Best China Micro-caps on the Market

[tiznow]

well HQS disappoints.....not gonna earn a buck this year after all looks like unless q4 blows it out....should be fine long term but a big pop goin' forward in some doubt now unless this is a one time thing and the q4 turns out really good

sales were flat yoy for q3....decrease in earnings due to this....

note this is a risk of investing in china stuff....the bio-product segment is their domestic china sales.....plus if they do receive it at some point i assume they will cancel the loss they are taking now out in the future?....

The decrease experienced in the quarter was mainly the result of the provision for potential losses in the Company's receivables in its health and bio-product segment which had not materialized to date, as well as an increase in advertising and marketing expenses within the same segment. EBITDA for the quarter decreased by 27% to $5.2 million, from $7.1 million for the same period last year.

Net income for the third quarter was $4 million, or $0.268 cents per fully diluted share compared to net income of $5.6 million, or $0.427 cents per fully diluted share, for the third quarter of 2008. Net income during the current quarter was affected by increases in doubtful accounts of approximately $1,606,000 and marketing and advertising expenses by approximately $979,000 from the health and bio-product segment.

first 9 months

Net income increased by 75% to $6.2 million, or $0.472 cents per fully diluted share, compared to net income of $3.6 million, or $0.291 cents per fully diluted share, for the same period a year earlier.

 

[tiznow]

yeah just realizing their earnings kinda flux some due to this DOUBTFUL/(RECOVERY OF) ACCOUNTS

like in q3 of 2008 they recovered 300k in the doubtful category...while now in q3 of 2009 they are taking a 1.6 million dollar loss

so that's a 1.9 million net income swing

 

[tiznow]

yeah that doubtful/(recovery of) accounts stuff nothing to really worry about

the guy just said that they put new products out on the markets so they had to give them more time to pay up for it and that sort of thing and they've never not received a payment in their history

also they are having some pricing problems now on their aquaculture stuff just the nature of their business with commodities and the economy the way they are and very volatile

i was a bit concerned to see the 7% drop in sales in their tilipia and shrimp stuff...but they said prices were down 25%...and volumes were up 10-15%....

so basically the deflation bug i keep ranting about bit them LOL

anyway we'll see how it does the rest of the week....basically at this point its more of a long term play and buy any dips....don't think we'll see the post q3 to early/mid year blastoff for a double though as we've seen in the past.....dip down to 6s or even 5s a great buy though IMO...

over 55 million in cash now and no debt....with a current markets cap of 103 million...book value 120 million

buying now or lower you should be happy with a long term outlook....short term kinda doubting the pop i was expecting now

 

[kuwlness]

HQS:

Yeah, looks like it'll be good long-term. I dumped my shares in AH to free up the capital. I didnt get to listen to the Con Call, but wasn't all that impressed with the numbers. Gonna try to catch an archived audio version later today. I'll wait to see how the Market reacts tomorrow and might look to grab some for a longer-term play.

Still, I think it's slightly undervalued at these prices and it would be hard to lose money if you had it in the stock at current levels. Will keep my eye on it.

 

[kuwlness]

ALIF

Well, if anyone was forunate and got it for cheap, congrats to you. It's going to be worth a lot more tomorrow. My stubborn ass wouldnt pay-up even though I knew it was going to $2+ ... ahh well, plenty more winners out there.


Profit .08 per share for Quarter.

http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=6593124

 

[tiznow]

yeah that flip on the doubtful/(recovery of) category hurt their numbers quite a bit yoy

as far as raw EPS goes....

their margins keep increasing which is good....had to up their advertising in china for their new product rollouts in their domestic chinese portion of their business as well

the downward pricing pressures on the finished products on the aquaculture end of things is just near term fluctuations and such.....good to hear their volume of sales is up that was my main concern when i saw the revenue drop (since they are selling the aquaculture stuff to economies in a recession the US and europe)....it'll all even out over the long haul

if you toss out that doubtful/(recovery of) they had flat EPS yoy for q3.....that fluxes the earnings quite a bit when comparing quarter to quarter....

as long as they don't take another big hit in q4 in that category....they should earn at least 40 cents in q4 (earned 48 cents last year)...worst case i see is they take another hit in that category and report 30 cents or so....

if so they earn 77 cents or so on the year....with slight revenue growth.....while adding a few million to their cash reserves over the course of 2009....and increasing book value by 20%

 

[UltF]

Thanks for the analysis Tiz and Kuwlness. I enjoy reading what you guys share. I wasn't in HQS but I like how you broke it down Tiz: it helps me understand more about what to look for.

 

[kuwlness]

YONG

Yongye International Raises 2009 Guidance

BEIJING, — Yongye International, Inc. (Nasdaq: YONG), (”Yongye or “the Company”) a leading manufacturer, developer and distributor of Shengmingsu brand plant and animal nutrient products in the People’s Republic of China (PRC), today announced that the Company raised its 2009 annual revenue guidance to $94-$95 million from $89-$90 million which represents a 96%-98% increase over 2008 results. The Company also provided guidance for 2009 annual pre-tax income from operations of $30-$31 million, which represents an increase of 119%-126% over 2008 results, and for 2009 annual pre-tax operating income margin of approximately 32%-33%.

“We have experienced stronger than expected revenue generation in our new, non-traditional markets in southern and central provinces, and internal economies of scale which are expected to increase our 2009 pre-tax operating income margin by approximately 4-5 percentage points over that of 2008,” commented Mr. Zishen Wu, Chairman and CEO of Yongye International. “We strongly believe these preliminary results support our geographic expansion strategy for the coming years and our ability to scale the organization to meet these demands.

 

[kuwlness]

ACLO

It looks like today is the day the MMs are going to finally fill that gap. This is a great buying opportunity. Put in a bid at .605 (not all-or-none) and you'll likely get filled. Odds are the MMs will try to close it at .60 or right about that level, but this is going much higher once this gap is filled IMO.

Near-term price target: $1.50 (after earnings is released)


Dont have a long-term price target until I see their earnings. I dont know if I'll hold much longer after earnings unless they're stellar. This should be an easy double nonetheless. GL

 

[kuwlness]

YUII

Added another 1k shares ahead of earnings which will be released on Thursday. Guidance for EPS of .83 for 2009 and then their new breeder farms open for business this quarter.

Just uplisted to the Naz ahead of earnings, I'd say they want to affix their stock with a sizeable PE by presenting a blow-out Q.

 

[kuwlness]

China Solar Stocks (referencing CSOL)

Only two listed are EPS positive -- the others have no pe. The two that have a PE average a ratio of 20+

http://uschinastocks.com/china-solar-stocks.html

That said, I believe CSOL will report EPS positive from continuing operations in the next week or so, and if they do I think it will FINALLY get some traction and trade closer to it's book value.

Hell, it's trading for about cash here today. I'm done saying this stock is undervalued. Either I'm wrong on CSOL or the market is, and we'll find out in a week or less.

Place your bets! I already put my money where my mouth is and bought more today at .36

 

[kuwlness]

Data Shows China Economic Recovery Stays Firm

BEIJING -- China's economic recovery stayed firm in October as industrial production growth quickened and investment growth remained solid, government data show.

Fixed-asset investment in China's urban areas rose 33.1% in the January-October period from a year earlier, slowing from the 33.4% growth in the first three quarters, government data showed. The increase was below the median 33.5% forecast of 13 economists surveyed earlier by Dow Jones Newswires.

Value-added industrial production in October rose 16.1% from a year earlier, higher than the survey's forecast of a 15.5% increase and September's 13.9% gain.

China's retail sales in October rose 16.2% from a year earlier, accelerating from September's 15.5% growth, the data showed.

http://online.wsj.com/article/SB125790615310142901.html

 

[kuwlness]

US Listed Chinese Companies Will Out Perform Market According To First Wilshire Securities Portfolio Managers

On 8:46 am EST, Wednesday November 11, 2009 Inc.Claymore/Alphashares China Small Cap

67 WALL STREET, New York - November 11, 2009 - The Wall Street Transcript has just published its TWST Small Cap Value Report offering a timely review of the sector to serious investors and industry executives. This 47 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling <?XML:NAMESPACE PREFIX = SKYPE /><SKYPE:SPAN id=softomate_v3_highlight_0 class=skype_v3_tb_injection title=Call this phone number in United States of America with Skype: +12129527433 mode=".modern" skypeid="0" skypeaction="call" nof="" isfax="" freecall="" fwidth="" type=".flex" path="file://C:/Users/kuwlness/AppData/Local/Temp/Low/__SkypeIEToolbar_Cache/e70d95847a8f5723cfca6b3fd9946506/static/" durex2="%DADDYHEIGHT%" durex="%DADDYWIDTH%" context="(212) 952-7433"><SKYPE:SPAN id=skype_v3_tb_nop0 class=skype_v3_tb_nop> </SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_droppart_0 class=skype_v3_tb_imgA_flex title="Skype actions" skypeid="0" skypeaction="drop" skypesms="0"> <SKYPE:SPAN style="BACKGROUND-IMAGE: url(file://C:/Users/kuwlness/AppData/Local/Temp/Low/__SkypeIEToolbar_Cache/e70d95847a8f5723cfca6b3fd9946506/static/famfamfam/US.gif)" id=skype_v3_tb_img_f0 class=skype_v3_tb_imgFlag></SKYPE:SPAN> <SKYPE:SPAN class=skype_v3_tb_nop> </SKYPE:SPAN></SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_img_s0 class=skype_v3_tb_imgS> </SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_text0 class=skype_v3_tb_injectionIn><SKYPE:SPAN id=skype_v3_tb_innerText0 class=skype_v3_tb_innerText> (212) 952-7433 </SKYPE:SPAN></SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_img_r0 class=skype_v3_tb_imgR><SKYPE:SPAN class=skype_v3_tb_nop> </SKYPE:SPAN></SKYPE:SPAN></SKYPE:SPAN> <SKYPE:SPAN id=softomate_v3_print_0 class=skype_v3_tb_injection_print context="">(212) 952-7433</SKYPE:SPAN> or via The Wall Street Transcript Online.

Topics covered: Small-Cap Value - Capital Preservation - Sovereign Bonds - Precious Metals - Value-Investing - Companies with International Exposure - US-listed Chinese Companies - Risk Limitation - Industry-Diversified Portfolios - Long-Term Value - Micro-Cap Companies - Turnaround Situations - Strategic Buying - Fundamental Analysis

Companies include: Bridgepoint Education (BPI); Compass Minerals (CMP); Flexsteel (FLXS); Hardinge Corp (HDNG); Phillips-Van Heusen (PVH); Adobe (ADB); Affiliated Computer Services (ACS); Alliance Data Systems (ADS); American Water Works (AWK); Atlantic Tele-Network (ATNI); Celanese Chemical (CE); CenturyTel (CTL); Clean Energy Fuels (CLNE); Consolidated Graphics (CGX); Dell (DELL); Dillard's Department Stores (DDS); Drew Industries (DW); Educational Development Corporation (EDUC); First Acceptance Corp (FAC); Forestar Group (FOR); Fresh Del Monte (FDP); Hain Celestial (HAIN); Harbin Electric (HRBN); Huron Consulting (HURN); IMAX (IMAX); IMS Health (RX); Kennametal (KMT); Lamar Advertising (LAMR); NBTY (NTY); Nature's Sunshine Products (NATR); Nobility Homes (NOBH); Omniture, Inc. (OMTR); Perot Systems (PER); Pfizer (PFE); SPDR Barclays Capital International Treasury Bond Fund (BWX); SPDR Gold Trust (GLD); Silver Wheaton (SLW); Tellabs (TLAB); Temple-Inland (TIN); Tempur-Pedic (TPX); Tesoro (TSO); Valero (VLO); Verizon Wireless (VZ); Whole Foods (WFMI); Xerox (XRX).

In the following brief excerpt from just one of the in depth interviews in the Special Report , top tier portfolio managers discuss the outlook for the market for investors.

FRED ASTMAN is Chairman and a Portfolio Manager at First Wilshire Securities Management, Inc. Mr. Astman served in the Air Force as navigator of both B-24s and B-26s in World War II and the Korean War. He earned a BA from the University of Connecticut and has been investing in the small cap sector since 1962.

SCOTT HOOD serves as President of First Wilshire Securities Management, Inc., and co-manages the portfolios. He has over 15 years of experience in the securities industry and has worked as an Analyst and Portfolio Manager at First Wilshire for 12 years. Mr. Hood also worked as a Supervisory Analyst with Merrill Lynch in Hong Kong and with a merchant/investment banking firm in New York City. He received his Bachelor of Science degree in Economics from New York University. He is a Chartered Financial Analyst and a member of the CFA Institute.

TWST: Tell us a bit more about the Chinese market, because the last time I talked to you, you said that the companies you follow are in the category of under 5 P/E. Has that changed now a year later?

Mr. Hood: Actually the Chinese stock market has had very high valuations. It's the U.S.-listed Chinese companies that we were following that had low P/E. Yes, their valuations have definitely gotten higher from the bottom. I think the Chinese stock market bottomed at the end of last November, but the real gains came after March. The Chinese stocks trading on Chinese exchanges were very pricy going into this downturn and got a lot cheaper. But their valuations have since increased, and our Chinese stocks have appreciated along with them, which was nice because they didn't always move together in the past. Nonetheless, the valuations of the Chinese stocks trading in the U.S. are probably half the P/E of the Chinese stocks trading in China.

Mr. Astman: The Shanghai stock market is trading at 30 times trailing earnings and 20 times estimated forward earnings. The Hong Kong market has a little bit lower P/E at around 22 times trailing, and 16 times forward numbers. The stocks that we're in are not in either of those exchanges and trade at lower valuations of 5 to 15 times P/E. They trade in the United States on NASDAQ, New York Stock Exchange, American Stock Exchange, etc. They comply with all SEC regulations and therefore have a little more visibility and oversight to them.

Mr. Hood: The reason why there are Chinese companies trading in the U.S. is that they need access to capital and they need to go public. It's very hard for smaller companies that are not tied to the government to go public in China, and it's hard to get bank debt as well if you're small, so they've sought other avenues of raising money. Getting listed in the U.S. has become more popular over the last 10 years. These companies have done well for the U.S. shareholders because they have higher growth but lower valuation than the U.S. companies and they have lower valuation than the locally listed equivalent companies. They have to abide by the U.S. standards of reporting disclosures as well.

Mr. Hood: There's one company in China called Shiner International, which is in plastic packaging. They're in some unique areas like anti-counterfeiting for products like cigarettes. They are also in the normal run-of-the-mill plastic packaging and that should be a good growth area over the next several years. The valuation of the stock is very much on the reasonable side.

Mr. Astman: Another one is China Pharmaceutical Holdings, which manufactures drugs and distributes them in China. Company does about $50 million to $60 million in revenues with forecast of $75 million for next year, which is a 25% increase. It trades at about eight times estimated earnings in 2009 and about six times estimated earnings in 2010. So again, we're seeing much higher growth in China. In other words, a company may be selling at 10 times earnings, but their growth might be 50% for the next three years.

Mr. Hood: China Pharmaceutical Holdings will have doubled its revenue this year from the 2007 level and should increase by well over 25% in 2010. They've really benefited from the government's emphasis on rural healthcare, which is part of their stimulus package. It has helped improve sales to the pharmacies and hospitals outside of the major cities, thereby benefiting the company.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 47 page special issue is available by calling <SKYPE:SPAN id=softomate_v3_highlight_1 class=skype_v3_tb_injection title=Call this phone number in United States of America with Skype: +12129527433 mode=".modern" skypeid="1" skypeaction="call" nof="" isfax="" freecall="" fwidth="" type=".flex" path="file://C:/Users/kuwlness/AppData/Local/Temp/Low/__SkypeIEToolbar_Cache/e70d95847a8f5723cfca6b3fd9946506/static/" durex2="%DADDYHEIGHT%" durex="%DADDYWIDTH%" context="(212) 952-7433"><SKYPE:SPAN id=skype_v3_tb_nop1 class=skype_v3_tb_nop> </SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_droppart_1 class=skype_v3_tb_imgA_flex title="Skype actions" skypeid="1" skypeaction="drop" skypesms="0"> <SKYPE:SPAN style="BACKGROUND-IMAGE: url(file://C:/Users/kuwlness/AppData/Local/Temp/Low/__SkypeIEToolbar_Cache/e70d95847a8f5723cfca6b3fd9946506/static/famfamfam/US.gif)" id=skype_v3_tb_img_f1 class=skype_v3_tb_imgFlag></SKYPE:SPAN> <SKYPE:SPAN class=skype_v3_tb_nop> </SKYPE:SPAN></SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_img_s1 class=skype_v3_tb_imgS> </SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_text1 class=skype_v3_tb_injectionIn><SKYPE:SPAN id=skype_v3_tb_innerText1 class=skype_v3_tb_innerText> (212) 952-7433 </SKYPE:SPAN></SKYPE:SPAN><SKYPE:SPAN id=skype_v3_tb_img_r1 class=skype_v3_tb_imgR><SKYPE:SPAN class=skype_v3_tb_nop> </SKYPE:SPAN></SKYPE:SPAN></SKYPE:SPAN> <SKYPE:SPAN id=softomate_v3_print_1 class=skype_v3_tb_injection_print context="">(212) 952-7433</SKYPE:SPAN> or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.
http://finance.yahoo.com/news/US-Listed-Chinese-Companies-twst-3721089464.html?x=0&.v=1

 

[kuwlness]

CNOA

Breaking out going into earnings. Could come out today, but I dont think they'll be here until Monday. Still, looks like its gonna run hard into earnings.

 

[kuwlness]

Tick Tock, Tick Tock ... You guys ready for new market highs??


S&P 1150 is my call ... should see it in the next 2 weeks IMO. Even the bears are joining the bulls as anticipated.

Race for performance is on. Previous tops are about to be new support going forward.

 

[kuwlness]

I have DOW 11k hats and t-shirts for sale if anyone is interested.

 

[kuwlness]

BSPM

Earnings due out after the bell today. They'll be holding a Con Call tomorrow AM ... the call-in information is a few posts back

 

[ANOTHERDAY]

CNOA

Breaking out going into earnings. Could come out today, but I dont think they'll be here until Monday. Still, looks like its gonna run hard into earnings.

Wish I was home earlier, but I picked up a bunch at $1.32

 

[tiznow]

Tick Tock, Tick Tock ... You guys ready for new market highs??


S&P 1150 is my call ... should see it in the next 2 weeks IMO. Even the bears are joining the bulls as anticipated.

Race for performance is on. Previous tops are about to be new support going forward.

bulls still haven't won the war yet

1100 S&P still a battle

and after that u still gotta clear 2200 naz

 

[kuwlness]

bulls still haven't won the war yet

1100 S&P still a battle

and after that u still gotta clear 2200 naz

Agreed, it will be a drawn out battle over the next few trading sessions. However, there is really no economic data that's major enough to stop this rally. Unemployment is 3 weeks away. Other than that, all we have is some minor manufacturing data and consumer confidence #s ... If we dont break and hold 1100 by end of next week, I'll work with you and we can find some good shorts : )