TONGXIN INTL (TXIC)

[abh3vt]

Ed, I agree that TXIC is undervalued in the low 8s. I can't help wondering how much of this selling pressure is coming from warrant holders who exercised recently or other shareholders who see the possibility of more shares being converted and are concerned about the potential dilution. All in, the fds count here is 16.3MM, which is approx 25% higher than Q3 09 total.

The company should be getting the tax reduction soon, which will cause the tax rate to drop from 25 to 15%. Also, they seem to be comfortable with a 15-20% LT growth rate, and given the tremendous expanion of infrastructure in China, strong demand seems to be fairly likely in 2010 for truck and SUV cabs.

I think once the company can get its guidance together for FY10, this should take off again. I think sales growth will be at least 20% higher next year, and possibly 30-40% at the high end.