Fantastic Start of the Year
posted by The Traveller on Saturday, January 09, 2010
2010 started with a BANG!! lifting the China Portfolio up to new heights. I am making several changes to the portfolio positions this weekend and there will likely be another post tomorrow with some new additions.
Biostar Pharmaceuticals (BSPM): down 5.84% for the week, total return 48.58%
BSPM is consolidating its recent gains but there is much more room for the stock to appreciate, especially as I consider an uplisting to a national exchange to be imminent.
I am doubling my position in the China Portfolio here. I am ADDING 1000 BSPM for Friday's close at $4.19. I am also raising the target price to 10x 2010e EPS of $0.82 to $8.20.
China Agritech (CAGC): up 31.88% for the week, total return 87.39%
The stock has reached my target price of $35 and I consider it fairly valued at current levels.
Closing position: I am SELLING 250 CAGC for Friday's close at $36.86 for a 87.39% gain or $4,297.50.
China Architectural Engineering (CAEI): up 15.25% for the week, total return 13.08%
I am not very happy with this position since CAEI bought a multiplayer online game developer in December. Stick with what you're good at? However, CAEI stays in the China Portfolio for now as I expect its core business to do much better in the coming months now that the Dubai disaster is out of the way.
China Armco Metals (CNAM): up 34.07% for the week, total return 26.49%
China Armco took off this week as the opening of the scrap metal recycling factory nears. No changes to my original investment thesis here.
China Biologic Products (CBPO): up 7.62% for the week, total return 62.50%
China Biologic is rapidly approaching my target of $15. No changes this week, but I will have to re-evaluate the target price in the coming week.
China Kangtai Cactus (CKGT): up 3.32% for the week, total return 64.71%
Despite the 65% gain over the past six weeks the stock is still trading far below what I consider fair value. A problem might be an expected to be huge non-cash charge with Q4/09 numbers resulting from EITF 07-05 adjustments, but earnings shouldn't be out before mid-February.
China North East Petroleum (NEP): up 12.76% for the week, total return 75.00%
The stock has reached my target price of $10.20 - actually it has seen $11.59 mid-week - and consequently I am closing the position here. I am not ready to up the target price above 8x 2010e earnings. This doesn't mean the stock couldn't run much further from here, momentum is clearly on its side, but according to the rules set up for this model portfolio the position has to be sold here.
Closing position: I am SELLING 1000 NEP for Friday's close at $10.43 for a 75.00% gain or $4,470.00..
China Recycling Energy (CREG): down 5.10% for the week, total return 38.16%
Everything looks fine here. The stock was stalling last week but long-term prospects are as bright as ever. No changes.
China Sun Group (CSGH): up 19.89% for the week, total return 43.87%
Excellent week for CSGH took the stock to new all-time highs. I am raising my target price from $2.50 to $3.50 on momentum in li-ion stocks and expected imminent news from the company on customer battery testing.
GC China Turbine (GCHT): up 13.55% for the week, total return -13.11%
The stock caught some interest last week but that I expect it to go much higher with actually verifiable numbers for the fourth quarter. GCHT is projecting its net sales to reach $550m in 2012, up from less than $30m last year. While I think that this is probably too ambitious, we can safely assume triple digit annual growth for the next 2-3 years. Investor Presentation (PDF)
I am doubling my position in the China Portfolio here. I am ADDING 750 GCHT for Friday's close at $2.85..
Gulf Resources (GFRE): up 24.27% for the week, total return 63.73%
The stock has reached my target price of $14.50 and I consider it fairly valued at current levels.
Closing position: I am SELLING 500 GFRE for Friday's close at $14.49 for a 63.73% gain or $2,820.00.
Lotus Pharmaceuticals (LTUS): down 5.47% for the week, total return 40.77%
Quiet trading in LTUS last week. The stock is trading at 52-week highs after it broke through the $1.20 resistance in December.
I am doubling my position in the China Portfolio here. I am ADDING 3000 LTUS for Friday's close at $1.35..
New Energy Systems (NEWN): up 25.42% for the week, total return 40.95%
NEWN released 2010 guidance of at least $1.23 per share this week. I am raising my target price to 12x 2010e EPS or $14.75. I consider this target to be very conservative and it is likely that I am not selling the position when the target is reached.
Orient Paper (ORPN): up 29.58% for the week, total return 42.95%
ONP is one of the top momentum plays in the China space at the moment. After lagging the market for a while the stock took off now and even scratched my target price of $14.50 this week. I will re-evaluate this target now and keep ONP in the China Portfolio for at least another week, although a short-term pullback is quite likely.
Skystar Bio-Pharmaceutical (SKBI): up 6.04% for the week, total return -6.63%
I do fully expect SKBI to do what ONP did last week in the near future: making a jump of a few dollars on strong volume. I am not in the slightest worried about SKBI's relative underperformance in the China Portfolio so far.
Worldwide Energy & Manufacturing (WEMU): up 15.45% for the week, total return 15.45%
Nice first week for the newest addition to the China Portfolio. If this stock gets volume we can see it retesting the 2009 highs this spring already.