Five China Stocks on This Week's Watch List

1) Sinobiomed (SOBM.OB) did a curious thing this past week. The company announced that it has signed a new "consulting" contract with its current CFO, effective January 1st. This CFO was appointed in March 2007 so he is just nine months into his job. The deal included 110,000 SOBM shares, currently valued at $82,500, to vest over a 12-month period. Is something happening at the company that we don't know of, for it to use such an incentive to keep one of its key officers?

2) Despite current uncertainties plaguing the Chinese real estate market, China Housing & Land (CHLN.OB) successfully closed a $20 million convertible deal to fund working capital. The interesting thing is, conversion price was set at $5.57 per share, much higher than its pre-announcement closing price of $4.25. Also, did you notice that one of the "make good" provisions was getting to a FY2008 net income of $35.8 million, which works out to a fully-diluted EPS of $1.02?

3) Skystar Bio Pharma (SKBI.OB) has upped its 2007 revenues guidance from $12-$14 million to $15.8 million. With such an exact figure, this seems more like a preview of its actual result than a "guidance". If so, this would represent a 61.3% jump in year-on-year revenues. The question now is, how much is its net income going to expand?

4) China TransInfo Tech (CTFO.OB) just released two restated financial statements from last year, after announcing earlier that it had to adjust certain provisions related to warrant liability. While it does appear that there was much ado about nothing (in fact, EPS for Q2 and Q3 went up by $0.01 and $0.04 respectively), this incident has thrown some doubt on the overall veracity of the company's financial figures. How can we be sure that there are no other items to be reclassified?

5) China Biotics (CHBT.OB) reminded us that it will be announcing its Q3 results (its year end is March 31st) on Tuesday, February 5th. A conference call will take place and a replay of that could be found at the company's new website. Is there good news coming, for why else would its share price jump by almost 30% over four trading sessions?

Comments

[David White]

I don't know if there is anything specifically going on at SOBM, but it does seem that they have a lot of good projects going. Their blockbuster is of course, the malaria vaccine. I think this stock has gotten beaten down with most of the other small caps. It does seem like it might be a good buy now.
I like your comments on chln also. The chart on that looks like it might be a good buy now too. The chart is definitely more promising than SOBM. However, SOBM is also a feel good stock. Who doesn't really want to invest in a malaria vaccine? The W.H.O. has even helped fund their research and approval trials.