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Someone just hammered that $1.10 bid and sold 65k+ shares in one go. Definitely a strong seller out there somewhere.
-Fernando
Yeah, definitely good price action today. Maybe they were saved by the 1-on-1 interviews at the conference...Got some investors interested it seems.
-Fernando
Exactly, CSP. Which means it'll keep going higher! =P.
Fact is, nobody wants to miss the next run up now that we are coming across VERY VERY easy year-over-year comparisons for the next number of quarters.
Might get a bit burned but I am not in the sidelines waiting for a pull-back. I doubt we hit 970 S&P again.
-Fernando
LLFH is being uplisted to AMEX *now*. That new SEC filing today is related to the 5M (+1M over) share issue they will make as they start trading in the AMEX. I saw this information today at the Renshaw presentation when the CEO used the wrong PPT, he quickly clicked through the pages but it gave enough time to read. Expect this to be released VERY VERY soon.
Small updates to guidance. 2010E is 108M revenues and around 27-29M net income (around $1 per share)...Numbers are off my memory. The CEO indicated he believed it would not be hard to beat this guidance.
-Fernando
I've kept this company in my 'watch list' to buy for awhile now...Today I saw their presentation at the conference, I must say it was pretty bad.
Company might be a buy, but they sure are not selling it properly. Made me hesitate on buying in.
-Fernando
Given how PUDZ will still need to negotiate and pay for each of the six mines, perhaps it is better if their current production is only at 100k. Would certainly be cheaper to acquire them if that was the case. What is the better scenario, paying less for 100k mines and spending cash to expand them...or paying more for 300k+ output mines and enjoying the instant revenue?
I suppose given the coal-washing business of PUDZ being far from 100% utilization probably means that the higher-output scenario is superior here... We can hope for it, I suppose. I believe that PUDZ's coal-washing capacity shortfall is somewhere around 1M to 1.5M? So 166k to 250k per mine is what we need to fill that gap.
-Fernando
Your certainly right that the *ultimate* production should be at least 300,000 tons. The thing is, isn't the reason these mines are being forced to consolidate because they are small operations? I would not be surprised if all 6 mines currently produced less than 300,000 and would have to be 'expanded' to meet that criteria.
Similarly to the mines LLFH owns, they are all being 'expanded'. That takes time and money, of course. We should not assume that they will all begin at 300,000 tons.
-Fernando
Nobody knows the size of the 6 mines. PUDZ would also have to negotiate separately for each one of the mines, so it won't be getting those for free. Will it get a good price? Who knows. How much dilution will it use to acquire those mines? Who knows.
I like PUDZ, don't get me wrong...But it is not necessarily a home-run.
-Fernando
Check out TMI ($7.8) guys. The play is not with the common though. Take a look at the TMI-WT warrants (2yr till expiration) or TMI-U units trading at $0.13 right now with a strike at $5.5. Big leverage for profit there if you believe the acquisition will be approved, as I do.
http://www.geoinvesting.com/companies/tmi_tm_ent__and_med_inc_d_b_a_china_mediaexpress/research
http://app.quotemedia.com/quotetools/showFiling.go?name=TM%20ENTERTAINMENT%20&%20MEDIA,%20INC.:%208-K,%20Sub-Doc%203&link=http%3A//quotemedia.10kwizard.com/filing.xml%3Frid%3D12%26ipage%3D6387347%26DSEQ%3D3%26SQDESC%3DSECTION_EXHIBIT%26doc%3D3&cp=on&type=HTML
http://finance.yahoo.com/news/TM-Entertainment-and-Media-bw-1685829401.html?x=0&.v=1
RISK: Lose it all if the acquisition does not get approved by shareholders. Shareholder meeting should be in the next month or so.
-Fernando
Yep, looks like China Direct Industries, Inc. is doing it. They dumped 333k shares since August 10th (latest sale on the 27th). They have another 955k shares in this company...Lets see if they plan to sell it all.
Might provide me a good entry point...Sell baby, sell!
-Fernando
One good way to play Brazil is via BRF, IMO. Unlike most Brazil ETF's, that one gives you very good exposure to consumer discretionary companies with 50%+ of their revenues coming from Brazil. I own a few Brazil companies, most notable ones like MRV and PDG in real estate because they are benefiting from the latest government '1 Mil home' program... But overall, home prices are going up there for the following reasons.
1) Brazilians do not really invest in the stock market. The mentality for decades has been a focus on owning homes as a form of wealth. This may someday change, but it is definitely true right now.
2) The country is experiencing an economic boom which is drastically improving the resident's economic power. More than 20 million (10% or so of the pop) have entered the middle class in the last few years. Credit and loans are MUCH more available than even 5 years ago... I saw tons of it available for car/consumer/house/etc loans a few months ago when I was there.
Given those points, I believe that the real estate sector in Brazil will outperform other sectors as a good chunk of this newfound wealth will go into housing. From friends who invest in land/housing, I can tell you that prices have been jumping the last few years...Thankfully it has the economic 'boom' to sustain it, otherwise I would believe it to be a bubble. I think the sector has a LONG way to go and will remain hot for years.
Anyhow, i'm very bullish on real estate in Brazil as you can see and have invested accordingly. BRF is a great way to play everything though, if you do not have the time/knowledge to make a more specific Brazil-portfolio. It also gives you exposure to the Real currency, which I believe will outperform the dollar.
-Fernando - Born in Brazil
Hey CSP,
I like PUDZ, been nibbling a bit of it in this latest pullback. However, in the coal space, I like LLFH and SGZH more. LLFH for its great growth coming down the line and SGZH is just dirt cheap.
Can I get your take on LLFH vs SGZH vs PUDZ?
-Fernando
Management has not been very reliable here, in what they do and forecast/etc. If the consumer starts buying electronics again, I can see them blowing out the earnings forecast given...
I agree with you though, it could be dead money for awhile... But with little risk and the possibility of a large pop in a turn-around, I believe it is worth it. They just closed the buy of that new transportation company, so that will add a bit to earnings (1.9M) as well...
Looking at the past history, this stock has also done most of their sales in Q3 and Q4... So we shall see. I certainly won't be putting the farm on something like this, but a small bet? Sure why not. Could very easily give a 6 bagger in 6 months.
-Fernando
I was going to invest here as well before I saw that action in the 10-Q. I certainly agree with what your analysis says.
The problem is, if management has proven they are willing to rob shareholders, watch them do it again.
President will give company X cash and get preferred shares again. Another R/S happens, all shareholders have less shares, management converts preferred again and owns more of the company. Maybe he will issue some common shares before doing this to raise capital for the company, more assets for him to 'steal' from shareholders after all when he does his conversion-routine.
Rinse repeat.
I hope I am wrong and you make alot of money here. There are so many other great cheap chinese companies out there, why take the risk with management that has done that kind of robbery before?
Good luck to you.
-Fernando
Read the prospectus for the convertible preferred of a company like CIT (CIT-PC is the symbol). Most 'good' preferred shares have anti-dilution legal protection which changes the conversion ratio if there is a split or reverse-split.
When management does a R/S and then converts 20M shares of preferred to 20M common, he is *robbing* the shareholders given that he owned most of the preferred shares.
Lets see the scenarios: 1:4 R/S for simplicity.
1)Conversion then R/S: 26M + 20M new shares = 46M shares, then R/S happens so you have 11.5M shares outstanding.
2)R/S then conversion: 26/4 + 20M new shares = 26.5M shares outstanding.
So by doing it in that order, management simply gave themselves a huge chunk of the company.
Be very careful with this company, after a move like that I would never invest here.
-Fernando
Welp, one more stock to be added to my China collection tomorrow morning. At these prices, I can't resist a turn-around play. Great risk/reward given their finances and current economic trends, IMO.
-Fernando
Here is the 10-Q. Not seeing it on the iHub list or on the company website...
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6763554-1201-165541&type=sect&TabIndex=2&companyid=631578&ppu=%252fdefault.aspx%253fcik%253d1284450
-Fernando
Choo Choo!!! Last stop, ALL ABOARD!
-Fernando
Sure thing.
(626) 581-8878
-Fernando
I called the company and spoke with someone (Strong chinese accent, heh). He said they are updating the website and we can expect the new one to be online before the end of the week.
Looks like they took the old one down.
-Fernando
What the heck did this company do in the past 6 months with the shares? Can someone explain it to me?
1) 26M common and 20M preferred which can become common at 1-1 ratio.
2) 4-1 Reverse split, so now alot less common
3) NOW, after the R/S, they convert the preferred and yet it is still at a 1-1 ratio?
4) Preferred, mainly owned by the CEO, now owns a vast vast majority of the 'new common'.
How is this not a rip-off? Shouldn't the PRF conversion ratio have changed as well? How can he justify doing the R/S right before the PRF conversion? Seems like highway robbery here.
-Fernando
Argh, shuck it. I'll buy all 3. I like the idea of this electronic-diag system here.
Maybe one will be up 20% at the open tomorrow and the market will make my decision for me.
Thanks for the feedback. I'm happy i've found this group of people, i'm obviously much less experienced with these Chinese companies than many here. I initially dipped my toes into LLFH/LPIH/etc due to Redchip but am finding other China stocks too attractive to resist. These companies will go well with my extensive Brazil holdings (I'm from Brazil, so naturally felt more comfortable buying those companies).
Good luck to everyone, may we make some more money.
-Fernando
Your correct in that to have this dilution, it would have to meet the targets in the contract. It would thus have to make more money than it is currently making, which would mean even with the dilution included, when the dilution happens the P/E would be lower than 5 at that point in time.
At the same time, its not right to completely disregard coming dilution to the effect of 30 million shares...Specially when the current share-count is 31 Million. I suppose I can come to a compromise and count the coming-dilution at 50% for my calculations.
So tell me, out of the following three companies, which two would you pick? I believe your in all 3 =).
LTUS
SGTI
CYXN
-Fernando
Using *current* share count, your certainly correct in your numbers. I just don't think it is a good idea to ignore a coming double in the share count. At least if they were warrants, the company would get cash from the deal...
Those preferred will convert at some point in time, its not like they have an expiration...Thus I think it is fair to count them in the share number. At least I will when I consider this company...
Regarding the low PE? There are certainly not many with a PE of 2, but there are many with a PE below 5. Let me give you a list of some of the stocks I own:
LPIH
LLFH (Yeah the PE is fairly high, but I like it more than PUDZ and am bullish on coal).
CCGY
SKBI
CDBT
CGDI - Small position here, wish they had more growth
WEMU (Bought at $3.6 on the oversold dip after a bad earnings report. Will likely sell once it corrects fro oversold territory.)
I am also considering LTUS and SGTI right now. CPQQ is on my watch-list, if it has a small pullback i'll enter it.
-Fernando
Bob, are you using a count of 61M common shares in your calculation? Once certain earning targets are hit, and the convertible preferred becomes common stock, thats the share count we will have.
-Fernando
Wow, I get a chance to buy a China company *before* it does a huge ramp-up in price? I'm shocked...
Will start my nibbling tomorrow. Give me a few days to accumulate before the price jumps, ok? =P.
-Fernando
This company is not at a PE of 2 though. Look at the terms of the preferred shares when they convert to common at a 6 to 1 ratio. 5 million preferred shares outstanding, that means 30 million common. It doubles the current number of shares. P/E becomes close to 5 given current $0.34 share price.
Better fish to fry out there...
-Fernando
I am very much on the fence with regards to CGDI. The company is certainly very cheap and it has a great balance sheet. I also like the whole deferred-revenue aspect...
My reservations are as follows:
1) Real estate relies on leverage to grow quickly. This company, as with many chinese companies, uses very little debt and thus has small leverage.
2) Even if it is at a P/E of 2-3, with a revenue growth rate of 10-20% how can it compete with the others above? This last quarter gave a big boost to earnings, but they will not be able to maintain such percentage cost improvements as the yoy comparisons will get tougher and tougher.
On the other hand, with asset values being much much higher than market cap... You have a leveraged play on china real estate values...But the company doesn't sell assets so it won't benefit directly from that...
Does anyone know when the leases start ending on the current 6 malls? Given their pre-pay system, I figure when renewals happen they will get great cash-inflows... Specially since the market rates should be significantly higher than the ones they got 5-8 years ago...
Can anyone give me any information that addresses my point #1 and #2?
-Fernando
Gotta love the flippers. With a slightly longer time horizon, you can benefit from all their momentum.
-Fernando
Shhhhh, i'm still accumulating!
-Fernando
Ignore my last post. They had a 1-10 R/S, so in actuality the 7.575M preferred shares will only become 757,500 common shares.
-Fernando
Careful with the "Almost 1.00 EPS............
and stock price is 3.20." claims... Take the preferred shares which will become common in 2011, and the actual EPS goes wayyyyyyyyyyyy down.
Keep in mind:
Preferred stock, $.001 par value, 7,575,757 shares authorized,
7,575,757, issued and outstanding
Common stock, $.001 par value, 140,000,000 shares authorized, 5,446,062, issued and outstanding
This company really has 13M shares...
-Fernando
I'm not happy with WEMU personally. Was a horrible miss with no warnings. It shows just how misleading that whole 'guidance' and 'backlog number' is.
On the other hand, at $3.6, we are at a VERY low share price historically. Given the current price, I can be nothing but a buyer. I have been buying at this price level and will double down if we get below $3.2. I think it is highly unlikely we go that low, we are oversold right now with an RSI below 26.
-Fernando
Hello all. I have also requested that the symbol be added.
-Fernando