CELM - I like it. It has $1.80 in cash and put on $4M on balance sheet in the last quarter alone. The company has been ramping up this August and we should start to see the results this quarter and through till at least mid 2011. By which time they should have doubled their output.

The company opened up another vertical "DC coreless micro motors segment" with no fanfare.

CFO - answered all questions put to him from nobodies like me. Seems to understand the market. He says since he IPO'd at 4.50 he isn't going to buyback above that level but would consider it beneath 4.50.

He also says he will be looking at upgrading auditors and is looking at SOX even though he's not required yet (think IPO's get a years grace or something).

So, at $5.00 downside limited. We should start seeing upside with Y/Y EPS growth possibly Q3 or certainly Q4.

rich

BORN - I would be surprised if there wasn't some collusion going on. Yesterday, however, the share price only drops off after 1.30 when the Instablog was published.

rich

[1] http://seekingalpha.com/instablog/647781-alfred-little/104739-a-sobering-new-look-at-china-borun

Soaring coal prices set to hit power generators

http://www.chinadaily.com.cn/business/2010-10/27/content_11463311.htm

rich

Well, I know next to nothing about TA. It's frustrating but, hey, I held CCME for a year and it felt like owning a part share of a corpse - now it's a bucking bronco.

The only thing that would improve things would be the warrant owners cashing in (you listening Mr Bradford? I know, I known.. no chance.).

Still, 50% rise beats a current account. And we've had a few new eyes through Louis and another record quarter coming up in three weeks.

rich

If it all pans out like you say and a trade gets canceled a month later I think we'd all like to know the name of the broker. I wouldn't want to use them.

rich

BURRP obv has a better handle on this than me. Just reading the basics the SEC says settlement is within 3 days. Wouldn't it have to be done and dusted by T+3?

I don't know if there's any exceptions to this. When that flash crash happened I thought it got sorted out for the next day?

http://www.sec.gov/investor/pubs/tplus3.htm

rich

It could at least flag that it was reviewing the trade.

rich

Yesterday? I can see why your aggrieved. It's unfair to wait so long as it makes the seller position 100%. He sold because he was worried it would go down - obviously now he gets a 100% return.

I don't understand this. Perhaps others do?

rich

LPH - very much so. I've been reading news stories to see if the price rise is being used in the past tense since the last rise was aborted on short notice. Seems to have happened.

It's going to mean all those pre-orders and inventory can turn into cash. Hopefully we'll see free cashflow in Q3.

rich

Surly you missed a trick... you could of said I'm stills upset?

Why didn't you buy it the next day then?

rich

Price Changes in graphs

http://www.chinadaily.com.cn/business/2010-10/26/content_11457140.htm

rich

BSPM - it was odd. Was mentioned in weekend article. The main part of the news was expected; they are aiming for 10K by EOY. The guidance they gave confirmed the low end rather than the range 80 - 82 and 18 - 20 - no idea why they didn't do the range but given the PPS I think hitting 80 & 18 is just fine.

PR fluff and negative sentiment = chance to bomb the stock? Dunno, odd.

rich

BSPM - not surprised - they are 700K clinics in China - plenty of growth. Think aim was 10K by EOY.

http://www.sec.gov/Archives/edgar/data/1418133/000118518510001025/ex99-1.htm

rich

China likely to announce new oil pricing mechanism

China's top economic planner, the National Development and Reform Commission, said Monday that the country was likely to announce a new pricing mechanism for refined oil products this year, which would be more transparent than the current one.

http://www.chinadaily.com.cn/business/2010-10/25/content_11455550.htm

rich

China likely to announce new oil pricing mechanism

China's top economic planner, the National Development and Reform Commission, said Monday that the country was likely to announce a new pricing mechanism for refined oil products this year, which would be more transparent than the current one.

http://www.chinadaily.com.cn/business/2010-10/25/content_11455550.htm

(Bloke at the local delicatessen told me.)

rich

SSE closed at HOD nice eom

YHGG - OK, so your thinking more $4.X rather than what I took from the previous poster of $11 value?

Interesting, it's something I'll have to read about tomorrow - I haven't invested in many companies where book value was considered hence my question (*steps quickly away in case big argument ensues*).

cheers

rich

OK, something to look at properly tomorrow... a quick look at the spreadsheet (maybe right maybe wrong)..

$Advertising...% of revenue.... Net Margin

09
Q3 2,400,000...15%...20%
Q4 2,446,227...14%...23%


10
Q1 3,081,443...25%...18%
Q2 4,418,557...23%...29%


So, on the face of it they managed the increased net margin while increasing adverting as a percentage of revenue. I must be missing something here. The gross margins are a bit better than last year but not startlingly so. So, if they can, one way or another, hold near the 29% margin they will walk the numbers... lets find out.

rich

YHGG - is the right way to value it book value? Why shouldn't we be using earnings?

rich

Checking Bank Balance It is a perfectly rational short argument if the auditing process is just checking end of quarter/year bank balance/statements. I personally do not know enough about the audit process to answer this properly

OK, I understand the point. If all an auditor did was check the balance at the end of the year that would result in abuse. So, 40M cash balance and needing dilutions to pay for acquisitions.

Like you I don't know what accounts actually check. Surely, at a basic they should see the transactions?

rich

Zushima - getting the OK in Oct (they hope!) and aiming for 3M in 2011. I don't see how it's going to add up to more then 300K in 2010 - with reasonable chance that significant sales don't begin till 2011. Best case is that it's a demand product and they have significant back-orders $1M say but that's a best case and not a more likely case.

Meipude - I don't know when their sales started to count but I hope it was not the whole quarter 20K sales on low margin belts. That looks like 1M wasted. We'll see in next 10-Q if I am right. They have a female inflammation product but can't discern what it is and what's being sold.

Raw Products - not sure how to gauge this. A few low margin herbs being sold + improved margins on products? The first harvest was, apparently April, but the margins have not been affected yet by vertical integration. This is a bit of a wild card - a successful integration and the numbers will look good.

Rural - different to gauge what's happening from the numbers. We have $4M in revenue in Q2 according to PR. But this is less than the numbers I was imagining last year - about half the amount. That said they are just starting to sell at these outlets and ramping up my take time. I'm not getting the transparency to say what's going on - if I imagine it's going well I suspect they would be trumpeting it out - anyway they are mentioning it in the presentations so I'll leave it as work in progress.


Estimates:
In 2009 they did around H1 40% : H2 60%. If it follows then they should hit their 80M. Why do you think the 13M from Zushima et al would not have been part of the estimate? I hope, secretly, management are aiming for 82-83 to give an error margin but nothing more. Or put it this way if they were going to do 90+ why not inch the estimate up?

rich

I spent time looking over the numbers - there are two known unknowns.

Q2 was only the second time Oleanolic acid sales didn't at least double Y/Y - up 42% Y/Y not bad numbers just not as good compared to others. I'm surprised as they are adding new provinces - Q1 was unusually high Y/Y so perhaps they sold too much inventory? Averaging that Q1 & Q2 Y/Y you get 71% growth *shrug*. 50% growth will get them in the ballpark for their target - 58M FY Oleanolic acid.

The other drugs Taohuasan Pediatrics, Gan Wang, Tianqi Dysmenorrhea, and Danshen Granule haven't shown significant growth - assuming they do what they did last year that would give you $18M.

The health products had a promising debut in Q2 this year but difficult to model. More sales in Q3 or has too much been ordered and show decline in Q3? No idea what to do for that. They did $1.8 in Q2 and I modeled $1.4 for Q3 and Q4. Giving $4.6M for the year.

So that one permeation that gives me 81M for FY revenues. With Oleanolic acid and health products being the unknowns. Not sure how I can get it higher - I am assuming that your 77 cents is modeling higher Oleanolic growth Y/Y than we've seen in (Q1+Q2)Y/Y?

I think I would be satisfied with mid to high 60s - certainly for $3.00 stock.

rich

Cash Balance: This comment had resonance with me

I guess the claim here is that these companies' audited filings are accurate with regards to the interest, but inaccurate with regards to the cash balance. Boy that makes a lot of sense.

IMF Change - seems positive for emerging markets

More power and an, undefined, effort to more towards free exchange rates. No obvious down side and lots of positives - I'll take that.

rich

http://www.bbc.co.uk/news/business-11612701
http://www.ft.com/cms/s/0/816ee036-dea2-11df-9b4a-00144feabdc0.html

Interest rates: An interesting point. I certainly would prefer a company to be holding it's money in a bank it knew well. Certainly, seeking out higher rates if it came with any additional risk would be a no-no.

I was thinking about writing to IR about it but seems a bit overblown. Might be an idea to give a heads up to them.

rich

BSPM - Looking at BSPM's interest rate

Seeking Alpha article on interest rates paid on company's cash balance sheet.

Before I begin I should note that some of these companies, perhaps BSPM, will have their money in Honk Kong. Interest rate are much lower there, however, the article doesn't state where the money is kept so I'll assume it's on the mainland.

BSPM's 2 year interest rate is low at 0.06%. In 2010 they have improved this and are getting 0.13% interest rate. The argument goes that if they had the money on instant access they should be getting 0.30%. Perhaps they should lock their money up for 3 months and get 1.71%?

If they aren't then they are either a fraud or incompetent money managers.

BSPM has been looking at acquisitions - and they are not brimful of cash so I don't see it's wise to tie up it's money, however, how much more interest income would the higher interest rates give you? 0.30% (instant access) and 1.71% (3 month access) would give you an extra 7.6K and 72K a year respectively.

This year they are aiming at 20M net income. So, we're talking about boosting earnings by 0.04% for 7.6K and 0.36% for 72K.

I agree they should be trying to get the 0.30% and depending on circumstances more, however, its only to respond to the bear's insinuations. Stating the obvious - I would prefer they improved operationally by 1% rather than getting a better interest income.

SA Warning Signs China Small-caps (Attacking Interest Rates)

http://seekingalpha.com/article/231699-warning-signs-for-chinese-small-caps?source=email

rich

China Solid Bet For Investors: Goldman Sachs' O'Neill

http://www.cnbc.com/id/39757896

rich

China Patents Article

I don't the answer to your question but at the bottom of the article they mention 3 patent enforcements (2 from western firms suing Chinese).

http://www.economist.com/node/17257940?story_id=17257940&fsrc=rss

rich

TechTicker - Chinese Stocks Are Cheap, James Altucher

HOGS, SINA mentioned

http://finance.yahoo.com/tech-ticker/article/535526/Big-Bubbles%3F-No-Trouble%3A-Chinese-Stocks-Are-Cheap%2C-James-Altucher-Says

rich

CCME - OK, that would be 3M increase in cash in bank? I was thinking of earned revenues rather than cash. I know they have plans to get better interest rates, at least that's what I interpreted Fernandos comments, but it's not a factor for this quarter(I assume?).

June 30th I have dollar/Yuan at 6.7815 and Sept 30th 6.6905 [1]- we're talking 1.4% change over the quarter or $57M revenue instead of $56.3. and $30.2M net income instead of 29.8.

I could include a larger negative effect of removing the new bus contracts starting in September - which, for simplicity, I've got in July and August.

rich

[1] http://www.indexmundi.com/xrates/graph.aspx?c1=CNY&c2=USD&days=180&lastday=20101019

CCME - I don't see that 30M is conservative. I think it's on the money given what management has given us. 483 airport buses gives you $4.5 M a month and 23.8K gives you 14.2M a month. I'm using v80ule's model on this [1] - might not be that high as some of those buses only got added in last month of the quarter but around there.

We know the bus number that isn't going to change - announcements are within a few days of when the contract is going to start or has started. If they can sell more minutes, or charge higher revenues per min they can beat that, however, ad rises in China seem to happen January time. I wouldn't bet on an ad rise.

For Q1 & Q2 they had the airport buses up their sleeve - what do they have this time? Might have an initiative but that's different from plugging in numbers that expect them to beat these numbers - seems to me that's setting up for disappointment.

Am I missing something? Can anyone justify a reason for having more than $56 rev and 30 net? Which are absolutely fantastic numbers given the valuation.

rich

[1] https://docs.google.com/leaf?id=0Bx1PAGtqlPFEMDllNWUzYjktZjZhZS00OTY1LWJhOGMtNThlOTBkNDcyNjgx&hl=en&authkey=CKju-OcD&pli=1

CCME - there won't be competition in bus advertising while the communists want to control media. I don't know who gets the contract every 5 years but it's going to be 1.

They are changing from 1000's of cable companies to 1[1]. I don't see that they are going to allow three advertisers, say, on buses. Certainly, it hasn't stopped them just offering VISN a monopoly on advertising on Beijing subway this year[2].

Laughably they are presenting this as increasing competition.

Bringing 1,000 networks together under a single operator and administration will increase not reduce competitiveness and opportunities as the new company will be better equipped to harness new technology, the report said. [1]

I guess it's about controlling what the people see rather than market efficiencies.

As others have said, I hope that CCME doesn't sit on it's laurels as China may change its definition of increasing competition.

rich

[1] http://www.radioandmusic.com/content/editorial/news/china-plans-merger-radio-and-tv-network

[2] http://app.quotemedia.com/quotetools/newsStoryPopup.go?storyId=32348547&topic=VISN&symbology=null&cp=null&webmasterId=95523

LPH - marvelous looks like 3% tacked onto Q4.

rich

Hey, I was just getting started asking you questions!

I think your right about the 30M I think they mentioned in during a CC and caused PPS to go down. I won't use 30M at this point as we don't know what they are going to do with those shares.

OK, from a quick Google session this link seems to be suggesting that you count all options vested or otherwise.

It also suggests using the treasury method(i.e. use the cash you get on excising to buy back the common stock) - so in the case of $3 strike price warrants with shares beneath $3 using this method they don't count towards FD.

http://www.blog.businessready.ca/how-do-i-calculate-diluted-earnings-per-share/

rich

More questions than answers

How you getting 30M shares fd?

Q2 I had O/S of 26,855,154

I've also got 550K warrants and 1M of options - they seem to be doing a lot of cashless conversions of warrants but I'll ignore that.

So, 28.3 FD? What am I missing then? Management bonuses?

rich


Latest 10-Q http://www.sec.gov/Archives/edgar/data/1418133/000118518510000874/biostar10q063010.htm

CELM - cheers. eom

CELM - bit ignorant here. Basically, someone who bought shares in the original prospectus wants to sell them now? So this has nothing to do with dilution then.

rich

Yuan keeps strengthening - while that happens I don't see a trade war developing.

http://www.indexmundi.com/xrates/graph.aspx?c1=CNY&c2=USD&days=180&lastday=20101019

rich

Thanks value - From latest 10-Q

Advertising

Advertising expense consists primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. For the three months ended March 31, 2010 and 2009, the Company incurred advertising expense of $3,081,443 and $908,481, respectively.

--------------------

Selling and Distribution

.....

The increase in selling and distribution expenses in dollar amount and as a percentage of total net sales for the three months ended March 31, 2010 compared to the same period of 2009 were mainly due to an increase in advertising and promotional expenditures of $2,214,669, an increase in sales commissions and sales personnel expenses of $1,061,472, and an increase in travel expenses of $304,880, all due to our ongoing marketing expansion, as well as an increase in shipping expenses of $140,335 from our increased net sales.
-----------------------------

Not sure which is the right number to use - 3M or the 2.2! Either way it's under 25%.

rich