The last week was an interesting week in U.S.-listed China stocks.
Going private candidate Tibet Pharmaceuticals (TBET) was halted by Nasdaq, because Nasdaq requested additional information. On Friday the firm filed a FORM NT 10-K (notification of late filing) so I expect trading to continue next week.
Another phenomenon was the heavy trading in certain Chinese small caps with some home runs.
|Cleantech Solutions Int.||CLNT||1.88||5.71||3.83||203,72|
|China Recycling Energy||CREG||1.24||2.05||0.81||65,32|
|NF Energy Saving||NFEC||0.83||2.35||1.52||183,13|
We would like to see more, but which stocks could bring us those returns in the short term? I think I know one.
Guanwei Recycling Int. (GPRC)
Heavy trading occurred last Thursday with a high of $1.85. The stock closed at $1.17.
Guanwei Recycling Corp. is China's largest manufacturer of recycled low density polyethylene (LDPE). Adhering to the highest "green" standards, it has generated rapid growth, producing LDPE from plastic waste procured mostly in Europe for sales to more than 300 customers in 10 different industries in China. The company is one of the few plastic recyclers in China that has been audited by German authorities, most recently Umweltagentur Erftstadt, for compliance with German pollution and environmental standards. This allows the company to procure high quality plastic waste directly from Germany and other European countries (Spain and Holland), with no middlemen, and permits highly economic production of the highest grades of LDPE.
With diluted earnings per share of $0.64 for fiscal year 2011, the company has a P/E-ratio below 2. Book value stands at $1.65.
The company just recently got its 10-K behind it and blew away earnings. Another positive note is that an analyst at Global Hunter has a target price of $7 for the company.
I was reading that Global Hunter changed its policy with regards to Chinese stocks, stating it wouldn't cover them unless these companies would agree to be thoroughly checked out by GeoInvesting, China 360 and other firms like that. Many companies wouldn't agree to this, not to mention the extra expenses involved, but GPRC stepped up to the plate and said "no problem." It passed its review with flying colors and Global Hunter covers GPRC.
This stock could hit $3.00 in the short run. Sentiment seems to be improving, especially for U.S.-listed China stocks that have been hit hard. The coming weeks will be crucial and if trading activity resumes high there can be many opportunities for traders and investors. Guanwei Recycling is one of them.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GPRC over the next 72 hours.