Short Earnings Round-Up
posted by The Traveller on Sunday, April 18, 2010

Huifeng Bio-Pharmaceutical (HFGB) reported revenues and net income at the high end of their February guidance. Gross margin improved by 182 bps to a healthy 36.69%. The company seems well on track to achive their 2010 net income target of $5 million and has a forward P/E of barely 5 at current levels. Huifeng did not publish a press release.

New Energy Systems (NEWN) announced financial results in line with expectations: $6.4 million in adjusted net income on $26.4 million revenues. However, NEWN's 2009 numbers do not include any revenue or profits from the two major acquisitions, Anytone and NewPower. The company reiterated its 2010 guidance of at least $15.6 million net income or EPS of $1.23 based on 12.6 million fully diluted shares. This guidance calls for 67.5% net income growth based on pro forma consolidated 2009 net income of $9.3 million as stated in the 10-K filing, and the company has a very healthy balance sheet with no further dilution to be expected for 2010. With a forward P/E of 6.7 New Energy is trading well below its peers and with a Nasdaq listing being a safe bet for Q2/Q3 the stock should appreciate significantly from current levels. I see this one as a clear buy below $10.

China Kangtai Cactus Biotech (CKGT) reported 2009 EPS of $0.43 on very healthy gross margins at 40%. Their 2010 guidance calls for more than 30% growth and we can expect the EPS number to rise to $0.60 for the current year. With a price-to-earnings ratio of just 4.x the stock is still very cheap here and I view it as a China Small Caps core holding.

GC China Turbine (GCHT) reported their first ever quarterly profit but failed to publish a press release with their annual report. That is surprising given the slew of press releases the company put out in the First Quarter. Should the company decide to promote their numbers next week and possibly reiterate their very ambitious business plan, the stock price should take notice. Q4/2009 was the first one in GCHT's history with significant wind turbine sales. My calculations point to $2 million net income for the quarter or $0.03 per share. GCHT stated that 16 1.0 MW wind turbines were sold in 2009, that it started mass production in the second half of 2009, expects sales during every quarter of fiscal 2010, and has a current backlog of 140 such turbines.

That was a short round-up of earnings releases from our China Model Portfolio positions. I will post about other very interesting developments in last week's annual reports (CFMI, CSOL, CHBU) later today if I find the time.

Unrelated to earnings... our portfolio position China Electric Motor (CELM) reached my target price of $8 last week. The stock showed exceptional strength in a weak market and reached a new all-time-high on Friday. However, according to the portfolio rules our CELM position has to be closed now. I am selling 1000 CELM at Friday's close of $8.16 for a profit of $3,180 or 63.85%.

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