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Sunday, May 02, 2010 12:06:34 PM
Hello gpg,
-- What are you thoughts as to where LPIH should settle after uplist? $4 to $4.50 range???
Ha, ha, well, excepting predictions of price within a time frame is a fraught and typically embarrassing process. I'll give you a quick answer....
Investment Overview
When I am thinking about an investment I think about the Macro and company level.
Macro Level
China has been tightening and this has made the markets pessimistic on China since they were announced (mid Jan). Oil usage is expected to increase and China is going through extreme lengths to secure as much oil as possible.
I worry about the usage of oil in China - perhaps they will move quickly to high electric car usage by 2020? Dunno, but I am expecting that they will just use the oil elsewhere. The per person usage stat of US per person usage,69, 10 times Chinas usage, 5.7, is one to set the scene[2].
Company Level
Oil demand could easily be a separate posting by itself. What we can say is that China's usage per person is a fraction of a developed nation and that we should expect that differential to diminish. I was also happy to see the new plant had different types of clients - coal powered stations, ironically, was a big one.
Macro + Company = ?
Can't do much about the China tightening and we can see that oil demand held up well during the downturn anyway. Oil distribution is not sexy but the demand will increase in the near term.
Fear of the New
Markets seem to ignore new plants until they see the whites of their eyes, or at least, some results - I think one of the reasons is new plants can have delays. However, the discounts seem to happen again and again and, for the patient investor, will offer good returns.
CCGY which was 30 ish cents a few months before the new plant is open, it's at 70 - 80 cents now, which is basically around P/E 10 for the old plant's earnings. The new plant should add, I think, 150% of the capacity.
CNAM - the value of the new plant was put at 0 until the first contract came in - it shot up from $5 to $10 and back again to $5 - I believe that once again the market requires earnings to be spelt out to it.
SKBI - the vaccine facility will double income, and boost cash flow, once full operating but it's opening in June and we are at low P/E.
PUDA was $5 until everything last item was in place for the new mines - where upon it moved to $10 in short order.
The lesson is that markets move late on these matters, however, once sustained increased earnings are in place you should expect an appreciation of PPS.
Uplist -
The affects of uplists can be dramatic and varied. I honestly don't know how this is going to be taken. Hey, I hope we're at $2.50 on first day on the AMEX - short that
. However, I don't see why a stock growing earnings shouldn't trade at least P/E 8 and for 2011, beginning July 1st, that 71 cents or $5.70. Now, I am of the opinion that P/E of 8 for 2011 is a joke but there's no point wittering on when the pps is $2 and change.
Conclusions
I dodged your question! I hope I gave an overview to my thinking on this stock.
In the short term I give no opinion - look at what happened to BSPM to see the vagaries of fate in the short term. However, China bringing real estates under control, the new plant, and the uplisting should provide an increase in PPS.
I will be holding until I can find a stock with more upside potential - I've got to say this one's pretty good still. P/E < 4 on FY 2011, beginning July 1st, it won't stay down here forever. My hope is that midway through FY 2011 we should be on the Amex and on a runrate of 70 cents for the FY and have corresponding P/E of 10 or more or $7. That said, we should all realise that there are many caveats but as investors we can run a bus through the difference the market is offering us and what we think it is worth - my only prediction is that this stock will beat the market over the long term.
rich
[1] http://finance.yahoo.com/news/Longwei-Petroleum-Announces-prnews-2935329698.html?x=0&.v=1
[2] http://www.nationmaster.com/graph/ene_oil_con_percap-energy-oil-consumption-per-capita
-- What are you thoughts as to where LPIH should settle after uplist? $4 to $4.50 range???
Ha, ha, well, excepting predictions of price within a time frame is a fraught and typically embarrassing process. I'll give you a quick answer....
Investment Overview
When I am thinking about an investment I think about the Macro and company level.
Macro Level
China has been tightening and this has made the markets pessimistic on China since they were announced (mid Jan). Oil usage is expected to increase and China is going through extreme lengths to secure as much oil as possible.
I worry about the usage of oil in China - perhaps they will move quickly to high electric car usage by 2020? Dunno, but I am expecting that they will just use the oil elsewhere. The per person usage stat of US per person usage,69, 10 times Chinas usage, 5.7, is one to set the scene[2].
Company Level
Oil demand could easily be a separate posting by itself. What we can say is that China's usage per person is a fraction of a developed nation and that we should expect that differential to diminish. I was also happy to see the new plant had different types of clients - coal powered stations, ironically, was a big one.
Macro + Company = ?
Can't do much about the China tightening and we can see that oil demand held up well during the downturn anyway. Oil distribution is not sexy but the demand will increase in the near term.
Fear of the New
Markets seem to ignore new plants until they see the whites of their eyes, or at least, some results - I think one of the reasons is new plants can have delays. However, the discounts seem to happen again and again and, for the patient investor, will offer good returns.
CCGY which was 30 ish cents a few months before the new plant is open, it's at 70 - 80 cents now, which is basically around P/E 10 for the old plant's earnings. The new plant should add, I think, 150% of the capacity.
CNAM - the value of the new plant was put at 0 until the first contract came in - it shot up from $5 to $10 and back again to $5 - I believe that once again the market requires earnings to be spelt out to it.
SKBI - the vaccine facility will double income, and boost cash flow, once full operating but it's opening in June and we are at low P/E.
PUDA was $5 until everything last item was in place for the new mines - where upon it moved to $10 in short order.
The lesson is that markets move late on these matters, however, once sustained increased earnings are in place you should expect an appreciation of PPS.
Uplist -
The affects of uplists can be dramatic and varied. I honestly don't know how this is going to be taken. Hey, I hope we're at $2.50 on first day on the AMEX - short that
. However, I don't see why a stock growing earnings shouldn't trade at least P/E 8 and for 2011, beginning July 1st, that 71 cents or $5.70. Now, I am of the opinion that P/E of 8 for 2011 is a joke but there's no point wittering on when the pps is $2 and change. Conclusions
I dodged your question! I hope I gave an overview to my thinking on this stock.
In the short term I give no opinion - look at what happened to BSPM to see the vagaries of fate in the short term. However, China bringing real estates under control, the new plant, and the uplisting should provide an increase in PPS.
I will be holding until I can find a stock with more upside potential - I've got to say this one's pretty good still. P/E < 4 on FY 2011, beginning July 1st, it won't stay down here forever. My hope is that midway through FY 2011 we should be on the Amex and on a runrate of 70 cents for the FY and have corresponding P/E of 10 or more or $7. That said, we should all realise that there are many caveats but as investors we can run a bus through the difference the market is offering us and what we think it is worth - my only prediction is that this stock will beat the market over the long term.
rich
[1] http://finance.yahoo.com/news/Longwei-Petroleum-Announces-prnews-2935329698.html?x=0&.v=1
[2] http://www.nationmaster.com/graph/ene_oil_con_percap-energy-oil-consumption-per-capita
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