4 High-Growth Chinese Stocks With Strong Receivable Trends

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 |  Includes: CXDC, SSRX, TUDO, YOKU
by: Kapitall

Interested in adding some exposure to emerging markets such as China? With this idea in mind, we ran a screen.

We began by screening US-traded stocks of Chinese companies for those with high growth prospects, with 5-year projected EPS growth above 15%.

We then screened for those stocks with strong sales trends, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables the healthier the company's revenue.

We screened for stocks seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall.

Do you think these companies are poised to move higher? Use this list as a starting point for your own analysis.

List sorted by increase in revenue over the last year.

1. Youku Inc. (NYSE:YOKU): Operates as an Internet television company in the People's Republic of China. Market cap at $2.74B, most recent closing price at $23.89. 5-year projected EPS growth at 38.33%. Revenue grew by 102.87% during the most recent quarter ($309.31M vs. $152.47M y/y). Accounts receivable grew by 94.59% during the same time period ($421.47M vs. $216.59M y/y). Receivables, as a percentage of current assets, decreased from 10.5% to 10.16% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

2. Tudou Holdings Limited (NASDAQ:TUDO): Operates as an online video company in the People's Republic of China. Market cap at $259.49M, most recent closing price at $36.60. 5-year projected EPS growth at 55.00%. Revenue grew by 76.72% during the most recent quarter ($140.28M vs. $79.38M y/y). Accounts receivable grew by -0.7% during the same time period ($256.6M vs. $258.4M y/y). Receivables, as a percentage of current assets, decreased from 45.6% to 23.06% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

3. China XD Plastics Company Ltd. (NASDAQ:CXDC): Through its subsidiary, Harbin Xinda Macromolecule Material Co. Market cap at $228.62M, most recent closing price at $4.81. 5-year projected EPS growth at 20.00%. Revenue grew by 61.78% during the most recent quarter ($123.18M vs. $76.14M y/y). Accounts receivable grew by -16.72% during the same time period ($63.05M vs. $75.71M y/y). Receivables, as a percentage of current assets, decreased from 55.75% to 24.08% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

4. 3SBio Inc. (NASDAQ:SSRX): Engages in the research, development, manufacture, and distribution of pharmaceutical products in the People's Republic of China. Market cap at $262.53M, most recent closing price at $11.89. 5-year projected EPS growth at 20.00%. Revenue grew by 38.24% during the most recent quarter ($139.88M vs. $101.19M y/y). Accounts receivable grew by 20.16% during the same time period ($161.19M vs. $134.15M y/y). Receivables, as a percentage of current assets, decreased from 16.91% to 16.24% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.