Another Lesson In Caution for Investors in Chinese OTC Companies

by: China OTC Player

A full thirteen C.O.P. Index companies (unlucky for some?) reported their earnings Monday (11/19) and the results are truly shocking. ALL EXCEPT ONE COMPANY reported flat or negative earnings growth. Of those, three are losing money with one swinging from profitability to loss.

A quick summary follows. Since this is a snapshot, I focused on the EPS for the 3-month period ending Q3 2007, fully diluted and less any non-recurring income, as compared to Q3 2006 earnings.

These companies reported shrinking EPS: (NASDAQ:CHLN), (OTC:CRTP), (OTC:WWMU), (OTC:CYXI), (OTCPK:CDSG), [CKGT.OB], (OTC:BPMA), and (OTCQB:SGAS). I discounted the one-time tax benefit accruing to CDSG.OB which inflated its earnings. This company swung from profitability to loss: [LWLL.OB], and two companies are still operating at a net loss: (SOBM.OB) (loss widening) and [SFBE.OB] (loss flat).

One company reported flat EPS growth: (OTCPK:CHBU). The only bright spot is (OTCPK:CIWT), which doubled its EPS from $0.03 to $0.06.

Wow! If this is indicative of anything, it again shows how careful one needs to be when investing in Chinese OTC companies. Luckily, I don't hold any of these stocks.

My Position: None.