China Growth Stocks

[rru2s]

LTUS: Nice entry point PPS now: $1.07 bids. Apparently the market reacted wrong to news, IMHO.

As per my previous post today:

LTUS is positioned very well with their construction nearing completion, a good mix of prescription drugs selling to 70% hospitals, and good top management.

IMHO today's news reflects a smart management decision. Trying not to over-extend with starting a new expansion project in Inner Mongolia while still finishing a few months yet on the new facility is a wise decision for cash-flow.

It won't take very long until the Beijing facility starts making a difference to the bottom line, so there will be plenty of opportunity in the future to use earnings from that for other expansions. The land sale should be healthy to expedite finishing the Beijing facility quickly.

The knee-jerk reaction of the market to today's news might be neutral since investors love to hear about more expansions rather than core-refocusing. However, the longer term impact on PPS should be very positive since it gives investors more confidence that there will not be poor cash flow management that might go along with future dilutive financing if LTUS had instead tried to run 2 major expansions simultaneously.