Replies to post #94271 on China Growth Stocks

[worthylion]

APWC--It's my biggest holding so would love to pound the table. Clearly margins are improving. Their balance sheet remains very strong with much less debt than cash and a book value of over $11 per share. Adding a new higher margin wire plant should further boost profits in the second half. However, if you add up Inventory Impairment, Exchange Rate Gains and Flooding Recovery items in 2012, those "boost" their earnings by .80--slightly exceeding their entire earnings of .79 for the year. Net of these items, their operations were pretty much break even despite improving margins. I do think their operating margins and operating profit will improve this year, but this positive "boost" to earnings probably won't reoccur. The flooding item won't, the inventory impairment will probably be negative because copper prices have dropped steeply this year and the exchange rate gain could be positive as the Thai Baht has appreciated relative to the dollar this year. Net those three items out at zero and they have .80 EPS to make up from real operating profit to have better earnings in 2013.