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China 3C Group (CHCG.OB) seems to be putting out different positioning statements about itself depending on what kind of press release it issues. Let's look at the following.

Press release on 4/2:

China 3C Group is a leading retail chain operating approximately 908 retail outlets in Eastern China. The company specializes in selling 3C products (communication, information technology and digital) in China. Among China 3C's primary attributes is its efficient distribution network and rapid logistics system.

Press release Wednesday:

China 3C is a leading wholesale distributor and retailer operating over 900 retail outlets in Eastern China. The Company specializes in selling 3C products which include: cell phones and accessories, fax machines and printers, consumer electronics, computer and computer-related products and small home appliances. Among China 3C's primary attributes is its efficient distribution network and rapid logistics system.

First mentioned by blogger Qaz 216 a couple of months ago, CHCG has been trying to redefine itself from being just a retailer to include its important distribution business. In fact, I dare say that one of the company's key strengths is its "efficient distribution network and rapid logistics system". This is probably why it just won a deal from Wal-Mart (WMT), to supply the retail giant with audio electronic equipment.

I think the full logistical ability of CHCG remains untapped. And with the trouble some foreign retailers are facing in China (Best Buy (BBY) for example), CHCG can step into the fray and assume control over an integral part of the supply chain. There is much value there. Rather than constantly trumpeting how many stores it has opened or is opening, I think the company needs to communicate with greater clarity its strategy for its non-retail business. After all, CHCG's agreement with six Wal-Mart stores in Zhejiang Province (next to Shanghai) could be the start of something really interesting.

My Position: Long.

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This article has 5 comments:

  •  
    UTVG.OB is a true tourism play company with extreme growth and great value at 4 PE.
    2008 Apr 10 11:25 PM | Link | Reply
  •  
    *IF* they survive there is a lot of potential. However this stock looks to me like it does not have enough money to finance it 908 stores.

    The Wal-Mart deal is a plus. But Wall Mart is not the King in China it is in USA.
    2008 Apr 12 01:06 AM | Link | Reply
  •  
    Knowing from personal experience the scrutiny Walmart puts vendors through, no one should be doubting the financial condition and operational efficiencies of this company. If one did, they are indirectly saying they know better than the most successful retailer and supply chain operator in recent times. This company is a buy all the way up to $3 and a steal as of late. Two years out those with the stomach for volatility will be rewarded greatly.
    2008 Apr 13 02:31 AM | Link | Reply
  •  
    There PR's are better than the share price. Fortm near 10 and losing 80% is a bummer. I am not convinced.
    2008 Apr 13 05:31 PM | Link | Reply
  •  
    Having worked for a company that did work for Wal Mart, they do everything from check your bank accounts to looking under the rug for bugs. Its takes months if not years to get in the "elite" vendor process with Wally. The next few years will be the make or break for this company. The secret lies in its debt free status, low inventories and quick turnaround. These are things that gets Wally all excited about working with you. I consider this a risky invesment with huge upside potential, only for those who can sleep at night not worrying about the investment.
    2008 Apr 21 12:34 PM | Link | Reply