Best China Micro-caps on the Market

[kuwlness]

Yikes, things are getting a little sketchy, lol. No Tiz, I dont use/have multiple aliases ... I save that sh!t for the ladies at the bar. : )


On a more serious note, I'm glad to hear more and more success stories. I've received a few via PM, but it's nice to see more people posting on the board. I'm simply here to help and give everyone an edge over Mr Market. There will always be skeptics because why would anyone do something like this for free, right? Well, I dont have a real answer to that, I guess I just enjoy seeing others succeed and make easy money. Plus, I'm helping give stocks that I own/love more exposure which in-turn means more buyers. More buyers means larger PPS increases and the MMs will be forced to move their bid/asks higher.

Lets face it, you cant make money every day, or even every week for that matter. Believe me, I've beaten myself up time and time again because I actually lost money during a week. My goal is to always finish the month higher than where I started, and most Money Managers dont live by this rule, they're mostly concerned about the Quarter.

But, just because a stock goes down doesnt mean it's a bad stock/company. It simply means shareholders are unhappy with the economy so they sell their holdings in hopes of re-buying at a later time when they feel more comfortable with the way things are. The market is fairly forgiving and you will get many chance to buy a stock, there's rarely ever a reason to chase. I've had several stocks that have gone up 50% only to retrace back to the levels that I bought them at simply because the market was in the dumps.

The trick is, you need to always take profits. I dont care if you have to sell 200 shares of a .50 stock to take out that $100 profit (case in point, you should try to make sure your buy/sell order puts the broker's commission at no more than 10% of the buy/sell total ... ie: $8 broker commission means your buy/sell order should be at least $80). Basically, what I'm saying is you'll have plenty of opportunities to re-buy these stocks at lower prices when they start to run. You have to look for opportunities to always capitalize on this.

Something I did for months when I first started trading was I looked at patterns all day long. I learned to make $50 here and there and be happy. The way I did this was by looking at the bid/ask. Here's a quick example (I still do this at times, just not as much):

ACLO: bid = .78, ask = .85

Here, you have a 7 cent spread between the bid & the ask. Now, on a stock like this, it's very easy to buy 1000 shares of said company. So, what do I do? I bid sit all day and wait for that chance to get those 1k shares on the bid so I can try to turn around and flip them at the ask. Might not seem like much, but when you're talking about 1k shares, .07 means you're making $70 (minus broker commissions, but who cares, those are a tax-writeoff in case you didnt know that).

Now go back to last week. ACLO had a bid of .60 and ask of .84. INSANITY. This was money just waiting to be made, lol. So I capitalized on it to the max. I flipped over 10k shares by bid sitting and re-selling at the ask. I probably made over $1k last week flipping like this. Investors hate when people do this because it holds back stocks from running. But (not to quote Cramer) I dont care about making friends, this is about making money. Now, I wouldve made a lot more doing this, but I wanted a core position in ACLO since it'll be $1.50 soon and I want to participate in that large move north.

So, I want everyone to start capitalizing on the spread between bid and ask if possible, especially when they're .05 or more. I call this straddling, but I doubt anyone else in the world would have any idea what this means. Now, one thing I should point out is that if enough selling happens at the bid, the bid will soon become the ask and this can turnaround and bite you. So, I never over-extend myself by doing this too much. And, the other thing that helps is I only do it on stocks I like and know will be going higher anyway, so just in case the bid does become the ask, I could honestly care less because in the long-term, it'll be higher than what I paid.


Anyway, sorry to type a novel, just felt like enlightening the board more on some of my trading strategies and wanted to clear up some of the silliness that I had read. I' seriously not the only one that likes/loves these stocks, you can find articles on TheStreet.com, SeekingAlpha.com, and several other stock sites. If you type in any one of the stocks mentioned on this board, there should be at least 1-2 articles on each of them (with ACLO being the exception, though I do think it'll get an article sooner or later).


So, I'll now open the board to discussion. And please, if you think you've found a hidden gem, please share it with the board and I will do some DD on it and let you know what I think.

 

[punter]

You got anything that follows oil & gas?

 

[tanner12oz]

GDHI

decent volume...might be fixin to pop

 

[kuwlness]

You got anything that follows oil & gas?

I couldve told you to buy NEP a few days ago, but it's only a double from here and I dont like it as much as some of the others. The major China plays I'm using for energy/oil are:

LPIH
CCGY


You could throw CSOL in the mix, but that's a pure Solar play. GCHT is a pure wind power play. I suggest CCGY as they provide bio-diesel & specialty chemicals, and with their major expansion set to be announced soon, it'll give you the bigger ROI in the short-term. CCGY's short-term price target is appx $1.50, so you'd be looking at an ROI of appx 75%.

Now, with LPIH, you have a great long-term play. Price target for LPIH is $10 by end of the 2010. So, ROI is appx 500% from today's close. This is semi-dependent on them uplistng to the AmEx, but I believe that'll happen in the next 6 months, so putting the $10 price target by the end of Dec 2010 is very realistic. Short-term price target is still $3, or a 50% ROI from today's close. This should be achieved sooner than most think, probably within a month IMO.

 

[tiznow]

yeah sorry bout that kuwl...

glad you pointed some of these guys out that woulda never been on my radar....

might be hopping in on down the road...wish i woulda known about them 4-5 months ago when the markets were freaked and some of these guys that are now in the dollar area were going for cents

just have a very big overall bearish feeling for the overall equity markets and think these guys might take a rest after this huge run since march regardless of what their long term outlook is and china holding up better than the rest of the world

also when i see posts like this i just smell a pumper....calling for a 5x+ bagger in 12-24 months.......just crazy targets but eh....to each his own i guess...if it happens i'll tip my cap

i think that's the issue line tamer had with you who seems to have disappeared after you two had that run in a bit ago.....

--------------------------------

GCHT

"Initial sales efforts have been rewarded with contracts of approximately $128 million."

Compare that to CWSI that made $19M last year and is making about $10M/quarter in revenue this year. And either GCHT is blowing smoke out their butt, or they've got some serious connections that they believe will turn to contracts because they've guided for big, big growth:


YEAR/REVENUES/Net Income/EPS on 61M diluted shares

2009 / $28.7M / $4.1M / .07

2010 / $87.2M / $14.7M / .24

2011 / $199.0 / $30.4M / .50

2012 / $536.0 / $89.0M / $1.46



Keep in mind, it's not uncommon even for China stocks trading in this sector to receive a PE of upwards of 20x. So:


Near-term price target: $2.40 -- should be here within a week or two.

Longer-term price target: $5 -- should be here within 3-6 months, IMO

Very long-term: $10+ -- 12-24 months, IMO

 

[tiznow]

also just food for thought i posted this over on sell thread last night

looking at the long term i'd be sure to stick to issues that are dependent on internal domestic demand...rather than the overall global economy in general....just some crazy stuff...steel production greater than EU, japan, US, and russia combined.....

cnoa, and ckgt the top 2 on my list for the long term of the many you posted are just that

ckgt looks really toppy to me technically...maybe i'm wrong...

kickin myself over that guy was close to moving in back in the low 1 area but held out for 90 cents that never came...

-----------------------------------

Gloomy times ahead for China

Oct 14, 2009


China faces a major slowdown in the growth of its economy as investment spending loses its momentum and consumer spending fails to offset that, according to a new report from the Monaco-based investment gurus Pivot Capital Management.

Development in China has been driven primarily by capital spending, but relative to the economy that has now reached unprecedented levels – accounting for almost 90% of growth in the first half of this year. The boom cannot be sustained at current rates and the chances of a hard landing are increasing.

Analysis of industrial capacity, urbanisation and infrastructure development "shows that China's industrialisation and structural modernisation are largely complete" – therefore its future long-term fixed capital formation needs are being grossly over-estimated.

China is "running out of easy ways to boost growth through investment."

• The manufacturing base is increasingly mature and there are few areas where there's an obvious need for capacity expansion. Its current steel production is greater than that of the European Union, Japan, the US and Russia combined. Despite idle capacity of 160 million tons of steel a year, additional capacity of 60 million is under construction.

In cement, having doubled its capacity, China now produces and consumes more than the rest of the world combined.

Because of the way electricity is subsidised, heavy industry is notoriously inefficient in use of energy – which has probably led to over-estimation of future power generation needs, an important area of capital spending in recent years.

• The movement of hundreds of millions of people from rural areas to the cities "is perhaps the most quoted fundamental trend that should drive China's growth for the next few decades," generating demand for construction, real estate and home equipment.

But, the Pivot researchers argue, the "numbers are not what they seem." If the same definitions of what are classified as villages, townships and cities were used by statisticians as in other major countries, China is already one of the world's most urbanised nations.

Potential for future growth in residential property is limited by a very high home ownership level (86% in 2005) and affordability – price-to-income ratios have reached 15 to 20 times in major cities and around ten times in regional cities.

• Infrastructure has been the prime beneficiary of the gigantic stimulus package launched late last year. But the economic justification for many of the projects is increasingly questionable.

China already has a highway system two-thirds to three-quarters the size of America's, despite a vehicle population less than one-fifth the size. It has roughly the same number of bridges as the US, despite one-fifth as many rivers. The only area of infrastructure where further investment clearly makes sense is the rail network.

A lot of infrastructure projects are now in sparsely-populated inland areas ("bridges to nowhere"), or clearly primarily intended to be prestigious, such as the Qinghai-Tibet railway.

The Pivot study expects infrastructure growth to halve next year and go flat or even negative in 2011.

China bulls suggest that private consumption will overtake fixed capital formation as the engine of economic growth. But private consumption only accounts for about one-third of the economy. Even making optimistic assumptions, private consumption would have to grow three to four times faster than in the past decade to compensate for the imminent fall in fixed investment.
The coming decline in the rate of growth

Such expectations are "unrealistic." The latest central bank survey of consumer sentiment shows that a record low 8.6% of households consider their income "adequate," compared to 32% in the first half of 2007. This is "hardly star material" for a consumption boom now in China, say the Pivot researchers.

The labour market is another worry. Urban unemployment is far worse than the politically-manipulated figures suggest – probably more than double the level the government admits to, and perhaps as high as 27% of the work force. Almost a million university graduates who started looking for jobs last year are still unemployed, and about 3.5 million of this year's graduates.

The Pivot study concludes that China's economic growth is soon going to decline to 5%-6% a year, "and probably slowing down even more later on."

This will have "enormous consequences on what China imports from the rest of the world as it shifts from commodity and capital goods into (most likely locally-produced) consumer goods and services."

Gloomy stuff for bulls of the Middle Kingdom like myself. It suggests that if we want to invest in China, we need to be particularly selective and concentrate on the best-connected as well as the best-managed companies focused on future domestic demand opportunities.

 

[kuwlness]

yeah sorry bout that kuwl...

Tiz, I dont blame you. Although, if I was pumping, why would I be doing it on a Sports Gambling forum? lol.

Anyway, back to your mention of the price target for GCHT. It's basically as simple as this:


YEAR/REVENUES/Net Income/EPS on 61M diluted shares

2009 / $28.7M / $4.1M / .07

2010 / $87.2M / $14.7M / .24

2011 / $199.0 / $30.4M / .50

2012 / $536.0 / $89.0M / $1.46


2009 EPS = .07. Typically Wind Power stocks (even in China) have a PE of appx 15-20. So, looking at them right now @ about $1.80, they're actually trading higher than a 20 PE. But, 2009 is almost over and people are looking ahead to 2010 already. 2010 EPS are .24. Put a 15-20 PE on that and you have: $3.60 - $4.80. By the end of 2010, we'll be looking forward to 2011, EPS forecasted are .50 ... 15-20 PE would put the PPS at $5-$10.

That's just the simple way of doing it and you never know if they'll pull through with their forecasted earnings or need to dillute current shareholders to raise capital for whatever reason. But, being backed by the Government is a big deal in the PRC, and companies backed by the Gov in China are usually very successful and get the higher PE multiples.

So, with that said, you guys all have more insight as to how I come up with my Price Targets. They're not just random numbers I throw out -- There is a rhyme to my reason (not sure if that's the analogy I'm looking for, but I'll leave it at that for now).

 

[tiznow]

most of these guys go through several rounds of dilution along the way as they need the cash to expand production

when i see a company with crazy targets like that i don't trust um for a second...

HQS which i've followed from the bulletin board days has gone through the dilution pains along the way....think more fears of dilution holding that one back....we'll see if it can pop here soon with typically big profit quarters of Q3 and Q4 coming up

 

[tiznow]

and according to this post i pulled off the yahoo hqs board small china guys and dilutions is the norm

the crash on HQS from 16 to 8 in mid 2008 was due to a dilution they did at 8.50...and than it tanked further to 4 (basically cash on hand price) as the markets got mauled in late 2008

---------------------------

Who can blame you? I did not sell my shares before this drop, but it's understandable that people get out of this stock.

Looking at the cash, it would appear they have more tan enough to cover expansions. But look at the history - they've had $50m for the last 4 quarters, yet still diluted the stock.

Looking again, even after this dilution the EPS is (now) over $1 with a P/E under 8. WOW!

This looks like a screaming buy - or even a modest one even with the threat of dilution. Unfortunately, it don't work out that way. Norbert does not concern himself with the shareholders because he doesn't have to. It's all about operations first, then growth without any regard to stock.

That's a shame for shareholders - but it's typical, especially for Chinese companies. Look at AOB... looks identical fundamentally/historically.

This isn't a knock on Norbert or China or anything else... it just is a fact and one that is and has been actually more and more pervasive in equity investing for 2 decades now. The reaosn is simple... supply and demand. Since 1990 the number of people investing actively has skyrocketed. There's far less pressure now to execute on a "feduciary responsibility". In fact, that term is a joke. There's no governing body to legislate it (mainly because they're all on the take and don't need to fix anything that's working perfectly fine for them and their lobby friends).

 

[kuwlness]

and according to this post i pulled off the yahoo hqs board small china guys and dilutions is the norm

Absolutely, dillution is the norm in China micros. It isn't a major concern for me, though. Every stock I've owned that's gotten dilluted has come back, and in most cases, came back stronger than before. Recent examples would be:

CYXN -- warrants to purchase stock at .15 a few days ago, took a hit and PPS came back
SCLX -- same as above
LPIH -- been dilluting for months for financing their expansion
MYST -- dilluted at .06 when it was at .10, look where it is now.


See, the thing with the China micros dilluting is that it's all for the benefit of the shareholder. They're dilluting to finance expansions, improvements in production, etc. In the end, it's all good for the shareholder. Sure, it sux when a stock you own takes a 10-20% dump in one day due to dillution, but they come back if the dillution is for good reasons.

The CEOs, officers, directors of these companies make pennies, and in some cases $0 if the company isnt performing up to snuff. If it's dillution for a good reason, I'm all for it. In most cases, I embrace dillution -- it gives me a chance to buy more shares of company that I already love at a huge discount, lol. I'm not your average investor, though.

Sh!t, they can dillute all day if what they're dilluting for increases EPS, revenues, etc. All I'm saying is, I'm used to dillution, it's been going on for years and it is part of investing in China Micros.

 

[kuwlness]

GDHI
decent volume...might be fixin to pop

I've seen the MoMo crews come in and out of this one countless times, but it's been on my radar for a few months now. Anyway, it's a bit too speculative for me just yet. Need to see some hard numbers out of 'em first.

But, you've gotta check out this presentation if you're considering purchasing some shares, it's outstanding IMO:

http://pinksheets.com/otciq/ajax/showFinancialReportById.pdf?id=25163


I need more time to research this one and will keep the board updated. For now, it's a no-buy/no-sell in my book. I might throw this up on the Roulette thread at some point, it does have nice swings. Thx for pointing it out.

 

[punter]

I couldve told you to buy NEP a few days ago, but it's only a double from here and I dont like it as much as some of the others. The major China plays I'm using for energy/oil are:

LPIH
CCGY


You could throw CSOL in the mix, but that's a pure Solar play. GCHT is a pure wind power play. I suggest CCGY as they provide bio-diesel & specialty chemicals, and with their major expansion set to be announced soon, it'll give you the bigger ROI in the short-term. CCGY's short-term price target is appx $1.50, so you'd be looking at an ROI of appx 75%.

Now, with LPIH, you have a great long-term play. Price target for LPIH is $10 by end of the 2010. So, ROI is appx 500% from today's close. This is semi-dependent on them uplistng to the AmEx, but I believe that'll happen in the next 6 months, so putting the $10 price target by the end of Dec 2010 is very realistic. Short-term price target is still $3, or a 50% ROI from today's close. This should be achieved sooner than most think, probably within a month IMO.

Thanks, I started dumping Delta today and need to look at some replacements.

 

[kuwlness]

CNOA

Man, she just wont quit. Looks like $1.50 is coming sooner than I thought.

 

[tiznow]

yeah kicking myself on that one too

Finally did dd last night night to figure out why so cheap

Turns out they got a lawsuit against um but it sounds pretty bs....sounds like they gonna settle out of court soon

The lawsuit has also seemed to hinder communications with shareholders so that'll get better soon

Q3 earnings should be out in mid nov and should be big with the harvest season and all

 

[kuwlness]

yeah kicking myself on that one too

Finally did dd last night night to figure out why so cheap

Turns out they got a lawsuit against um but it sounds pretty bs....sounds like they gonna settle out of court soon

Funny you mention that. That's the reason for today's big move. Lawsuit settled. Waiting on a PR from the company though. But this is very good news. You can still get in for the double to $2.

 

[kuwlness]

CNOA -- consider yourselves, in-the-know : )


From Pacer:

Dated 10/7/09 and approved by the judge 10/13/09.

"Dear Judge Daniels:
We represent Lead Plaintiffs in the above captioned class action and , together with defendant China Organic Agriculture, Inc. ("China Organic"), write to inform the Court that plaintiffs and defendant China Organic have reached an agreement in principal to resolve this matter. At present, plaintiffs have until October 12, 2009 to file their amended complaint with any briefing on a motion to dismiss to commence thereafter. To enable the parties to draft and present for the Court's review the required settlement agreement, proposed orders and notices to the class, we and counsel for China Organic respectfully request that the Court stay these deadlines for 60 days. No prior requests for extensions or adjournments have been made.

Respectfully,
Ronen Sarraf"



When this hits mainstream media and posts on Yahoo, folks are gonna rejoice and buy this up to $2 IMO.

 

[kuwlness]

SIAF


Hang Sing Tai Agriculture Development Co. Ltd. Expands Production Capabilities, Completes Installation of Additional Dryer Units

Press Release
Source: Sino Agro Food, Inc.
On 9:22 am EDT, Friday October 16, 2009


GUANGZHOU, China--(BUSINESS WIRE)--Sino Agro Food, Inc. (Pink Sheets:SIAF - News), an emerging integrated, diversified agriculture technology and organic food company with subsidiaries operating in China, is pleased to announce Hang Sing Tai Agriculture Development, a 75% owned subsidiary of Sino Agro Foods, Inc., has expanded its production capabilities by installing additional dryer units.

Hang Sing Tai Agriculture Development operates a 490-acre Hylocereus Undatus (“HU”) flower plantation. HU flowers, also known as “dragon fruit”, are popular in China for their perceived medicinal benefits. The Company recently completed construction of 4 new additional dryer units. These new units will increase the amount of product that can be dried, which will result in less product spoilage, longer shelf life and expanded distribution during winter months.

The Company is also nearing completion on the construction of additional cooling rooms, as well as improvements to infrastructure such as roads, loading and discharging bays, open storage areas and drainage. An additional 50 acres are also expected to be added for the 2010 season. The Company expects total renovation and development costs to run approximately $2M U.S. dollars of which are being funded through retained earnings from ongoing operations and China Government subsidies.

Mr. Lee Solomon, Sino Agro Food, Inc. CEO, stated, “The new dryers are expected to increase our revenue by at least three times subject to dried flower prices between now and April 2010. It is however looking good so far, as information is indicating that overall supplies this year will be less than 2008, and 2008’s average was RMB46 / kg of dried flowers, and we are expecting over RMB50 averaged for 2009 crops.”

Beacon Equity Research recently published an equity report providing an overview of Sino Agro Food, Inc. This report may be viewed at http://siafchina.com/download/SIAF.pdf. Additional information about the Company may be obtained at http://www.pinksheets.com

 

[tiznow]

Yeah cnoa looks like a special circumstance to me that should run regardless if things get fugly for equity markets

Assuming they didn't take a big hit from the lawsuit and operations do what they expected to do in 2nd half of year and shareholder communications get better could be back to 3 to 4 area in next 6 months

It's amazing what a little pr can do ckgt for instance isn't earning way more than it was in 2007

It's just in may they hired a firm to help with pr after they had a large gap in communications

That said ckgt has had a nice run and the cacti smokes not gonna add much to earnings yet pretty sure that guy takes a break and looks toppy

 

[tiznow]

also cnoa is in the process of trying to uplist from the bb like puda did

the lawsuit has gotten in a the way a bit it seems they wanted to get it done by end of 2009 but might take a bit longer now

so that'll be another positive for them going forward over the next 12 months or so....assuming they get that done

 

[SpreadDestroyerr]

Bought plenty of FXP in pre market~~:<<