Technology Has Cleaned Up And Should Bounce Back

Posted by AGORACOM at 9:30 AM on Wednesday, October 14th, 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.

TODAY’S FEATURED COMPANY

e-Future Information Technology (NASDAQ:EFUT)

Efut - header

About eFuture Information Technology Inc.

eFuture Information Technology Inc  is a leading provider of software and services in China’s rapidly growing retail and consumer goods industries. eFuture provides integrated software and services to manufacturers, distributors, wholesalers, logistics companies and retailers in China’s front- end supply chain(from factory to consumer) market, especially in the retail and fast moving consumer goods industries. eFuture currently serves over 15 Fortune 500 companies, over 1,000 retailers and over 5,000 suppliers operating in China.  On October 13th 2009, the Company announced its financial results for the full year ended December 31, 2008.

Check out the full details below!

Read Full Press Release

China Stocks TV Segment

HIGHLIGHTS

  • Total revenues increased 64.7% year-over-year to  US$20.5 million
  • Gross profit increased 49.7% year-over-year toUS$8.5 million
  • Gross margin was 41.3%, compared to 45.4% in 2007.
  • Adjusted net income (non-GAAP) was US$2.3 million, an increase of 315.9% from 2007.

MY COMMENTS:

The company had some accounting problems that forced them to re-audit the books.  This beat up the stock pretty good.  However, now that the clean up is done, you may have a great re-entry point here.   I especially like the fact the company is providing revenue guidance for $28 – $29 million for fiscal 2009 – that would be an increase of 40 – 45% over 2008 revenues of $20.5 million.

I also love the level of commercial acceptance achieved by eFuture.  Specifically, eFuture currently serves over 15 Fortune 500 companies, over 1,000 retailers and over 5,000 suppliers operating in China.  That’s pretty damn good.

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

This is a company I would love to provide online investor relations to.

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. 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.

Regards,
George

Posted in All Recent Posts, China | Comments Off on ChinaSecurities.com Small-Cap Feature: e-Future Information Technology Has Cleaned Up And Should Bounce Back

SEC Sues Over Alleged $1.7M Pump and Dump of China Energy Savings Technology

Posted by AGORACOM at 8:52 AM on Wednesday, October 7th, 2009

In the interests of maintaining balance about my bullish views on Chinese small and mid cap stocks, the Securities and Exchange Commission filed suit against Jason Genet in a New York federal court alleging that he “pumped and dumped” the stock of China Energy Savings Technology for a profit of $1.7 million. China Energy completed a reverse merger in 2004.

Moral of the story.  I love China and you can love China too – but make sure to do your due diligence each and every time you look at a new possible investment.

Regards,
George

Posted in All Recent Posts, China, Stock Scams | Comments Off on SEC Sues Over Alleged $1.7M Pump and Dump of China Energy Savings Technology

City Telecom (Nasdaq:CTEL) – Hong Kong’s Largest Fibre Network Provider With Next To No Debt, Growth, Profits And Happy Customers.

Posted by AGORACOM at 6:00 PM on Monday, September 21st, 2009

PYWMYMI (Pim-Wi-Mee) is the act of Putting Your Money Where Your Mouth Is.   Individuals like Muhammad Ali used it to back up their talk – but very few organizations are willing or able to PYMWYMI in an effort to back up their products or services.  Sure, I can think of a dozen commercials with beautiful spokespeople throwing canned responses at me “our customers come first” but can’t remember the last time they backed it up with their pocket book.

THE COMPANY – CITY TELECOM

City Telecom (CTEL:Nasdaq) is a company that practices PYMWYMI.  Via it’s main operating entity – Hong Kong Broadband Network -  CTEL now claims Hong Kong’s largest fibre network subscriber base and, amongst many other reasons, has accomplished this goal by providing customers with a bandwidth guarantee of 2x their money back.

This was one of the first hooks provided to me by John Marco at Elite IR, so I took a closer look.  What I found is a Chinese small-cap company with business achievements and a corporate culture that make me want to become a long-term investor.  Here are just some highlights, followed by an in-depth webcast interview with CFO, NiQ Lai, at the very end.

THE FACTS AND FIGURES

  • $167 Million in revenues for 2008 and $93 Million in revenue in H1 2009
  • A brand new fibre network that completely bypasses the incumbent’s inferior network
  • Cost per Mbps that blows away the incumbent
  • Peak CapEx is over
  • Positive free cash flow and dividends
  • Steadily increasing ARPU
  • Valuations (P/E and EBIDTA) that are well below industry averages

WHY WALL STREET IS STARTING TO PAY ATTENTION

The company just completed a roadshow that criss-crossed the United States over the last 2 weeks.  With the company’s share price up nicely, I have to conclude that fund managers liked what they heard.  Here are 3 key points to consider:

1. Verizon FiOS at 1/5 the cost

Essentially, CTEL’s competitive advantage comes from having built a Verizon FiOS-like Fibre Network in Hong Kong. Due to Hong Kong’s extreme density of 16,000 people per square mile versus 890 for the US, CTEL’s cost per home pass of ~US$200 is about 1/5th of Verizon FiOS’s cost of ~US$1,100 (data according to CTEL).

2. US$385 million gross investment cost is almost 2x current Market Capitalization

It has taken CTEL 10 years to build its Fibre Network at a gross book cost of US$385 million, almost 2x current market capitalization of US$200 million. The replacement cost for the network would be much higher today, due to the congested in-building conduits and time value. With the company now delivering financial success, the strategic value of the network should be recognized by the market over time.

3. Valuation

The stock market has yet to reflect CTEL’s true valuation. Comp’s are trading at significantly higher multiples on EBITDA and P/E basis.

THE GREAT MARKETING

What you can’t see on the financial statements is simply how cool this company is.  This isn’t relative to other Chinese small and mid caps, this is relative to all companies I have ever seen.  For example, even if you can’t speak Chinese, you can clearly see the genius behind these three TV ads and how they almost have a Mac vs. PC feel to them by pointing out the incumbent’s weakness. Take 90 seconds out to watch them:  Ad1 … Ad2 …  Ad3

THE CORPORATE CULTURE

Finally, despite its’ small-cap status,  CTEL has publicly announced its Big, Hairy, Audacious Goal (BHAG) To Become Hong Kong’s Largest IP Service Provider By 2016. More than just lip service, the company expects to achieve this goal by benchmarking itself against the best corporations in the world for many different categories.. For example,Toyota Production System for back end process, Disney for outdoor customer service, HSBC Premier Premium Banking for Personal Account Serving, China Light & Power for service reliability and safety.

City Telecom also took 47 Senior Managers on a Japan study mission earlier this year to learn best practices from Panasonic and Toyota.  Some of their most important takeaways?

  • Continuous Change Is Essential – Species that adapt, survive
  • It Is The Duty Of The Manager To “Worry” – A good manager thinks and plans faster than subordinates
  • Raising The Number Of Charcoals – A charcoal is a manager that fuels growth. CTEL was founded with 2 – but needs 3,000+ to achieve its’ BHAG

THE INTERVIEW

I sat down with NiQ Lai to discuss my findings and the company even further.  It’s an audio interview with 17 accompanying slides, so enjoy and good luck with whatever actions you decide to take with City Telecom.

Regards,
George

Posted in All Recent Posts, China | 1 Comment »

City Telecom CFO, Nick Lai, Featured On TheStreet.com

Posted by AGORACOM at 10:21 AM on Tuesday, September 15th, 2009

Congratualtions to City Telecom for being featured on TheStreet.com. This is a 1:45 minute overview of the company, so use it only to begin your due diligence. For your convenience, I’ve embedded the interview below

Nonetheless, the company is doing something right given it’s stock price advance as of late. We’ve tentatively booked an interview with Mr. Lai for this Friday, which will provide ChinaSecurities investors with even deeper information about the company.

Regards,
George

Posted in China | 2 Comments »

ChinaSecurities.com Small-Cap Feature: China Recycling Energy Skyrockets Top And Bottom Line

Posted by AGORACOM at 10:30 AM on Friday, August 21st, 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.

TODAY’S FEATURED COMPANY

China Recycling Energy Corporation (OTC.BB:CREG)

Creg

China Recycling Energy Corp.  is based in Xi’an, China and provides environmentally friendly waste-to-energy technologies to recycle industrial byproducts for steel mills, cement factories and coke plants in China. Currently, recycled energy represents only an estimated 1% of total energy consumption and this renewable energy resource is viewed as a growth market due to intensified environmental concerns and rising energy costs as the Chinese economy continues to expand.

On August 21st 2009, the Company announced unaudited financial results for the second quarter of 2009 ended June 30, 2009.

Check out the full details below!

Read Full Press Release

China Stocks TV Segment

HIGHLIGHTS

2nd Quarter Ending June 30, 2009

  • Revenue was $11.1 million compared to $4.3 million in the first quarter of 2009 and $2.6 million in the second quarter of 2008.
  • Net income was $3.2 million with a Diluted EPS of $0.07 versus net income of $1.1 million and a diluted EPS of $0.02 in the first quarter of 2009 and a net loss of $3.8 million and a diluted EPS of $(0.12) in the second quarter of 2008 (restated).

MY COMMENTS:

Both revenue and profits grew at an extraordinarily fast pace, both sequentially and year-over-year.  However, the share price has not followed, so investors have a real opportunity to get in to a fast growing company at cheap prices.

Granted, by Chinese standards, revenues are still small but anytime a company more than doubles sequential growth and quadruples annual growth, you have to take notice.  EPS of $0.07 for the quarter is extremely attractive for a company trading in the $1.20 range.   When taking a closer look at the company, make sure to examine the balance sheet for any weaknesses.  If they’re clean and have no skeletons in the closet, let me know so that we can ride this one together.

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.

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. 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.

Regards,
George

Posted in China | Comments Off on ChinaSecurities.com Small-Cap Feature: China Recycling Energy Skyrockets Top And Bottom Line

ChinaSecurities.com Small-Cap Feature: Orient Paper Has Top And Bottom Line Value

Posted by AGORACOM at 9:30 AM on Friday, August 21st, 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.

TODAY’S FEATURED COMPANY

Orient Paper Inc. (OTC.BB:OPAI)

Opai - header

Orient Paper, Inc., through its wholly owned subsidiaries, controls and operates Hebei Baoding Orient Paper Milling Co., Ltd (‘HBOP’). Founded in 1996, HBOP is engaged in the production and distribution of products such as corrugated paper, offset paper, writing paper and blueprint paper.

On August 17th 2009, announced it Second Quarter revenue.

Check out the full details below!

Read Full Press Release

China Stocks TV Segment

HIGHLIGHTS

  • Revenue for the second quarter of 2009 was approximately $22.4 million compared to approximately $17.6 million for the same period in 2008, an increase of approximately 27.6%.
  • Gross profit for the second quarter of 2009 increased 25.2% to approximately $4.0 million from approximately $3.2 million for the second quarter of 2008.
  • Net income was approximately $2.5 million, or $0.05 per diluted share

MY COMMENTS:

Strong revenue and profit growth is great to see.  Even better to see a company with $0.05 EPS for the quarter.  If they can maintain this pace (excluding the terrible Q1 of the year), then we’re looking at a company with $0.20 in annual earnings.  This assumes no further growth, which we know is unlikely.  Given the fact Orient Paper is trading at $0.85 range, you have a company trading at just over 4X earnings.

The caveat is to make sure the $0.05 in EPS this quarter didn’t come from pent-up demand as a result of Q1 slowdown.

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.

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. 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.

Regards,
George

Posted in China | 2 Comments »

ChinaSecurities.com Small-Cap Feature: China Agritech P/E Of 5.25 Is Attractive

Posted by AGORACOM at 9:30 AM on Thursday, August 20th, 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.

TODAY’S FEATURED COMPANY

China Agritech Inc – OTC.BB:CAGC

Cagc

China Agritech, Inc. is engaged in the development, manufacture and distribution of liquid and granular organic compound fertilizers and related products in China. The Company has developed proprietary formulas that provide a continuous supply of high-quality agricultural products while maintaining soil fertility. The Company sells its products to farmers located in 26 provinces of China.

On Augsut 17th, the company reported it’s Quarterly Revenues and Net Income for the Second Quarter of 2009.

Check out the full details below!

Read Full Press Release

China Stocks TV Segment

HIGHLIGHTS

  • Net revenue increased 56.9% year-over-year to $21 million
  • Gross profit increased 37.3% year-over-year to $8.9 million
  • Net income increased 91.2% year-over-year to $5.6 million

MY COMMENTS:

Anytime a company hits record revenue and income, you have to take a closer look and see if you’ve stumbled upon a company that is really hitting its growth cycle.

In this case China Agritech achieved earnings of $0.22/share for the quarter! Even if the company had no more earnings for the year, you’d have a decent P/E.  However, in this case, we know the company has re-affirmed annual net income of $9.5 million, which should translate into approximately $0.38/share for the year.  With the company trading in the $2.80 range, this translates into roughly an 7.5 P/E.  I like that.

The story gets even better.  With $16.5 million in cash, China Agritech has about $.80/share in cash.  As such, if you strip that out of the share price, you are actually buying the business for $2.00 per share, which bring the true P/E down to about 5.25.  The comany has no long-term debt and a current ratio of 5.4 : 1.  This is an incredibly attractive opportunity.

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.

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. 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.

Regards,
George

Posted in China | 1 Comment »

ChinaSecurities.com Small-Cap Company Feature: China Wind Systems Inc.

Posted by AGORACOM at 7:30 AM on Thursday, August 20th, 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.

TODAY’S FEATURED COMPANY

China Wind Systems Inc – OTC.BB:CWSI

Cwsi

China Wind Systems supplies forged rolled rings to the wind power and other industries and industrial equipment to the textile and energy industries in China. With its newly finished state-of-the-art production facility, the Company plans to increase its production and shipment of high-precision rolled rings and other essential components primarily to the wind power and other industries.

On August 17th, the company reported Strong Financial Results for the Second Quarter of 2009.

Check out the full details below!

Read Full Press Release

China Stocks TV Segment

HIGHLIGHTS

  • Net revenues increased 21.5% year-over-year to $13.6 million
  • Net income increased 26.2% year over year to $1.8 million, or $0.03 per diluted share

MY COMMENTS:

If you extrapolate the company’s $0.03/share earnings over the year, you could have a company with $0.12/share in profit for the year.  With the company trading at approximately $1.30, you have an opportunity to buy into a Chinese wind company at just a little more than 10x earnings.  I have seen better valuations out there – but if you like the wind energy business, this has a lot of appeal.

In addition, the company has announced a 1:3 reverse stock split, which is no doubt intended to help the company list on a more senior exchange.  Typically, reverse split are bad for shareholders – unless they are done for an advantageous purpose and this definitely appears to be one.

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.

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. 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.

Regards,
George

Posted in China | Comments Off on ChinaSecurities.com Small-Cap Company Feature: China Wind Systems Inc.

« Older Entries
Newer Entries »