Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
ZX: Company is doing great, but performance is being masked by cyclical weakness in heavy truck industry.
PMs and Questions
The enthusiastic response to my posting of the first CNTF article makes me cautious about what I'm going to post publicly.
If you have a question that I didn't answer on the board then you can send me a PM with an email address. I will probably reply if I recognize your name OR if you are lonely Russian housewife with candid pictures.
CNTF Investor Presentation: Link
DHRM Presentation
They filed a newer one last December as a 6-K: Link
Re: CNTF
I don't think earnings will really move the stock because current revenues are small compared to the company's asset value. I think the key issue is that both investors and the company lost faith in each other.
ZX: that SA guy is clueless.
KEYP: I saw that too. I was excited in thinking it was only 1 day late - would be huge progress for KEYP, but instead it's the 3/31 10Q. They made money ($3.4mm or $0.05/share).
Cash used in Operating Activities of $67mm. The company now has $683mm of liabilities and $65mm of equity. CEO must be well connected to have access to so much bank credit.
Re: Are you based in the US?
NYC. It's provided an opportunity to meet with some of these Chinese companies when they're at conferences or doing non-deal roadshows. I gather there was a lot more 3-5 years ago but I wasn't involved in this space at that time.
EVK is smaller, both smaller float and smaller store count.
EVK is more midpriced womens clothing.
EVK is growing this year.
EVK has the international wholesale business.
I visited one EVK store.
EVK tmall
All of these companies look better to me than MCOX.
No catalysts.
Re: DHRM
Long-term demand for this company's respiratory products should be boosted by all of the air pollution problems. Check out this slideshow.
Foreign private equity was behind the company before it went public so I hope the governance is relatively clean.
They promise to report 1H results this month.
WH: Looks like that guy wrote his piece before this morning's news. Also doesn't look like he did any real work on the company and the background of the transaction.
WH: Not a sure thing, but this morning's price implies an unreasonably low likelihood of closing.
WH: Woohoo from Wuxi
WUXI, China, Aug. 15, 2013 /PRNewswire/ -- WSP Holdings Limited(WH) ("WSP Holdings(WH)" or the "Company"), a Chinese manufacturer of API (American Petroleum Institute) and non-API seamless casing, tubing and drill pipes used in oil and natural gas exploration, drilling and extraction ("Oil Country Tubular Goods" or "OCTG"), and other pipes and connectors, announced today that the parties to the going private transaction of the Company have amended the Agreement and Plan of Merger (the "Merger Agreement") to extend the termination date to December 31, 2013. As previously disclosed, the Merger Agreement was entered into as of February 21, 2013.
The Company anticipates filing its annual report on Form 20-F in September 2013, and expects to complete the going private transaction as soon as practicable thereafter, subject to approvals and satisfaction or waiver of conditions in the Merger Agreement.
For additional information regarding the going private transaction, please refer to our latest Schedule 13E-3/A and preliminary proxy statement filed with the Securities and Exchange Commission on June 27, 2013.
CNTF: Funny thing is that if you try to figure out what it's really worth then you end up with almost $6 in tangible value per share plus the IP (patents, games, and TV).
NCTY has some new games in beta testing. Maybe they suck.
DEER: What really happened? Wasn't that a situation where Alfred Little went to the factory and discovered it had shut three months earlier? $2mm seems like a small penalty if that was true.
I got a settlement notice from China Transinfo. The company agreed to enhance the disclosures in the proxy statement for its going-private deal (which closed ages ago). No extra cash for the shareholders, but the class action lawyers get paid $875,000.
DEER: Looks like they paid $2.1mm Link
ZA: Two high quality shareholders have stuck with the company. No selling from pre-IPO Chinese s/h. That leaves a really small public float. Short interest is basically zero. Business model is low risk - 2H sales revenue is in the bag because they only produce clothes after receiving orders from distributors. Guidance is great relative to industry comps (many reported a decline in orders). Margins are within the normal range for the industry. So 2H earnings will be excellent and cash will grow further, but I don't know of any particular catalyst that will make investors care.
VLOV: That's Yoko Ono's line for Opening Ceremony
ZA: I visited three of their stores last month.
Could earn 13-14c in 3Q.
Added a lot of cash despite weak sales in 1H.
No Debt: This is not a specific issue with Lihua, but I see it as a yellow flag when an industrial company has zero debt. Unsecured lending is rare in China so debt confirms that a company has real assets and real corporate relationships. Longwei had no debt.
CNTF Due Diligence: Lots to like here
ZX: Real float is less than 4mm shares
Re: WH. Write-up did not contain any surprises, but the short author's own calculation suggested that $2 would be fair value:
Based on the current prices, the market determines that the possibility that the deal goes through is 87%. I think this probability is significantly overstated. The true probability that the deal goes through should be much less than 50%. Suppose there is a 30% possibility that the deal closes at $3.15 and a 70% possibility that the shares drop to $1.5 after the deal terminates, the expected value of the shares is $2 per share,
Seems like a interesting long spec here. Am I missing something?
You're in Nairobi? By coincidence I think ZX's CFO is on vacation in Kenya right now.
Re: VIPS. No crack, but they do sell Handlove
Unfortunately that expansion plan will cost over $2Bn which the company does not have.
Weird little company. Or maybe it's a big company that's represented by a weird little stock. Only about 8% of the shares are floating. I don't know why it's still public.
End of the 1 child per family rule should be good news for kindergarten operators.
MCOX: Very dangerous valuation for a troubled business. There are some profitable and larger retailers trading below net cash.
New Chinese article on CNTF: Link
Google translate says: "asset value of its shares has reached more than 400 million", BUT it's not really clear to me what the author is talking about (perhaps it's not clear to him either). I'm not even sure that "400 million" is an accurate translation of the Chinese number. So it's probably better to ignore that and just use the article for the background description of the business.
Article may explain some interest in CNTF:
------------------------------------------------------------------
Mobile Game Developers Enjoy Win Streak, but Analysts Are Skeptical
Profits are up, investors are keen and acquisitions are plentiful, but experts say the good times have to end some time
(Beijing) – The country's mobile game industry is sizzling hot with cash from investors apparently undaunted by analysts' warnings that the business is volatile and may be overvalued.
Rarely can a startup company in any other industry make a profit in its first year, an investment banker said. In the mobile game sector, however, this is common.
He said one company he recently visited was set up in 2011. It turned in a profit that year, and in the next its earnings hit 40 million yuan.
Another investment banker, with CITIC Securities, said that this year there would be more than 10 mobile game developers with a monthly turnover of at least 10 million yuan. By a conservative estimate, they can make at least 60 million yuan a year, he said.
Investors on the secondary market have sensed the great growth potential of these companies, leading to a surge in the share prices of a number of public mobile game developers.
In the first seven months of the year, every one of the top six mobile game developers listed in Shanghai or Shenzhen has seen their share prices at least double.
The share price of the leader, Beijing Ourpalm Co. Ltd., which debuted on Shenzhen's ChiNext board in May last year, has risen by almost 300 percent this year.
Deep-pocketed institutional investors are in the game as well. Huayi Brothers Media Group Co., the only listed filmmaker in China, said on July 24 it would buy 50.88 percent of Guangzhou Yinhan Technology Co. Ltd. for 672 million yuan.
Based on the estimate of Huayi's financial consultant for the acquisition, China Securities Co. Ltd., Yinhan's net profits were 637,000 yuan in 2011 and 6.4 million yuan last year.
This meant the price-to-earnings ratio of Yinhan, using the 2012 profit for calculation, is higher than 206, a senior analyst said. By contrast, the ratio implied by a transaction four months ago, in which Tencent acquired 15 percent of Yinhan for 19 million yuan, was only 19.9. The surge in valuation surpasses most people's expectations.
Measured by Yinhan's profitability this year, however, the ratio may return to normal. In the first six months, the company has made 53 million yuan in net profit. It expects to more than double the amount by the end of year.
If it hits the target, the price-to-earnings ratio implied by Huayi's deal will fall to about 12, Chen Caimao, Guoxin Securities' analyst, said.
Acquisitions Abound
There are certainly pitfalls, however. More than 80 percent of Yinhan's revenue in the first half of the year came from one game.
"But the life cycle of mobile games is short, mostly in the range of six to 12 months," an investor familiar with mobile technologies said. "So, Yinhan's performance in the latter half of this year, let alone next year, will face a lot of uncertainties."
Liu Zhi, an analyst at HwaBao Securities, said game developers and movie producers have one weakness in common: their boom or bust relies too heavily on the performance of a single product. One blockbuster does not guarantee future success.
Huayi has written what it sees as a failsafe mechanism into its contract with Yinhan: in case the software developer fails to deliver on profit promises, it must compensate Huayi with extra equity shares and cash. Nevertheless, a source close to Huayi said it was not expecting to use the mechanism in the future because it believes that Yinhan's profitability will be satisfactory.
The filmmaker is also the second-largest shareholder of Ourpalm. It sold 5.1 million shares of its holdings in Ourpalm for 285 million yuan in May, but still owns 12.6 percent of the company. Ourpalm spent 810 million yuan in March to take over online game developer Dovo Technology Inc. and is reportedly mulling acquiring Beijing-based mobile game developer PlayCrab for up to 2 billion yuan.
The trading of Ourpalm's stock has been suspended since July 17 after the company said it is working on a "major event." Trading has not resumed by the time this article was published. The company declined to confirm it was trying to buy PlayCrab.
Since April, at least six companies have announced moves to either acquire a mobile game company or set up one of their own.
A Place to Put Money
Meanwhile, the size of the mobile game market is expanding fast. Sales last year totaled 5.4 billion yuan, says Analysys International, which provides information on the industry. This year, it exceeded 5 billion yuan by the end of June.
The rapid growth rate helped mobile game developers' share prices soar, but many analysts said the exuberance may not last.
Liu Jin, a founding partner of Lotus Capital, a venture investment company, said investors have expressed a great amount of interest in mobile game developers because the industry is one of the few bright spots in a chronically weak A-share market. Also, many developed unrealistic expectations for the industry's growth. He described the expectations as irrational and said growth will not continue forever.
Wang Yuying, an angel investor focused on the Internet industry, said the valuations of domestic mobile game developers have far exceeded those of similar Chinese companies listed in the United States. Over time, he said, they are bound to fall a bit.
Even if there are some companies that are genuinely worth the high price, it is hard to tell them apart from others under current circumstances, a fund manager familiar with the industry said. That is because almost every listed mobile game developer has been highly sought after by investors who have nowhere else to put their money.
In other words, he said, a share price alone does not offer any clue to the real competitiveness of a company.
And expanding through acquisitions can be perilous, a securities broker said. Ourpalm, for example, had so far been successful playing the game, but there is no guarantee that it will always succeed.
The company has been trying to expand businesses vertically along the industry chain by deepening cooperation with other game developers and enhancing its distributing channels. But it is still heavily reliant on China Mobile, the country's largest telecom operator.
The dependence makes it all the more important that the company chooses its next target wisely because once the performance of the acquired firm fails to meet expectations, the impact on the acquirer will be huge, the broker said.
IB has no stock available to short
CNTF now operates as ??? in China (edit: IHub doesn't post Chinese characters, but you can see the company name on the website logo).
CEO Defu Dong is ??? (edit: IHub doesn't Chinese characters, but this is the CEO)
The smart TV product is something that CNTF has developed in conjunction with most of the major domestic TV manufacturers. New TVs are being sold with a built in Kinect-type sensor using technology licensed from Primesense. Example
IDG is a private equity manager that currently owns 9.9% of CNTF. CNTF may consider this to be a hostile offer. It will be interesting to see what develops. It's possible that IDG's initial offer was rebuffed so the story was leaked in order to stir things up and put the company in play.
Chinese media says IDG has offered $200mm for CNTF: Link. Would be about $3.50/ADS.
CHC 13D: Link
Newquest is taking out Vicis to raise its stake to 57%. Newquest earlier took out Swiss Re: Link. Newquest is a private equity fund seeking to realize fair value for this investment over a 3-7 year horizon.
Seems like a good signal when the company Chairman keeps raising his commitment at the market price.
Short term results are dependent on rainfall, but the last cc described interesting opportunities for revenues to grow in the medium term through grid enhancements and in the long-term through deregulation of tariffs.
I've been watching a lot of companies and just got back from two weeks in China. I've focused on small caps that are undervalued, but I try to limit my exposure to any company where something seems weird. I'd rather own a clean company at a 3 P/E than a messy one at a 1 P/?, but the cleanliness is all relative. My largest China holding is XIN - highly visible, heavily regulated business, and seems to have good governance.