Reasons for PSL8 Picks:
1. AIRT: This company has two major divisions; de-icing equipment and overnight air cargo. It will be adding another division - aircraft maintenance - starting this quarter. The upcoming quarter should show strong y/y eps growth, as the comp quarter last year was weak. Margins should improve as revenues kick in from the Northwest Airlines contract, plus they have higher margin work in their record backlog, which was up sequentially from the prior quarter. Company has been buying back shares as well. I'm looking for eps in the quarter that are much better than the 0.16 they put up in Q2. Price target: 11.50 - 12.50 (+33%)
2. CEUA.OB: Chinese on-line education company that is growing very fast. Interesting niche in vocational training and secondary school testing. Sales grew 123% y/y in the past quarter, and the company earned 0.08 ft, fd. I'm hopeful they can improve on that sequentially....second half of the FY is supposed to be a seasonally stronger period. Price target: 5.50 - 6.00 (+34%)
3. CHLN.OB: China Housing and Land development company in Xian, capital city of Shaanxi province. They just announced that they closed a deal during the Q4 that enables the company to meet their "make-good" estimate of around 0.54 for FY07. For FY08, the make-good target is much higher....around 1.15. One analyst who follows the company thinks that they will beat that, and has 1.21 as an estimate. At its current price around 4.70, it trades at 4x FY08 eps. Sales are lumpy, but they appear poised to have a few strong quarters in a row. Price target...given the "real estate" angle, perhaps it won't revisit its old 52 week high of 8.20 within the next 3-4 months, but hopefully it can get to the mid 6s. (+38%)
4. CKGT.OB: Involved in selling cactus-related products...earned 0.04 eps in Q3, and ytd has earned 0.12 eps. On track to earn at least 0.04 in Q4, and possibly higher if they don't have to write off more A/Rs. Conservative target: 8x 0.16 fd eps = 1.28 (+60%)
5. CPHI.OB: China pharmaceutical company selling generic and other drugs. My guess is that they can earn 0.30 - 0.33 in FY07, and with the Chinese SFDA finally getting back to approving new drugs again, perhaps FY08 will show 30%+ eps growth. Price target: 12.5 x 0.32 eps = 4 (+38%)
6. SUOT.OB: Steel maker that is transitioning into higher margin sales, plus expanding its capacity at the same time. Sales increased 62% while earning 0.17 in Q3 (+86% y/y). If they can at least repeat that success in Q4, they will prove to be on track to earning 0.68+ in FY08. Target: 10 x 0.68 = 6.80 (+70%)
