News Focus
News Focus
icon url

Rames

08/22/11 9:51 AM

#85349 RE: Shinisaurus #85345

CXDC - the margins argument is pretty weak. Operating margins DO make sense given the current size of the company. This is certainly not an industry where scale does automatically lead to higher margins - this is not a one or two commodity-type of products company like chips or solar.

If you have a more detailed argumentation than this SA article the other day, please let me know. The SA article is utter nonsense as it compares CXDC with a 7 times larger competitor which sells its plastics products to "automobile, information technology, electronics, telecommunications, household appliances, construction, lighting and electrical tools, and other industries," when CXDC almost exclusively sells to the auto industry.

CXDC's operating margins are in the 13% range, this doesn't look impossible to me. Those "peer group" comparisons often fail when you just look at the plain numbers and look at margins without digging deeper. Do AAPL margins make sense if compared that way with NOK and the like?

I don't really want to defend CXDC here, but I'd like to hear some more detailed argument when you go ahead and post "you can go ahead and count CXDC as a fraud." ;)