Update on BSPM, CELM, CCME and WEMU

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.