Earnings Previews, Part 4
posted by The Traveller on Sunday, March 28, 2010

The fourth and last part of my China Small Caps earnings preview for the next week:

RINO International (RINO) will release results on Wednesday, March 31, after the close. Analyst consensus for the Fourth Quarter is EPS $0.49 with Rodman & Renshaw setting the street high with $58.3 million and $0.60 in revenues and EPS. RINO is a player in the very interesting and high growth environmental protection industry and should deserve a P/E multiple of 15 or higher with an earnings beat. The stock is down 17% for the year and is trading at less than 10x projected 2010 earnings now. RINO was trading between $18 and $33 this year and it is likely that wild price swings will continue after earnings.

Sino Clean Energy (SCLX.OB) pre-announced FY2009 numbers with their Third Quarter report. The company is expecting at least $10 million in net income on at least $40 million in revenues. For FY2010 net income should grow by 50% to at least $15 million. There is some confusion about the new facility that began production as the company stated that this additional capacity should contribute $7 million net income this year. But SCLX loves to provide guidance so we should get some clarity with the final earnings report next week. Rumours say that the company is preparing for moving its stock to a senior exchange which would require doing a reverse split first, not a bad idea to bring down the high share count of more than 100 million anyway.

Sino Gas International (SGAS.OB) is set to report on March 31 after the close, followed by a conference call the next morning. The stock is very thinly traded and about flat for the year. Sino Gas is profitable and announced back in January that it secured additional bank loans and private capital to fund its future growth. I have no opinion on the stock at this time and will not take a position whatever might happen this Wednesday.

Songzai International (SGZH.OB) is one of those China Small Caps that leaves investors pretty much completely in the dark. If that would change the stock will likely take off or would at least have participated in the huge China coal stocks rally this winter. The stock is up 20% for the year but still the worst performer in the coal group and the only one that didn't see new highs in 2010. Fundamentally SGZH is cheap and I would call it a buy as soon as the company shows any interest in improving their investor relations and improving communication in general.

SinoHub (SIHI) will release its FY 2009 financial results on March 31 before the market open. I like that the company is actively trying to improve investor relations and telling their growth story by hiring an IR firm and communicating regularly with investors. I don't like that their share count is exploding and that I do not fully understand their business which keeps me from taking a position in SIHI.

Skystar Bio-Pharmaceutical (SKBI) is one of my favourite core holdings in the large group of China Small Caps. I believe this company is widely misunderstood and when (not if) that changes the stock will trade in the $20's. Misunderstood because Skystar is despite its name not a healthcare stock as it serves the agricultural and food industry. Misunderstood because the stock took a beating last winter for diversifying its business, positioning itself for higher growth in an additional market segment, at the price of pushing forward certain vaccine revenues by ONE quarter which resulted in lowering FY 2010 guidance. SKBI is flat for the year and analyst consensus for the Fourth Quarter are $10.6 million and $0.31 for revenues and EPS.

SORL Auto Parts (SORL) will report tomorrow, March 29, before the market opens. The company is expected to report Q4 revenues of $36.25 million and EPS of $0.19. The stock ran up nicely in the past few sessions and is now up 12% for the year, pretty much in line with the auto parts sector. For further upside I would want to see EPS guidance for 2010 coming closer to the $1 mark, right now the stock seems fairly valued with a forward P/E of about 14, but you never know with those auto parts stocks as apparently some analysts believe that peer CAAS deserves a multiple of 30.

SkyPeople Fruit Juice (SPU) pre-announced 2009 net income of $15-$16 million on revenues of $58-60 million. The company has already provided FY 2010 guidance for net income between $19 and $21 million, representing roughly 30% income growth. The stock is one of the big winners so far this year and is up 42% since January.

Sancon Resources Recovery (SRRY.OB) is a bit of a mystery to me. The company seems to have a very solid business, recycling of industrial and commercial waste like plastic, paper and glass, and selling the recycled materials to Chinese manufacturers. The business seems almost risk-free, the company is generating lots of cash, is solidly profitable for many quarters, yet the stock is completely off the radar and SRRY is barely trading 10,000 shares a day around $0.40 or 4x 2009 earnings. The last 10-Q filing is full of statements like "tremendous demand for recycled materials" , "we anticipate rapid growth" and "Sancon is uniquely position to benefits from these initiatives as an early mover in the industry and one of the few foreign companies being awarded a waste management license in China. Sancon has for the past years developed one of the largest collection and recovery network in China for commercial wastes and expects to expand into other areas of environmental services." (bit of Engrish here).

Telestone Technologies (TSTC) has repeatedly reaffirmed its 2009 revenue guidance of $70 million, I don't believe that actual results will differ much from that number. Unusual for a Nasdaq company, there is no announcement for the actual earnings release and conference call yet (unless I missed it). TSTC jumped on everyone's radar screen with very strong Third Quarter earnings and has been a member of the IBD 100 for most of the year. The stock is down 10% YTD and who knows, maybe Q4 earnings and guidance will refuel the rocket ship. I have no idea how the stock will react this time, but I would definitely put it on my watchlist for the coming week.

Tongxin International (TXIC) is by far my favourite of the Chinese auto parts stocks. The company pre-announced Q4 revenues of $29.5-$32.5 million (net income should be $4.8 to $5.0 million) and full year earnings of about $17 million (EPS $1.29) on $124 million revenue. For 2010 Tongxin expects revenue to grow about 25% to $150-$160 million. At the current price of $7.62 TXIC is by far the cheapest of the auto stocks with a trailing P/E of just 6. Compare that to SORL or CAAS and you see why I like it as a value play in this sector.

ZST Digital Networks (ZSTN) will be announcing Fourth Quarter and FY 2009 numbers on March 30 before the market opens, followed by a conference call mid-morning. The one analyst, Rodman & Renshaw, expects the company to report $28.1 million and $0.29 for revenues and EPS. The full year should come in at $98 million revenues with a fully diluted EPS of $0.91. And for 2010 the EPS number should rise about 28% to $1.17. The stock is currently flat for the year and trading range-bound with strong support at $8. ZSTN probably has to beat estimates by a nice margin in order to break out of this range and move back to January highs in the high $11's.

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Earnings Previews, Part 3
posted by The Traveller on Sunday, March 28, 2010

GC China Turbine (GCHT.OB) has yet to post a profit or any meaningful revenue but there's a chance that at least the latter will be accomplished with Fourth Quarter earnings. The company posted a slew of positive press releases in the past weeks and said it is well on track with their ambitious plan of generating orders for their wind turbines with an estimated value of $1.1 billion from 2010-2015. However, the stock is down 20% for the year and almost 50% from its November high at $3.79. Highly speculative but possibly very rewarding with the next momentum driven rally.

China GrenTech (GRRF) will report Wednesday, March 31, after the close. The stock just turned positive for the year on Friday after the company announced to be the exclusive WLAN provider for the 2010 Shanghai World Expo. GRRF is expected to post a small profit for the Fourth Quarter, if all goes well in the same range as for Q3 ($3 million net income). Year-over-year comparables will look good as GrenTech was not profitable a year ago, but keep in mind that GRRF handily beat estimates in all of the past four quarters.

Huifeng Bio-Pharmaceutical (HFGB.OB) is very thinly traded and completely under the radar. The company is profitable, pre-announced a healthy net income of $2.8-$3.0 million for FY09 (80% to 93% year-over-year growth) and provided net income guidance between $4.5 million to $5.0 million for 2010. HFGB is in the pharmaceutical raw materials business and doesn't carry drug approval and acceptance risks that are common in the pharmaceutical industry. This should allow them to have a pretty good idea of how their business is progressing mid- to long-term.

Hong Kong Highpower (HPJ) is set to report earnings on March 30 before the open. Like most other Chinese battery stocks HPJ is down sharply for the year (-20%) and from its January high (-37%). Still valuation is one of the highest in the group and the company has to post very strong numbers to support the current short-term uptrend. The stock climbed 25% in the past five sessions probably in anticipation of the earnings report. Personally I would avoid the stock, but I have been wrong about HPJ in the past when it caught strong momentum and tripled in price from November until January.

Jade Art Group (JADA.OB) is sitting on one of the largest jade reserves in China but we do not know much about how the business is progressing. What we know is that the company had six sales contracts for raw jade in 2008, valued at $42 million and "did not acquire any new customers or enter into any new contracts with existing customers during the first nine months of 2009." There should be about $11 million revenue left to collect from those contracts or about as much as JADA reported for Q3/2009. The key here is to look out for new sales contracts and possibly new customer wins in the near future.

Lihua International (LIWA) is scheduled to report on March 31 before the start of trading. The company already pre-announced full-year 2009 revenue of $161.5 million and net income of $25.5 million (non-GAAP) representing 118% income growth over 2008. LIWA anticipates 2010 year-over-year growth of approximately 30-35% in gross profit and 35-40% in non-GAAP net income. The good performance of close peer Fushi Copperweld (FSIN) supports Lihua's high growth prospects. However, there are persistent rumours about possible accounting fraud at LIWA and the stock behaved very vulnerable to recent FUQI issues.

Lotus Pharmaceuticals (LTUS.OB) is another one of China's undervalued health care micro caps. The stock is up 12% for the year but at the current price of $1.43 it has given back most gains since the January high at 2 dollars. The Fourth Quarter 2008 has been Lotus' strongest so far and I do expect nothing less from next week's earnings report than a new record in quarterly net income, possibly more than $7 million. If Lotus delivers I call it an instant buy at current levels and it should be able to take out this year's highs pretty quickly.

China North East Petroleum (NEP) is now slightly down for the year after they had to restate several quarters and admitted to having made 'computational errors' and 'incorrect assumptions.' Plain numbers say the stock is undervalued here and should appreciate significantly this year. The company also announced record oil production for 2009 and drilling results exceeding their expectations. Watch out for the company confirming their 2010 guidance in the conference call and words about the possible impact of a revamped Chinese resource tax on FY2010 results.

New Energy Systems (NEWN.OB) is one of my favourite core holdings in the China Small Caps space as the company has improved in all areas: clever acquisitions, vastly improved investor relations and communications, actively pursuing Nasdaq listing in 2010. NEWN recently reaffirmed 2010 EPS guidance of $1.23, which makes the stock the cheapest one in the battery space. Fourth quarter results will be interesting as NEWN repeatedly held on to their low guidance and expectations are therefore pretty low. With a Nasdaq listing the stock should double from here ($7) and consolidated results including acquisitions will display favourably to 2009 numbers in the quarters to come.

NF Energy Saving (NFEC.OB) will file their 10-K next week. Preliminary 2009 results were announced late February with record revenues and EPS of $0.35. The company also said that an additional $3 million in revenue had to be moved to the First Quarter so those numbers should be not too bad either. I would watch out for proper 2010 guidance beyond the current fluffy note that the 'outlook appears favorable.' and some more details about an uplisting to a senior exchange. The market likes NFEC's industry as the performance of recently uplisted peer China Recycling (CREG) shows.

Orient Paper (ONP) reports Q4 and FY09 numbers on Tuesday, March 30, before the open. There shouldn't be many surprises as ONP has already pre-announced 2009 numbers with revenues up 57% to $102.1 million and EPS up 27% to $1.03. The stock is down 8% for the year and down sharply from its January high of $15.15. Orient Paper is targeting at least 45% net income growth for 2010 and as I pointed out in a previous article an expected revaluation of the Chinese currency should add significantly to ONP's bottom line.

Orsus Xelent Technologies (ORS) is a beaten down consumer electronics stock, trading 75% below book value. However, the company is still profitable, earned $0.20 per share for the first nine months of 2009, which compares favourably to the current share price of $0.48. There are many reasons for the depressed stock price: the company has almost no cash on its books, reported weak earnings, reduced margins, and a 53% drop in net income for the Third Quarter 2009, and pre-announced lower than anticipated full year sales in late December. The 2010 outlook in this last press release was cautiously optimistic, though. For the earnings report this week I would look only at liquidity problems, cash flow, and signs for a business turnaround in the second half of 2010. The company has multi-bagger potential if it can turnaround sales but currently it seems more likely that the stock is kicked out of NYSE Amex before any of this materializes.

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Earnings Previews, Part 2
posted by The Traveller on Saturday, March 27, 2010

Another bunch of China Small Caps that are set to report next week. Part 3 and 4 of this post will be up tomorrow.

China Medicine (CHME.OB) will report Monday, March 29, before the open. CHME is trading in the $4 range for most of the year and positive news on Monday could propel it above its 52-week-high at $4.89 which had been reached in January. The company has already applied to list on Nasdaq, it is nicely profitable and reported $3.36m net income for the Third Quarter 2009. Keep an eye on the share count which should increase significantly with the $69.6m private placement that was announced in January.

Changda International (CIHD.OB) is also set to report next week. The stock clearly underperformed in its sector and is currently trading at its year low (down 35% since January). All metrics for CIHD are negative but there is some hope for a surprise quarter as the company is heavily in the snow melt agent business and the hard winter seems to have paid off for Changda as the company announced in January that orders in this segment have more than doubled in 2009. Watch out for liquidity issues.

China Industrial Waste (CIWT.OB) is a player in a very interesting industry that is set for explosive growth. CIWT has yet to prove that their business model works as growth in 2009 has been weak so far. I have no opinion on what Fourth Quarter numbers might look like, but watch out for bullish guidance especially for their sludge processing business.

China Kangtai Cactus (CKGT.OB) has already announced preliminary FY09 numbers in early March. The company is looking at revenues of $25.8 million for 2009 and is targeting 35% revenue growth for 2010. The market has been clearly disappointed by this guidance and the stock suffered to lose more than 22% for the year. However, CKGT is dirt cheap at current levels with a P/E ratio of less than 4.

China Armco Metals (CNAM) is one of the best performing stocks YTD in the China Small Caps sector with a gain of 171%. But the stock is still not expensive here and with a FY 2010 guidance in the $1 range CNAM has plenty of room to appreciate further. Most people are still not fully aware of the earnings potential that lies in the new scrap metal recycling business. China Armco announced a conference call for March 31 after the close, so expect a press release to hit the wires next Wednesday.

China Organic Agriculture (CNOA.OB) is a stock where I never know what to expect. The company is profitable, trades at book value and looks cheap at current levels. But their business model seems flawed with a crude mix of segments and recently a move into blueberry drinks and blueberry health care products(?!). I would not take a position here before earnings and watch the behaviour of the stock closely when numbers are out. CNOA has a history of making wild swings to both ends of the scale with earnings, there is always a chance of making money either way if it keeps this tradition.

China Power Equipment (CPQQ.OB) is in an interesting industry (energy saving, smart grid), has good growth prospects and seems prepared for an uplisting to Nasdaq now with the appointment of independent directors in mid-March. The stock is down slightly for the year and seems to have fallen under the radar, although it has been slowly creeping up over the past few weeks. Watch out for an uptick in volume with a break of the $4 level which the stock hasn't seen since January. It could be a potentially very rewarding investment.

China Ritar Power (CRTP), another laggard in the CSC space, will report FY09 numbers after the close on March 31. Growth prospects for the lead-acid battery industry are in the 25% range for 2010 as COO Zeng Jianjun indicated yesterday. Just like most other battery makers CRTP is down for the year and trading close to its lows. Analysts are expecting the company to report Q4/09 EPS between $0.08 and $0.15 (FY09 EPS $0.37 - $0.44) with a median revenue estimate of $33.3 million.

China Shuangji Cement (CSGJ.OB) is currently up 36% for the year and the stock roughly doubled in the past four weeks on a bullish press release the company issued on March 4. CSGJ is still trading below book value and the company earned $2.75 million in the first nine months of 2009, up 8.7% from 2008 levels despite a decrease in revenues. I would focus on revenue guidance for 2010 and some more clarity about production capacity for the new Longkou Cement plant.

China Valves Technology (CVVT) is scheduled to report earnings on March 29 before the market opens. The performance of the stock 2010 YTD has been excellent as CVVT is up more than 46% from December levels. Two weeks ago the company announced net income guidance of $23 million for 2009 and $40 million for 2010 which represents a healthy growth rate of 74%. Those numbers call for an outstanding Fourth Quarter and we will see early Monday morning if CVVT can deliver on the promise.

China Wind Systems (CWS) also preannounced 2009 numbers already. Non-GAAP net income for the year should come in at $0.34 per diluted share on revenues of $53.6 million, representing an estimated 26-33% growth. Nothing to get too excited about. Performance of the stock has been disappointing, despite big catalysts as the Nasdaq listing the stock is down for the year and down a whopping 40% from its January high at $8.20. I would look for any signs of accelerating growth, especially in the wind energy components business, to find a reason for the stock to trade at higher multiples than 10-12.

China Yongxin Pharmaceuticals (CYXN.OB) could be very interesting here. The company is currently in transition but preannounced higher net income ($5.4 million, +35%) on lower revenues ($46.1 million, -22%) for FY 2009. The company is moving away from the wholesale sector into direct retail and medical facilities. Yongxin is also actively working on uplisting to a senior exchange. CYXN is down 15% for the year but with confirmation of the 2009 guidance next week the stock could start to move with big upside. The Fourth Quarter has to be exceptionally strong for Yongxin to reach their guidance of EPS $0.16 for FY09 and at the current share price of just $0.55 this would mean the stock is currently valued with a ridiculously low trailing P/E of 3.47.

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Earnings Previews, Part 1
posted by The Traveller on Saturday, March 27, 2010

American Lorain (ALN) reports on March 30 before the open. The stock is doing well so far this year (up 15%) after it beat Q3 estimates nicely. One analyst expects ALN to report Q4 revenues of $58.3 million and EPS of $0.20. This one has further upside with a good earnings report.

Biostar Pharmaceuticals (BSPM.OB) has already pre-announced FY09 numbers with $52-$54 million revenue and $16-$17 million operating income. Watch for confirmation when they report next week. BSPM has already provided guidance for FY10 with $69-$71 million revenue and $16.2-$17 million net income, mind the difference between 'operating' and 'net' here. The stock is expected to move up from the OTC/BB in the very near future, keep your eyes close on this for an announcement.

China Agritech (CAGC) reports on March 31 before the open. The stock is up a whopping 95.7% for the year and now sports a hefty market capitalization of almost half a billion dollars. Whatever they report it will hardly be sufficient to support the current stock price from the fundamental side, but an earnings beat combined with strong forward guidance might reignite the strong momentum CAGC enjoyed for most of its Nasdaq life.

China Green Material (CAGM.OB) is down 12% for the year so far but as the stock reached its all-time-high at the turn of the year it is still performing well. CAGM is currently priced at 10x trailing earnings and 3x sales and I believe for being able to test its highs again the company should report an uptrend in both earnings and net income, both year-over-year and sequentially. CAGM reported $1.11m net income on $4.19m revenues for the Third Quarter of 2009.

China Auto Logistics (CALI) reports on Monday, March 29 before the open. The stock has not participated in the China automotive stocks rally so far and is one of the few in the sector that are down for the year (15%), trading range-bound between $4.20 and $4.70 since late January. Look for revenues of at least $60 million and net income of $2 million for a possible break-out.

China Clean Energy (CCGY.OB) is up 29% for the year already but I see much room for further upside as the company guided back in January for Q1/2010 revenues of $7.3 million or 150% growth from 2009 numbers. Their new chemical plant started operating on a commercial basis in January and for the yet-to-be-reported Fourth Quarter it was still in trial production. We do not know if this trial phase generated significant revenues and I do not expect the company to report outstanding numbers for this period, but that doesn't matter as we should see a reiteration of Q1 guidance which positions the company as a growth play that is trading well below book value.

China Electric Motors (CELM) will be reporting their first quarter as a public company after the market closes on Tuesday, March 30. I would keep a close eye on that one as CELM's industry peers (HRBN) reported strong growth for Q4/2009 and CELM has yet to issue guidance for 2010 and basically introduce itself to the US investing world with their first public conference call. Everything about this company looks very promising to me and we could see big money taking a shot at CELM if those events go well.

China Growth Development (CGDI.OB) is due with their annual report by March 31. We won't see a conference call, probably not even a press release, the company's investor relations are non-existent and it's one of those hidden OTC stocks most people have never heard of. CGDI is profitable, reported $900k net income on $4.5 million revenue in their most recent quarter, and the stock is trading at less than half of its book value. If they report another profitable quarter on top of those numbers then the stock could take off from currently depressed levels. A highly speculative trading idea for a possible 100%+ gain.

China Energy Recovery (CGYV.OB) is another widely unknown China OTC play. But contrary to CGDI all the metrics here say 'avoid'! The stock is down 42% for the year and closed 2 cents off its lows on Friday. Watch for Fourth Quarter numbers more than FY09 ones. The company will likely report a small profit for the year but the trend has been down lately. Last quarter CGYV reported a loss of $0.12 million on revenues of slightly above $6 million.

China 3C Group (CHCG.OB) is trading well below book value and cash on hand, actually it looks like one of the cheapest stocks around based on those numbers alone. Though the stock is down 10% for the year and trading around 45 cents for the past two months. The company posted a big loss for the Third Quarter and Fourth Quarter numbers will likely not look better as CHCG expects their "business performance for the 2009 fourth quarter to be on par with that of the third quarter." The key here is to look for signs that the company can turnaround their business, if there is light on the horizon the stock would be a clear buy at current levels:
"While we expect the remainder of 2009 to be challenging, we remain focused on building a platform for long-term sustainable growth. We have a lot of work to do but believe we have the right plan and managerial team in place to execute on our mission. We look forward to updating you on our developments in the months ahead." (Source: Q3/09 press release)
China Carbon Graphite (CHGI.OB) is in a strong uptrend lately, both for their business with a 50% sequential rise in earnings last quarter, as for their stock price which has appreciated almost 60% this year. Watch out for a confirmation of this trend with Q4 and year end numbers that are due next week. The stock benefited hugely from an internet plug this month but is down about $1 from its mid-month highs and that would be the target for the stock with a trend confirmation.

China Gengsheng Minerals (CHGS) plans to release fourth quarter results on Monday, March 29, after the close. The stock has gained 40% so far this year on several catalysts as the NYSE Amex listing and new contract announcements. Though CHGS is currently trading well below its March 5 high of $4.30. For the stock to resume its uptrend I would be looking for revenues of $15.5-$16 million and net income of about $1.8 million.

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Bullish on Tri-Tech (TRIT)
posted by The Traveller on Thursday, March 25, 2010

Tri-Tech Holdings (TRIT) is a player in the fast growing Chinese environmental protection industry. Since 2002 it provides solutions for wastewater treatment and odor control and also systems for the management of natural waterways and water resources in general. Its customers are mostly local and regional governments and Tri-Tech already has implemented projects in all of China's regions and provinces (excl. Tibet) which makes it well-positioned for further contract wins.

China has a huge environmental problem and the government is actively putting more and more funds into getting this under control. The government has dedicated an estimated 1.35% of its gross domestic product, or approximately $205 billion, to environmental protection.
According to the 2009 Chinese Government Annual Report announced by Primer Wen Jiabao, the Chinese government will continue to focus its efforts on environmental protection in 2010. To improve its environmental management, and municipal sewage and solid waste treatment in key areas, China will increase its daily sewage treatment capacity by 15 million cubic meters and its daily solid waste treatment capacity by 0.06 million tons in 2010. Based on an average construction unit cost of RMB 1300 per cubic meter of treatment capacity, we believe that total spending on sewage treatment will reach RMB 19.5 billion.
(Source: TRIT 10-K)

Tri-Tech and peers like RINO International (RINO) are set to record huge and sustainable growth for several years. Additionally to the municipal and government business Tri-Tech is now also targeting heavy industry customers with an Industrial Pollution Control segment:
We intend to strengthen our company’s industrial pollution services by penetrating adjacent industry verticals such as the power generation, oil and petrochemical industries. While we have previously implemented air pollution control systems for the petrochemical industry, we believe that there is significant opportunity to further develop this portion of our business.
Strong Growth

Last night the company filed their annual report, at the time of writing there has been no press release issued but I would expect that to happen later today. Tri-Tech reported FY2009 revenues of $16.8 million (up 98.8% from 2008) and net income of $3.85 million (up 127.0% from 2008).

Strong Guidance

Somewhat hidden in the 10-K filing we find a very bullish revenue and income guidance for the current fiscal year. I would expect this to create significant awareness of the stock when it's been revealed to a greater audience via press release.
For 2010, we anticipate that our revenues will range between $40.6 million and $50.5 million. We anticipate our net income will likely reach between $7.0 million and $9.2 million. We expect that we will be able to reach these revenue and net income projections without receiving further financing.
  • Revenues: $40.6 - 50.5 million (up 142-200% from 2009)
  • Net Income: $7.0 - 9.2 million (up 87-139% from 2009)

If we take the midpoint of TRIT's net income guidance we get a forward EPS of $1.54 (5.255 million shares outstanding) and at yesterday's close ($13.90) the stock was trading at a 2010e P/E of 9 and a P/E/G of about 0.1. Back in January the stock has already traded in the mid-$20 range which back then looked expensive based on trailing earnings and no guidance. That picture changed last night as TRIT looks like a huge bargain here given its high growth prospects and very attractive industry. Please not the important fact that the company explicitly stated in their guidance that the 2010 projections can be reached without further financing. I wouldn't be surprised if TRIT goes back to the $20's near term.

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When the Yuan Strengthens...
posted by The Traveller on Sunday, March 21, 2010

There is widespread talk about an upcoming revaluation of the Chinese currency, the Yuan (Renminbi). While certain circles in the U.S. try to make the case for a currently undervaluation of up to 40% it seems inevitable that China will be forced to let their currency appreciate in the 5-10% range this year. So what would this mean for investing in US-listed Chinese Small Caps?

First of all the obvious: all US-listed companies report in US Dollars, including the China based companies. Any Chinese company that is doing their business in local currency will be able to record a foreign exchange gain equivalent to the valuation gain of the Yuan. And that is unrelated to actual business developments. The whole group of US-listed Chinese companies will benefit from a stronger Yuan.

You want to look for companies that do pretty much their entire business in China. Most of the agricultural and food stocks fit into this category. Let me single out Skystar Bio-Pharmaceutical (SKBI) as a good value play right now. Despite its name SKBI isn't your typical healthcare company as it produces micro-organism products, feed additives and veterinary medicine and vaccines for poultry, livestock and aquacultures. They produce and sell all of their products in China and with a P/E ratio of 6 the stock is currently in the bargain bin. Those with a faint heart might want to wait until the company reports earnings which are due by the end of March.

But it doesn't stop here. There is a whole sector that will enjoy a double benefit from a possible Yuan revaluation: Companies who primarily import their raw materials from international markets like Europe or the U.S. (in US Dollars) and sell their manufactured goods primarily on the domestic market (in Yuan).

Take Orient Paper (ONP), a producer or paper and packaging related products. The company uses recycled waste paper as its primary raw material which it buys from a variety of suppliers. Those suppliers will likely source a good part of their waste paper from the U.S. and Europe as China is just the number one destination for our recyclable materials. Orient Papers sells their finished good entirely on the domestic market so all of their revenues are recorded in Yuan. The stock is currently cheap after a massive sell-off last Friday which was likely triggered by reports the company had dropped out of an investor's conference (a report that has been labeled as a misunderstanding by the company). If you want to reduce risk you might want to wait until the dust settles and ONP reclaims the $9 support level.

But there is one group of companies that will have a disadvantage from a stronger Yuan. All of those that fit into the stereotypical category of Chinese manufacturer with cheap labour and resourced that exports its products to Europe and the North America. Think of all of those neatly cheap products at Wal-Mart, clothes and IKEA furniture, and also all of the contract manufacturers. Their cost of sales will rise with a stronger domestic currency and it is not very likely that Wal-Mart, IKEA and co. will be willing to pay more for the goods. It will depend on the size and scalability of the manufacturer if they can adjust to a stronger Yuan, but overall it should put strong pressure on their margins.

I would strictly avoid investing in any small cap or micro cap company with a business model that entirely relies on exporting cheap products to the international markets. A company that is too small to deal with a possible 10% rise in raw materials and labour cost will struggle to survive, and that is probably the main reason why the Chinese government is trying so hard to defend its undervalued currency as "fairly valued."

One example would be China Linen Textile Industry (CTLXF), a Chinese manufacturer of linen products for the textile industry. As the company stated in their last annual report, "consumers for linen textile products are currently mainly in foreign markets outside of China." CTLXF's customers include well known brands as Boss, Marks & Spencer, H&M and Zara and in its latest presentation the company identified China, Italy, USA, Brazil, Belgium, Spain and Greece as its top customers' markets.

It seems likely that China Linen's competitiveness would be harmed by a stronger Yuan, and while we don't know how well the company might be prepared for such a development it should be noted that they do already have a warning in their annual report: "should the Renminbi appreciate against the U.S. dollar at that time, our financial position, the business of the company, and the price of our common stock may be harmed."

Those three stocks portrayed are just examples from their respective groups, I could have picked several others that fit into the same categories. Bottom line is: it might be wise to be at least partially exposed to the US-listed China Small Caps sector when the actual news of a Yuan revaluation hits the markets.

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A Case for Yongye
posted by The Traveller on Saturday, March 20, 2010

Yongye International (YONG) is a Chinese producer of liquid organic fertilizer and animal nutrients for the agriculture industry. The liquid plant products are typically applied together with normal fertilizer and are proven to increase the yield of wheat, potatoes and a variety of vegetables by up to 30%. The animal product is a powder that is mixed with normal feed and currently only targeting dairy farms. Its natural anti-biotic type properties help decrease inflammation and pain which occurs as a result of milking.

Both these products are based on something called 'fulvic acid' which is derived from humic acid that is typically extracted from coal. Yongye has a proprietary extraction process for high-quality fulvic acid which, so the company claims, allows it to create products that are more effective than other fulvic acid mixtures on the market.

Yongye-branded storeKnowing that marketing to farmers is crucial in this business, Yongye has found a unique way of distributing their products. The company currently has a network of 9,110 branded stores in nine provinces, two autonomous regions and several test markets in northern, central and southern China. The exterior of those stores is decorated with Yongye color and banners, and inside their products are prominently displayed alongside promotional materials provided and posters with village-specific case studies that demonstrate a farmer's incremental revenue, original investment and harvesting time saved from using their products. By the end of 2010, the Company plans to expand its total number of branded stores to more than 20,000.

This strategy is also the key to understand YONG's very positive business outlook:
From 2010 to 2012, Yongye expects to achieve at least a 50% annual growth rate in revenue through geographic expansion into new markets, increased penetration in existing markets, additional marketing and brand-building efforts, and expanded production capacity. During 2010, the Company also expects to build a new manufacturing facility nearby, which is expected to be capable of extracting humic acid from coal and producing 20,000 tons per year of the Company's liquid plant product and 10,000 tons per year of its powder animal product. The Company's current manufacturing facility operates at almost full capacity to meet peak season demand and inventory requirements. In addition, the Company plans to acquire certain Shengmingsu distributors that have especially strong channel networks. The Company also intends to improve its cost structure and enhance its profitability by gaining greater control over its supply chain and distribution network through a vertical integration strategy.
This vertical integration strategy is coming along well. Securing humic acid supplies, the base material for all of YONG's products, is currently the largest component of cost of sales. Last December the company raised $69 million in a public equity offering with the intention to secure their own humic acid supplies which would both secure long-term growth and substantially increase gross margins. Then earlier this month the company announced the acquisition of an undeveloped lignite coal resources project in Inner Mongolia for about $35 million.

Strong Growth

  FY 2009 FY 2008 Change
Revenue: $98.1m$48.1m+104.0%
Gross Profit: $52.1m$24.9m+109.2%
Gross Margin: 53.1%51.8% 
Operating Income: $31.4m$13.7m+129.2%
Operating Margin: 32.0%28.5% 
Adjusted Net Income: $26.2m$11.2m+133.9%
Net Margin: 26.7%23.3% 
Earnings per Share: $0.83$0.56+ 48.2%

In 2009 Yongye demonstrated strong growth by all metrics: revenues and gross profit more than doubled for the year, gross margin expanded by 130 bps and operating costs have been kept under control very well as operating margins improved even more (350 bps). At the current share price of $8 and trailing earnings of $0.83 per share, YONG is currently valued with a TTM P/E of 9.6 which is well below peers like CGA or CAGC. 2009 EPS growth was slower relative to the other metrics due to the huge share offering in December which resulted in a substantial dilution of about 30%. I see this offering and subsequent acquisition of the coal supplies as a big success for the company and the driver for sustainable future growth. The offering price of $7.50 will likely serve as a floor in the current correction.

2010-2012 Projections

Yongye's guidance for the next three years was reconfirmed last week with at least a 50% annual growth rate in revenue. Margins should further improve as I have pointed out and as the company only needs about 50% of the raised $69 million for the coal acquisition it should be left with plenty of cash even after constructing the new manufacturing facility which should limit future dilution. To be conservative I am attempting a 2010-12 projection with just 50% annual revenue growth, flat net margins and 10% annual dilution.

  FY 2009 FY 2010 FY 2011 FY 2012
Revenue: $98.1m$147.1m$220.7m$331.1m
Income Tax Rate: 15%15%25%25%
Adjusted Net Income: $26.2m$39.3m$54.4m$81.6m
Shares Outstanding: 31.3m34.5m37.9m41.7m
EPS: $0.83$1.14$1.44$1.96

YONG is currently followed by three analysts who all rate the stock a BUY: Oppenheimer (price target $12.50), Roth Capital ($15.00) and Rodman & Renshaw ($12.00). The most recent update from Rodman & Renshaw calls for FY2011 revenues of $212m and EPS of $1.53 which makes their $12 target very conservative. I'd like to follow Roth with my projections and believe the stock should be fairly valued at $15 or roughly 10x 2011 earnings. Given the high and likely sustainable annual growth rate the stock could see much higher levels if it attracts enough interest from institutional investors (as it should). Look at CAGC's share price development and you can see what kind of multiples are possible in this space.

I am adding a half position of YONG to the China Model Portfolio at Friday's close of $8.02. My 12-month price target for this position is $15.

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How Rick Pearson Moves the Market
posted by The Traveller on Friday, March 19, 2010

The biggest problem for most Chinese Small Caps on US exchanges is that they are struggling to get their story out to the investing world. There are so many profitable, high-growth companies in this space which are trading at a significant discount to their domestic peers, a discount so steep that it is not justified by the much higher risk to invest your money in China alone. Reasons for this are plenty: lack of analyst coverage or coverage only by second tier brokerage firms, bad investor relations, lack of transparency for business developments and projections. But the main problem is that too few people tell their story to a greater audience.

Rick Pearson is one of those few people out there who has the platform (TheStreet.com) and the background (education, language, location) to pick up some of the compelling stories and he is doing that quite frequently. When Pearson publishes an article about a thinly traded Chinese stock on the OTC Bulletin Boards, this stock is usually reacting instantly, and massively!

During market hours on January 11th, Pearson posted an extensive interview with Subaye Inc. (SBAY) CFO Jim Crane on TheStreet.com. Actually it was more like an infomercial for Subaye than an interview. Subaye is a tiny Chinese media company that likes to compete and compare itself to the big players in the industry. The stock traded on the OTC/BB on very low volume, the average daily volume of the last 20 trading days was just 8190 shares.

After Pearson's article was published the stock surged from $16.00 to $21.75 to close with a 35.9% gain for the day on 4x average volume. The following day the run continued and the stock reached a new all-time high at $26.00, a whopping 62.5% surge within roughly 24 hours, to close at $23.50. And on January 13th, SBAY reached an intraday high of $24.50 when heavy profit-taking pushed the stock down to $20.00 again on the heaviest volume in its history of more than 84,000 shares.

All this craze faded pretty quickly and in February we saw SBAY shares trading mostly in the $12-14 range on microscopic volume until the company announced a surprise move to Nasdaq a few days ago when volume and volatility picked up again, though the stock never again reached the $26 level nor the record volume after Pearson's plug. Now the stock is back to where it was on January 11th, closing yesterday at $16.15.

On March 2nd, Rick Pearson featured OTC/BB-traded Sino Clean Energy (SCLX) as "a stock with multi-bagger potential". The company is in the liquified coal business and its stock is heavily diluted with options, warrants and convertible debt. SCLX was trading range-bound between $0.37 and $0.43 on a low average volume of 233,000 shares (less than $100k dollar volume) in the two weeks before Pearson's story appeared. That changed instantly when the article was posted and the stock exploded intraday from $0.40 to close at $0.53 for a 32.5% daily gain. Volume was 3.36 million shares or almost 15x average daily volume.

As with Subaye, the craze lasted several days, SCLX took out its former 52-week high and the peak was reached on March 8th with an intraday high of $0.95 (a 137.5% gain since Pearson's plug) on record volume of more than 6.2 million shares. The stock is still holding up very well now, it closed at $0.77 yesterday (March 18), so if you followed Rick Pearson's recommendation you are still sitting on a 90%+ gain now.

It might have been encouraging for Rick to see how well his SCLX article worked out, because just a week later he plugs another widely unknown, thinly traded OTC/BB stock on his TheStreet.com column. China Carbon Graphite Group (CHGI), a tiny Chinese maker of carbon and graphite products (duh!) has been introduced to his readers as "the next stock to skyrocket".

Rick Pearson's CHGI article was posted on TheStreet.com on March 9th before market open, but we can safely assume that a version of his piece has been floated already during market hours on March 8th as that day saw a huge spike in volume and price, and the article mentioned a current share price of $1.90 when CHGI closed above $2 that day and never again fell below that level. The volume of 664,000 shares on March 8th was by far the highest volume in CHGI's history, staggeringly high if you consider that the stock has traded less than 10,000 shares in five of the previous seven days.

On March 8th CHGI's share price surged 34.2% from $1.55 to $2.08, but to be fair let's take the $1.90 mentioned in the article to measure the effect of Pearson's plug. March 9th saw a turnover of more than 2 million shares or about 150x average daily volume, and the stock closed at $2.70 for a 42.1% gain from the $1.90 level. It didn't stop just there as CHGI climbed further to reach an all-time-high of $3.50 on March 16th which translates into a 84.2% for everyone who followed Pearson into the stock at $1.90.

Either the craze is fading now or the stock is hit by heavy profit-taking as the share price came down by more than one dollar in the past two trading days alone to close at $2.45 on March 17. We will see if it goes back to where it started like Subaye or if it can settle at a substantially higher level as Sino Clean. Time will tell.

So what do we learn from all of this? Tiny OTC/BB-traded stocks can be moved massively by a single article in the right spot. And that move can and will eventually fade if it is just based on that one article. What every investor should do at all times and no matter what is: do your own due diligence! Read all the available filings, get your own picture of the company you want to invest in, be comfortable with what you are holding for a reason, your very own reason. Then you can benefit from moves like those induced by Rick Pearson, otherwise you might be jumping on the famous bandwagon when it is already hot and sticky up there.

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Update on BSPM, CELM, CCME and WEMU
posted by The Traveller on Sunday, March 14, 2010

Biostar Pharmaceuticals (BSPM) got a write-up in a newsletter this weekend which should propel the stock safely above the $4 level next week. BSPM is still down 9% for the year and 15% from its all-time-high reached on January 5th. I believe the stock will double from current levels this year, our target price is at $8.20.

China Electric Motor (CELM) was trading around the $6-level all of last week or 25% above its IPO price. Lead underwriter Roth Capital initiated coverage of the stock last week with a Buy rating and a price target of $8. That is the suprisingly low target given the fundamentals of the stock and I still believe CELM is headed for the double digits. Closest comparable Harbin Electric (HRBN) reported blow-out earnings last week which, although Harbin is more exposed to the booming Chinese automotive industry, should bode well for CELM's earnings report that is expected by the end of March.

China MediaExpress Holdings (CCME) is a major laggard in our model portfolio. It is trading sideways for several weeks now and what the stock needs is serious institutional money accumulating shares for the long term. CCME will report Fourth Quarter results on Tuesday, March 23, before market open. I would recommend watching the stock closely next week for a break of the current trading range and buying it on a break-out above the $12.75 area before earnings. It is unlikely that CCME breaks the low end of the range as the earnings report should be very good on all metrics.

Worldwide Energy and Manufacturing (WEMU) has been on my probation list since their surprise secondary offering in January. It only stayed in the model portfolio because of the bullish guidance they issued for 2010. After last week's earnings of major Chinese solar companies I have reason to doubt WEMU's guidance now, and given the uncertain outlook for the second half of 2010 in the solar industry I see an increasing probability of WEMU being forced to revise their guidance. In the current environment of oversupply and price cuts for solar energy components it should be much harder for small companies to keep their margins and even stay profitable.

I am closing the complete WEMU position in the China Model Portfolio now. 1000 shares of WEMU are sold at Friday's close of $5.74 for a gain of 4.36% or $240. The stock might still trade higher into earnings as fourth quarter results should be very good across the whole industry. In my opinion the risks just outweigh the possible rewards in the current situation.

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March Investor Presentations
posted by The Traveller on Tuesday, March 09, 2010

With three major investor conferences this month, many new sets of presentation slides are popping up from our favourite Chinese small caps. Here is a comprehensive list (all links point to the html version in the SEC filings, no PDF or Powerpoint links!):
I will update this post with more presentations throughout this week.


Huifeng Bio-Pharmaceutical (HFGB)
posted by The Traveller on Sunday, March 07, 2010

Huifeng Bio-Pharmaceutical (HFGB) is the leading Chinese producer of rutin and related plant-derived chemicals for use in pharmaceutical, nutraceutical and food production. For the first nine months of 2009 the company reported net sales of $8.89 million and net income of $1.41 million.

On February 4th, Huifeng announced preliminary 2009 results of revenues between $13 million and $14 million and net income of $2.8-3.0 million. These are huge numbers as they translate (taking the midpoint of the range) into Q4 revenues of $4.6 million and net income of $1.5 million, which is more than the company realized in the first nine months combined. Also net margins would rise from 22.4% in Q3 to 32.6% in the fourth quarter. Huifeng is anticipating year-over-year revenue growth of 31% and net income growth of 86% for 2009. "The increase in revenue reflected both a gain in new customers, as well as an increase in the number of orders from our existing customers," the company stated.

Huifeng also issued very impressive 2010 guidance in early February. "Management is providing revenue guidance of $20 million to $25 million and net income guidance between $4.5 million to $5.0 million for 2010. Growth is expected to be driven by increasing sales of current products. Because of the EU COS for Diosmin, the company has a high level diosmin quality. Certain European customers will be interested in Huifeng's diosmin and will increase their purchasing quantity from the company. The company will begin to perform the contract with Safic-Alan for diosmin. Another driver is production line expansion and acquisition which will increase the production quantity of diosmin. This will meet the big quantity requirement of new orders."

Taking the midpoint of this guidance, the company expects revenue to grow by 66% and net income growth of 64% or 2010e earnings per share between $0.20 and $0.23, which gives the company at the current share price of $0.90 a forward P/E ratio of 4.2 and given the high growth rates for 2009 and 2010 a P/E/G-ratio of below 0.1. Conversion of the company's convertible note and related warrants (exercise price of $1.00) might increase the share count by 2.5 million shares or about 11% which would increase the forward P/E to approximately 4.7.

Hidden in a 8-K filing (no press release), HFGB revealed on February 25th that the company has hired three independent directors. This move usually indicates that the company plans to move its stock to a senior US exchange, and with the sustained profitability and high projected growth rates such an uplisting would make a lot of sense. The current low share price would imply a reverse stock split being on the agenda for 2010, a move that has turned out to be very successful for many Chinese OTC-listed companies in 2009.

I am adding a half position of Huifeng Bio-Pharmaceutical to the China Model Portfolio at Friday's close of $0.90. My target for the stock is $2.00. Catalysts could be final FY09 numbers (to be released by the end of March) and follow-up news regarding a possible uplisting.

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Lihua International (LIWA)
posted by The Traveller on Saturday, March 06, 2010

Lihua International (LIWA) is a Chinese developer, designer, manufacturer, marketer and distributor of copper rod and copper wire products and copper clad aluminum (CCA) wire. Lihua has developed a proprietary, patented CCA technology which offers users the same levels of electrical conductivity as solid copper wires, while utilizing only 40% as much copper which significantly reduces costs.

Last week the company announced that it expects full-year 2009 revenue of approximately $161.5 million and non-GAAP net income of approximately $25.5 million. This represents year-over-year revenue growth of 223% and net income growth of 118%. For fiscal year 2010 Lihua anticipates year-over-year growth of approximately 35-40% in non-GAAP net income. Using the low end of this guidance we can expect FY 2010 net income of $34.5 million or $1.43 per share, which means the stock is currently trading at a forward P/E of 6.5.

"The Company expects that 2010 growth will be largely the result of continued strong demand in China for recycled copper and copper alternatives such as CCA in the household appliance, consumer white goods and infrastructure markets. In order to better meet this expected growth in demand, Lihua plans to add 10 new proprietary high-speed production lines in 2010, which will increase its annual capacity by nearly 40%. Lihua expects to complete the build-out of six of these new production lines in the first half of 2010, bringing its annual copper magnet and copper fine wire production capacity to 25,000 tons from approximately 18,000 tons at the end of 2009. Lihua expects to launch the remaining four production lines during the second half of 2010, which will bring its CCA fine and magnet wire capacity to 10,000 tons annually, compared with current annual capacity of approximately 7,200 tons. To date, the Company has launched the first two of its six planned copper magnet and copper fine wire production lines. Lihua remains on track to complete the build out of four additional copper wire production lines during the first half of 2010, with four CCA wire production lines planned for the second half of the year."

The Company anticipates funding these capacity increases from existing cash on the balance sheet and operating cash flow generated in 2010. As of September 30 last year, LIWA had $38.5 million cash on its books and generated operating cash flow of $12.5 million in the first nine month of 2009.

I am adding a half position of LIWA to the China Model Portfolio at Friday's close of $9.37. LIWA will report final numbers for 2009 at the end of this months and Q4 numbers will look exceptional. With the pre-announcement for the year we can expect Q4/09 revenue of $51.22 million which is more than the company reported for the full year of 2008 ($50.01 million). My price target for the position is $16.50 based on roughly 11.4x 2010e EPS or a P/E/G ratio of 0.3. This is significantly below the industry average and below the $20 price tag Rodman & Renshaw has on the stock, but I like to be conservative as usual.

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China Model Portfolio Changes
posted by The Traveller on Saturday, March 06, 2010

Our portfolio position China Armco Metals (CNAM) had big news today. The company announced a $100 million supply contract for scrap metal which means that it has already sold all of the production from its recently completed recycling facility for the first several months.

CNAM's stock price doubled this week on the news but for those of us who were following the company for a while it is no surprise that they will actually sell their recycled steel from the new factory. The growth potential for CNAM is huge but in the end only those plain numbers will matter and my projection of $1.00 EPS for 2010 has not changed. I consider CNAM fairly valued at current levels and as the stock is trading above my target price of $9.00 I am closing the position here.

I am selling 1500 shares of CNAM at Friday's close of $9.60 for a 185.71% gain or $9,360.

Lotus Pharmaceuticals (LTUS) entered into an agreement to sell up to $10 million of common stock, periodically, at app. 10% discount to market price. It was expected that the company would need to raise capital and the terms are reasonable and shareholder-friendly.

After doing a little bit of maths, my 2010 earnings projection stays unchanged at EPS $0.45. However, I am reducing the target price for the portfolio position to 8x 2010e EPS or $3.60 which still leaves 160% upside from current levels.

The Chinese Small Caps sector looked very strong this week and volume indicates that institutions are currently rebuilding positions. I will 2-3 new positions to the China Model Portfolio this weekend, stay tuned.

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2010 Guidance and EPS Estimates
posted by The Traveller on Thursday, March 04, 2010

China Kangtai Cactus (CKGT) is forecasting FY 2010 revenues of $34.8 million, or 35% growth from projected 2009 results of $25.8 million. This translates into Q4/09 revenues of $7.77 million, down 5% from the third quarter. As Q3/09 was the breakout record quarter in CKGT's history, I wouldn't see this guidance as negative - the average for 2009 just sits at $6.0 million so Q4 results should be seen as confirmation of the uptrend.

The company achieved a net margin of 36.8% in the third quarter of 2009. Applying that same margin to the 2010 revenue guidance means CKGT should be able to achive a FY10 net income of $12.83 million or $0.65 per share. This is consistent with my own conservative estimate of 2010e EPS $0.60.

Gulf Resources (GFRE) also issued FY financial guidance. Taking the midpoint of this guidance, GFRE is expecting FY10 revenue of $129.5 million (up 17.5% from 2009) and net income of $37 million (up 21% from 2009). With 35.54m shares outstanding, this translates into a 2010e EPS of $1.07, or just 7% EPS growth from 2009. This number is significantly below my own estimate of $1.20, so I am now calculating with 2010e EPS of $1.02.

Dilution has been heavy for GFRE shareholders in 2009 as the total share count has risen by a whopping 38.6% in just one year. I hope this trend will not continue or Gulf Resources is no longer a value pick for the growth stock investor.

Lihua International (LIWA) preannounced 2009 results and issued FY 2010 guidance. The company expects FY09 revenue of $161.5 million and net income (non-GAAP) of $25.5 million. For Q4/09 this means record revenue of $51.22 million and net income of $7.6 million ($0.32 per share).

Lihua anticipates 2010 year-over-year growth of approximately 30-35% in gross profit and 35-40% in non-GAAP net income. Using the low end of this guidance we can expect FY 2010 net income of $34.5 million or $1.43 per share, which means the stock is currently trading at a forward P/E of 6.3. And that makes this high-growth stock a bargain at the current level.

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Chinese Book Value Plays
posted by The Traveller on Tuesday, March 02, 2010

I've made a screen for Chinese Small Caps trading below BV. Of course this doesn't necessarily mean they are cheap here but there are some interesting names on this list which may qualify for further DD.

Personally I like CHCG, CSGJ, SGAS, JADA, SGTI, CCGY, CNTF, AKRK, CYXN, RCON, CDII, CNOA and CSR as speculative ideas here.

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