3 High-Growth Chinese Stocks With Strong Receivable Trends

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 |  Includes: AMBO, CXDC, KZ
by: Kapitall

Looking to diversify into the emerging markets? With this idea in mind, we ran a screen.

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

We then screened for 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.

https://www.kapitall.com/?SSS_40F653BDFE1539BF09ECE793F2F49512

Tool provided by Kapitall. More investing ideas on Kapitall Wire.

Do you think these companies will meet their high growth expectations? Use this list as a starting point for your own analysis.

List sorted by increase in revenue over the last year.

1. China XD Plastics Company Ltd. (NASDAQ:CXDC): Market cap at $209.13M, most recent closing price at $4.40. 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).

2. Ambow Education Holding Ltd. (NYSE:AMBO): Provides educational and career enhancement services in high school entrance examination and college entrance examination markets in China. Market cap at $178.25M, most recent closing price at $2.40. 5-year projected EPS growth at 19.00%. Revenue grew by 22.09% during the most recent quarter ($374.82M vs. $307M y/y). Accounts receivable grew by -10.71% during the same time period ($196.71M vs. $220.3M y/y). Receivables, as a percentage of current assets, decreased from 14.72% to 14.41% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

3. Kongzhong Corp. (KONG): Provides wireless interactive entertainment, media, and community services to mobile phone users in the People's Republic of China. Market cap at $320.35M, most recent closing price at $7.71. 5-year projected EPS growth at 21.00%. Revenue grew by 8.07% during the most recent quarter ($42.46M vs. $39.29M y/y). Accounts receivable grew by -26.37% during the same time period ($20.72M vs. $28.14M y/y). Receivables, as a percentage of current assets, decreased from 16.4% to 10.16% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

*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.