China Natural Resources' 70% Leap Just Another Bubble
posted on: October 03, 2007 | about stocks: CHNR
We present China Natural Resources (CHNR) - with a name like that how could one go wrong? Up 70% yesterday.
A quick look shows us 2 of the hottest parts intersecting into 1 stock - mining and China. This must be the next Rio Tinto (RIO)or BHP Billiton (BHP) - let's look at its massive revenue growth.
Per an update in mid September the company reported 32,526 RMB in revenue in the year ago quarter. Well if you are mining for 1.3 billion people revenue must have shot up this year - what are we talking? 60K RMB? 70K RMB? Perhaps 100K RMB? I mean after all this company is in the home of 1.3 billion people.
Well 1 year later, the quarterly revenue shot up to 33,070. Yes folks, that an impressive year over year gain of 1.7%. Massive. Unbelievable. 1.3 Billion people served. I don't believe I've seen growth rates like that since the lemonade stand down the street owned by 1.3 person, a 4 year old girl and her dog. 1.7% wow. That deserves a 70% premium.
Profits of course went ...down... year over year. So how has the market rewarded this stock? Well the market has rewarded this awesome grower, a value between $6 and $12 for the better part of 2 years. Then word got out today that the company has special words in its corporate logo - words like China, and Natural Resources. Word of this leaked Monday when the stock jumped from mid $13s to $16.
This highlighted the stock on thousands of momentum traders desks overnight - and boom $16 to $28 yesterday. Why stop there? If it's worth $28 today it should be worth $50 tomorrow. The new market economics. I mean they do serve 1.3 billion people with natural resources. Did I mention the 1.7% yearly growth? Awesome. Worth 70% to me to get that type of growth.
I am getting dreaded flashbacks of '.com'. Replace China with .com. Then rinse, wash every 7 years, repeat. New bubble. Did I mention China Architecture (RCN)? Brand new IPO - was priced at $6 - yesterday we decided that was a steal, its really worth $11. +50% today. Magic words - China and Architecture. This company provides Architecture to 1.3 billion people. Cool.
Did I mention China Tech Development Group (CTDC) +33% yesterday. This company provides Tech Development to 1.3 billion people. Oops I forgot China Shenghuo Pharmaceutical (KUN) - only $6 and it provides drugs to 1.3 billion people. This one will be $50 by next week. Just imagine the market opportunity... china, drugs, 1.3 billion people. $6? Are you kidding me. Shameful.
American investors clearly are missing these opportunities. Insert (buzzword theme - architecture, pharmaceutical, natural resources) + China + 1.3 Billion people = the next Microsoft, Cisco, General Electric, Exxon, Pfizer. Preferably by next week. Thank you and may I have another? See you tomorrow.
Disclosure: Long CHNR (yeh right!)
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