Replies to post #75603 on China Growth Stocks

[ratobranco]

CKGT - The lowest CKGT's operating margins ever reached last year was 21%. Not low at all.

Look, the company may be legit, but you need access to the chinese filings to have that confidence. Have you seen the chinese filings?

Remember, the US filings are just part of the IR effort. They should not be taken literally unless you can find independent evidence to confirm them. The quickest way to do that is to look at chinese filings, particularly SAT filings. Another way is to check with customers and suppliers, and try to determine what the true margins actually are.

In the case of CKGT, I would believe this. You go to a bunch of stores, you find CKGT's product, you verify the price, you talk to the store managers, you ask them whether this product sells well. You have them estimate how much they sell per week. You then gather up all the parts of CKGT's supply chain and verify the prices in that chain, and make a margin estimate.

You have revenues, you have margins, now you can determine earnings. That approach works. If you took that approach, and you said, "Hey, these guys are for real", then I would be inclined to take you seriously.

I am confident that you are telling me that they are profitable not based on that kind of rigorous on-the-ground DD, but based on what CKGT filed here. That's just not going to work. The likelihood is that those numbers are just IR numbers.