Replies to post #17610 on China Growth Stocks

[handbelleditor]

For Glen's consideration:

XODG - http://investorshub.advfn.com/boards/board.aspx?board_id=16409

GRVY - http://investorshub.advfn.com/boards/board.aspx?board_id=15836

JADA - http://investorshub.advfn.com/boards/board.aspx?board_id=11964

[TrekRider]

Bradford --- Glen, CHBT, x10 capacity (150 ton) expansion complete, paid for and testing to begin commercial production in late Dec (hey that's now isn't it). Will begin another x10 capacity expansion (150 ton) expansion in Jan 2010 (hey that's about now too isn't it). Guiding revenue increase at least 50% in 2010 (sandbagging).

Mike

[systrader]

Bradford - check out TSTC

Unique product in WFDS, amazing growth in China and expanding to US and South America, expecting blowout numbers for this quarter.

It is NASDAQ listed with a small float and current market cap is only $ 180M at $ 17.31 a share. It can easily be a $ 50 stock with the current growth rate.

[CSykes]

I still think you should do an article on SIAF. I know it is hard to get past the pinky of it.. but it is for real.

Check your email..

[Rames]

Glen, WEMU trades at a forward P/E of 3.25

According to this presentation (Dec 8) the company is guiding for 2010 revenues of $100m and net income of $5.75 million.

http://www.redchip.com/visibility/conferencePages/Shanghai2009/PowerPointPresentations/WEMU/English/WEMU_English_12082009.ppt

According to this Q&A posted on GeoInvesting (Dec 15) Jimmy Wang confirmed to be conservative with his guidance. Background is that WEMU missed Q2 numbers badly as guidance was very aggressive and they pledged to avoid such mistakes in the future.

http://geoinvesting.com/companies/wemu_worldwide_energy_and_mfrg/profile/geosnapshot

My point is that if we believe the company's 2010 guidance the stock is grossly undervalued relative to its peers in the solar industry. 2009 YoY earnings growth should be in the 70-80% range so the company is definitely growing at a fast pace. All of WEMU's peers are priced with multiples of at least 12 as this screen I made shows nicely:

http://spreadsheets.google.com/ccc?key=0AnhEjV6NNo9hdGZLSlJLbzE4R3ZScERiVzVNanJJa0E&hl=en

Possible catalysts for the stock price to appreciate are any mentioning of this 2010 guidance in a press release, posting numbers for a likely to be strong Q4, news about the expected uplisting to a proper exchange.

[steeledge]

Glen, here are a few that don't get much attention:

CO/CNDWF.OB - China Cord blood; not cheap in a PE and mkt cap sense, but sometimes you have to pay up for protected niches with high barriers to entry. The growth story here is an easy one to get one's arms around: One-child policy. CO is a recent uplist from otcbb to NYSE. Here's a nice writeup (but I know you can do better): http://investorshub.advfn.com/boards/read_msg.aspx?message_id=44628449

CALI - Transitioning from low-margin seller of autos in China to high-margin "Autotrader"-like internet service/advertising player. Web-driven growth is growing like wildfire. I get giddy when I think of the inherent value of an early-mover Autotrader-of-China stock.

CHOP - Chinese specialty steel player isn't just another CPSL or GSI, due to end-uses of their steel. Looks cheap going-forward.

CIHD.OB - Rapidly growing Chinese fertilizer and specialty chemical firm. Impending uplist...until their share price dropped below $3...oops! Despite that, one has to like the fertilizer macro story in China, but the wildcard is the new deal with Sanofi-Aventis for one of their spec chemicals.

CBTE - Crossing t's and dotting i's on finalization of merger with highly profitable Chinese peptide firm; priced as if the merger is going to fail, but CBTE mgmt says otherwise (of course). This feels like a $3+ stock if/when the merger is consumated, trading at .40 today.

CFQCF.OB/CFQWF.OB - This Chinese SPAC has finalized share purchase agreement with highly profitable Chinese machinery company. Deal will need to be agreed by shareholders, but the diamond in the rough here are the warrants, which should have almost $3 intrinsic value to them but are trading at around 1/3 that.

Last but not least, a pinkie...BBCZ.PK
Yet another Chinese fertilizer company which has been hamstrung by legal difficulties preventing investment in their own growth. Well, their legal issues are finally behind them, and with a new cash hoarde (>$3M) plus a substantial investment in China Pediatrics (~ another $3M), the stock is trading below cash/investments and should be set to emerge from the brink. At .21 there's some good risk/reward there, although I've been unsuccessful in getting responses from mgmt.

[Traderfan]

Glen, I think you should write about CNAM right now. They are expected to grow huge in 2010 because their scrap metal facility is now ready and being tested and sometimes very early in Q1 they start with production. It has the capacity of 1 million metric tons of scrap metal and the price per metric ton was around 390 bucks last time I checked.

That means with 100% capacity we are talking about potential of 400 million in revenues and if you only take 5% net margin we are talking about potential 2 bucks in EPS once all is up and running!

The stock is trading at 3 bucks right now. Go figure. But that's not enough. Their traditional business does 50 cents EPS in 2009 as well on it's own.

Throw in some very good chance for uplisting within the next few months and here you go. Probably the best deal out there right now if everything goes as planned even if they do a small secondary which isn't sure yet.

IMO

[justin s]

Glen: I like Themes

Although I do not currently hold any, I think Pharma might be a good theme for an article - touching on the Chinese approved drug list, western v. eastern medicine, fragmentation, aging population, opportunity... bspm, ltus, chme, etc. Even skbi and mentions of past misplays like aob.

Besides a little trading, I have stayed away because frankly the whole industry is hard to get my arms around, understand the roll of gvt, trust what I am hearning, etc. etc.

Anyway, just a non-self serving theme for an interesting article.

BTW: Another interesting theme might be tremendous nuclear growth, cpqq, chgi. And of course there is always the Ag theme, yong, feed, cga even ckgt, etc. Or energy, NEP, LPIH, CBEH, etc.

I think themes make for a more digestable and informative article as opposed to China is booming, here are some undervalued equities poised for growth. It puts color, perspective, and a human quality behind impersonal tickers and fundementals.

[pnnymn]

Write on whatever u like but dont referance this board. The influx would ruin it.

[nuketheshorts]

Glen, here are two lesser known ideas:

XING - Major assets here. Big time telephone co selling off low end (unprofitable) portion of business and transitioning into natural resources (mining.)

ONBI - American Management Team quickly amassing multiple Chinese companies that utilize green processes to produce raw chemicals, herbal extracts, natural health suppliments and organic products.

It might also be interesting to get your perspective on the mia company - CHFI

[Roeroy]

Glen,

What is your read on the latest Puda updates?

Thanks!

[Drexion2004]

Hey Glen, if you wish to write about CCME, here are some links to make the thing easier:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=44223981

website: http://www.gstv.cc
Q3 PR: http://finance.yahoo.com/news/China-MediaExpress-Holdings-bw-500656408.html?x=0&.v=1
(old) presentation: http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6666227-29968-59760&type=sect&dcn=0000950123-09-015690

Competitors include FMCN and VISN, all at P/E's of 20+ (With analyst targets at P/E's of 25 or so, they just upgraded for 2010)...Competitors having much slower growth of course. This is a very very hot industry for 2010, ad dollars are surging into China with their whole focus on consumption increase.

CCME (via Warrants) P/E right now for 2009 is around 6.2 (Not including warrant dilution since they cannot be used in 2009). For 2010, including all warrants exercised (35M+ more cash in balance sheet too), my estimates have them at $2-2.4 EPS (Assumes they make between 70m and their 84m earn-out) so that puts them at a forward P/E of 4.4 to 5.25.

Truly a cash-generating cow type company though, so should have plenty of cash on its books. Oh and they just added DTT as their auditors.

Warrant leverage is very nice while it lasts, should be gone in a few months though (sadly they will force us to exercise into the common by February/March).

-Fernando

[derek2000]

Compiled list of stocks suggested to Glen

I am compiling the list of the stocks suggested to Glen for this article. My intent is to create a watch list for myself for further research/DD.


XODG

PPS 1.45, down trend for last few days
Extremely bullish by some ECSC members
http://investorshub.advfn.com/boards/board.aspx?board_id=16409
XODG is a LED story. Energy saving in the energy thirsty country is a go. It is also a carbon play.

GRVY

http://investorshub.advfn.com/boards/board.aspx?board_id=15836
Not exact a China play (the company is based in S. Korea)
Gravity is a developer and publisher of online games. Gravity's principal product, Ragnarok Online(tm), is a popular online game in many markets, including Japan, Taiwan and Thailand, and is currently commercially offered in 38 markets.
Good: low PE of ~ 5
Bad declining revenue

JADA

Jade Art Grp. (BB) (USBB:JADA)
Current pps $0.425
http://investorshub.advfn.com/boards/board.aspx?board_id=11964

CHBT

Latest PPS $14.25, PE 15.91
Pro: x10 capacity (150 ton) expansion complete, paid for and testing to begin commercial production in late Dec (hey that's now isn't it). Will begin another x10 capacity expansion (150 ton) expansion in Jan 2010 (hey that's about now too isn't it). Guiding revenue increase at least 50% in 2010 (sandbagging).
Cons: relatively high PE

TSTC

Telestone Technologies Corporation
Pprovides wireless communications coverage solutions
One of the members' favorite in ECSC
Unique product in WFDS, amazing growth in China and expanding to US and South America, expecting blowout numbers for this quarter.
NASDAQ listed with a small float and current market cap is only $ 180M at $ 17.31 a share. It can easily be a $ 50 stock with the current growth rate.

SIAF.PK

Sino Agro
Provides agri feeds for farmers
Interesting business model: for example, Sanjiang is a joint venture between SIAF and local government in western China. It sells feeds to farmers who raise cows, and then purchase the beef castle from farmers for sales in more affluent coastal cities.
Another amazing story is the the stock went to less than one cent ($0.009) this year, and bounced back to about $1, for a 10,000% gain.

WEMU

Current PPS is $5.25. Current PE 16.06, and forward P/E of 3.25
U.S. based China manufacturer, serving the solar energy, aerospace, telecommunications, automotive, and electronics industries
Probably one of the cheapest solar play. Solar division has a revenue of $31m.
Revenue Growth for the nine months ended September 30, 2009 increased 25% and net income before tax increased 85% compared to the same period in 2008.
The company is guiding for 2010 revenues of $100m and net income of $5.75 million

CNAM

PPS ~ $3.
Expected to grow huge in 2010 because their scrap metal facility is now ready and being tested and sometimes very early in Q1 they start with production. It has the capacity of 1 million metric tons of scrap metal and the price per metric ton was around 390 bucks last time I checked.
With 100% capacity we are talking about potential of 400 million in revenues and if you only take 5% net margin we are talking about potential 2 bucks in EPS once all is up and running!
Their traditional business does 50 cents EPS in 2009 as well on it's own.
Some very good chance for uplisting within the next few months.

Pharma Stocks: Good theme for an article touching on the Chinese approved drug list, western v. eastern medicine, fragmentation, aging population, opportunity...

BSPM, LTUS, CHME, SKBI, etc.
Past misplays like AOB.

Agro Stocks

YONG, FEED, CGA, CKGT

Growth stocks:

Another interesting theme might be tremendous nuclear growth, CPQQ, CHGI

Energy Stocks:

NEP, LPIH, CBEH, etc.
CO (formerly CNDWF.OB)

China Cord Blood;
Largest cord blood banking operator in China. The company provides cord blood collection, laboratory testing, hematopoietic stem cell processing, and stem cell storage services.
Moved from OTCBB to NYSE
Business model: Expectant parents pay the co to process and store the cord blood of their children at birth for potential future use in medical treatment.
Q2 (Sep) revenue rose 30.4% yr/yr to $9.4 mln, with huge operating margin of 37%.
Subscribers currently total 105,812 with 21,752 new subs signed up in 1H09, up 47% yr/yr.
Pros: China's one child policy, Chinese govt's "one license per region" policy for cord blood operators. Penetration is low with great growth potential: As people become more fluent, more would pay for cord blood banking services for its presumed health benefit.
Cons: a confusing concept in US. Many people may be turned off by the stock just by its name. A pretty high share count (66.1 mln) makes the P/E valuation somewhat high (no ests) and it results in a $380 mln market cap, which is on the high side for a co with $18 mln in revs for the 6 mos ended Sep 30.

CALI

Transitioning from low-margin seller of autos in China to high-margin "Autotrader"-like internet service/advertising player.
Web-driven growth is growing like wildfire. I get giddy when I think of the inherent value of an early-mover Autotrader-of-China stock.

CHOP

Chinese specialty steel player isn't just another CPSL or GSI, due to end-uses of their steel. Looks cheap going-forward.

CIHD.OB

Rapidly growing Chinese fertilizer and specialty chemical firm.
Impending uplist...until their share price dropped below $3...oops!
Despite that, one has to like the fertilizer macro story in China, but the wildcard is the new deal with Sanofi-Aventis for one of their spec chemicals.

CBTE

Crossing t's and dotting i's on finalization of merger with highly profitable Chinese peptide firm; priced as if the merger is going to fail, but CBTE mgmt says otherwise (of course).
This feels like a $3+ stock if/when the merger is consumated, trading at .40 today.

CFQCF.OB/CFQWF.OB

This Chinese SPAC has finalized share purchase agreement with highly profitable Chinese machinery company. Deal will need to be agreed by shareholders, but the diamond in the rough here are the warrants, which should have almost $3 intrinsic value to them but are trading at around 1/3 that.

BBCZ.PK

A pinkie...
Yet another Chinese fertilizer company which has been hamstrung by legal difficulties preventing investment in their own growth.
Well, their legal issues are finally behind them, and with a new cash hoarde (>$3M) plus a substantial investment in China Pediatrics (~ another $3M), the stock is trading below cash/investments and should be set to emerge from the brink.
At .21 there's some good risk/reward there, although I've been unsuccessful in getting responses from mgmt.

CCME

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=44223981
website: http://www.gstv.cc
Q3 PR: http://finance.yahoo.com/news/China-MediaExpress-Holdings-bw-500656408.h...
(old) presentation: http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6666...
Competitors include FMCN and VISN, all at P/E's of 20+ (With analyst targets at P/E's of 25 or so, they just upgraded for 2010)...Competitors having much slower growth of course. This is a very very hot industry for 2010, ad dollars are surging into China with their whole focus on consumption increase.
CCME (via Warrants) P/E right now for 2009 is around 6.2 (Not including warrant dilution since they cannot be used in 2009). For 2010, including all warrants exercised (35M+ more cash in balance sheet too), my estimates have them at $2-2.4 EPS (Assumes they make between 70m and their 84m earn-out) so that puts them at a forward P/E of 4.4 to 5.25.
Truly a cash-generating cow type company though, so should have plenty of cash on its books. Oh and they just added DTT as their auditors.
Warrant leverage is very nice while it lasts, should be gone in a few months though (sadly they will force us to exercise into the common by February/March).

Note: The page is not very clean when copied to this board. You can see a cleaner version of the list using this link:

http://chinastock.homelinux.com:8080/content/watchlist-2010