Two Chinese Stocks Showing Opportunity

I’m becoming convinced that Chinese stocks are presenting an opportunity for swing traders. These particular stocks accomplish their moves in gaps. Here is China Life Insurance (LFC):

To see China Life trading in the $50 range after last year’s parabolic run, which began in many of these names last August, for the institutional long-term buyers, this is somewhat of a reprieve. The market is overly discounting China right now, a lot of bad p.r. around the Olympics, but the stimulus injection the Olympics will undoubtedly create will be felt this year and next.

At the very least, I think a more appropriate price for China Life is much closer to $75. Continued strength in the Yuan will have a positive effect on these names, so $85 could be forecast by some estimates. On the flip side, to attach a bearish pair to this long idea, one might consider Aluminum Co. of China (ACH). At $40, it remains overvalued and the same positive factors influencing China Life are acting as a headwind for China Aluminum. I see fair value for ACH close to $24.

China Southern is the country’s largest carrier, and their growth is mind boggling but not surprising. Look at these ratios:

Long term weekly chart of China Southern (ZNH):

My numbers suggest China Southern is worth closer to $50 based on their recent earnings release. Again, institutional long-term buyers are relieved about where prices are now compared to the runaway in early ‘07.

Disclosure: None

Comments

[city:]

I like to remind readers here; Mr Petti worked for Bear Stearns and also he is working in a State Chinese Communist run school at the moment. Details please visit seekingalpha.com/autho...

China has many problems on its own; but it's very ironic the red communists do not mind Mr Petti (who is paid salary by the Chinese communist run school) being so critical of everything in China even the air he breathes every day.
All Mr Petti's pupils and seeking alpha readers here; the story about Mr Petti just does not add up! According to Mr Petti's views (you can read all his articles about China on this site ; strangely he only wrote about China), everything in China is in crisis even the air is filthy so why he is making a living there; getting paid from the red Communist school; why not go back to Wall street to work for Bear Stearns ? Bear Stearns is not dead yet.

It is time for Mr Petti and his loyal pupils to disclose his relationship with the red Chinese government now!!! And all readers on this site should also make such a demand; otherwise it's an insult to the intelligence of all seekingalpha readers!

2008 Apr 23 08:22 AM

[barnburner:]

ACH / ZNH are not being touted as a 'buy and hold' trade. Whats Mr. Petti's track record is the only question of any importance

2008 Apr 23 11:34 AM

[Investment ...:]

Who is "Mr. Petti" and what does he have to do with Investment Capitalist's trading recommendations?

2008 Apr 23 02:24 PM

[Healthy:]

This author's words are a waste of our time. I don't know what he is talking about here. Nothing mentioned of importance. His employer went out of business, didn't it?

2008 Apr 23 03:06 PM

[Mcgyver:]

Mr. Petti obviously knows nothing about about company valuation or things like future growth. He certainly did not do any homework on ACH. For example the own what may be the largest copper deposit on the planet, the Toramacho Project in Peru, which they are developing.They own 12% of BHP and are looking to grab more and I could go on.
Aluminum production is only part of what they do. The driving force for investors is future growth and in that ACH, who is emerging from plant closings due to the worst Chinese winter on record, is poised to explode.

2008 Apr 23 10:06 PM

[buyforeclos...:]

Nice call...ach is up up up

2008 Apr 24 02:12 PM