China ADRs: Severe Loss in June

Comparing to what happened to Chinese stocks listed on U. S. stock exchanges, the drop in major U. S. equity indexes is minor, though the Dow Jones Industrial Average did lose more than 10% in just one month (10.19%). During the same time period, the NASDAQ dropped 9.12% and the S&P declined 8.57% as jitters in the financial sector continued and there was no sign that the housing market has bottomed. In fact, the loss in June was the severest monthly loss since the Great Depression.

However,  if you are investing heavily in Chinese ADRs (like me), then I am sure you feel even more depressed when looking at your stocks’ performances last month. Of the 82 Chinese ADRs I track regularly, only 6 of them ended the month in the positive territory. All other 76 stocks dropped, and they dropped like a rock: 30 stocks lost more than 20% and 10 more than 30%.

The worst performer of the month is Tongjitang Chinese Medicine (TCM), losing more than half of its value, followed by Spreadtrum Communications (SPRD) 46.91% and China Southern Airlines (ZNH) 38.31%. The biggest gainer is China Medical Tech (CMED), rising 25.29% in one month. For the month, the Shanghai Composite Index (^SSEC) fell 22.75% and the Hong Kong’s Hang Seng Index (^HSI) lost 9.9%.

Name	Symbol	06/30/08 Price	June return (%)	YTD return (%)
3SBio	SSRX	9.06	-16.27%	-39.11%
51Job	JOBS	18.32	-6.86%	1.66%
Acorn international	ATV	6.97	-12.11%	-25.29%
Actions Semiconductor	ACTS	3.45	0.58%	-15.44%
Agria	GRO	4.28	-11.20%	-54.13%
AirMedia Group	AMCN	14.44	-17.58%	-35.48%
Aluminum Corp of China	ACH	28.54	-34.77%	-43.64%
APT Satellite	ATS	1.3601	-12.25%	-36.74%
ATA*	ATAI	13.01	-13.84%	36.95%
Baidu.com	BIDU	312.96	-9.30%	-19.71%
China Architectural Engineering	CAEI	9.77	10.77%	12.95%
China Digital TV	STV	13.91	-23.66%	-48.44%
China Eastern Airlines	CEA	31.34	-29.87%	-67.91%
China Finance Online	JRJC	15.27	-37.85%	-30.59%
China Grentech	GRRF	4.56	-8.80%	-48.42%
China Life Insurance	LFC	52.18	-13.54%	-31.79%
China Medical Tech	CMED	49.4	25.29%	11.29%
China Mobile	CHL	66.95	-9.27%	-22.93%
China Nepstar	NPD	8.66	-24.96%	-50.74%
China Petro & Chemical	SNP	92.89	-7.91%	-37.32%
China Southern Airlines	ZNH	19.79	-38.31%	-69.76%
China Sunergy	CSUN	8.27	-29.44%	-49.94%
China Techfaith	CNTF	4.22	-11.16%	-27.24%
China Telecom	CHA	54.39	-23.57%	-30.33%
China Netcom	CN	54.59	-20.31%	-8.10%
China Unicom	CHU	18.52	-18.74%	-17.32%
ChinaEdu	CEDU	4.75	-13.79%	-44.12%
City Telecom (HK)	CTEL	4.53	-5.62%	-19.82%
CNinsure	CISG	14.61	-6.55%	-8.63%
CNOOC	CEO	173.54	-2.12%	3.65%
Ctrip.com	CTRP	45.78	-21.58%	-20.34%
E-House	EJ	11.36	-24.27%	-52.33%
eLong	LONG	7.1	-12.24%	-14.25%
Focus Media	FMCN	27.72	-31.20%	-51.21%
Fuqi International	FUQI	8.76	-22.34%	5.54%
Giant Interactive	GA	12.12	-17.49%	-6.63%
Global Sources	GSOL	15.18	0.53%	-46.27%
Guangshen Railway	GSH	22.41	-11.49%	-37.12%
Gushan Environmental Energy	GU	11.62	-16.28%	24.28%
Home Inns & Hotel	HMIN	19.01	-22.63%	-46.63%
Huaneng Power	HNP	27.65	-18.05%	-33.05%
Hurray!	HRAY	3.16	6.40%	-20.60%
Hutchison Telecomm	HTX	21.24	-2.66%	-6.23%
JA Solar	JASO	16.85	-20.78%	-27.59%
Kongzhong	KONG	3.73	-18.02%	-38.75%
Las Vegas Sands	LVS	47.44	-31.68%	-53.96%
LDK Solar	LDK	37.88	-17.74%	-19.42%
Linktone	LTON	1.84	-13.21%	-40.45%
Longtop Financial Tech.	LFT	16.56	-14.24%	-30.07%
Melco PBL Entertainment	MPEL	9.32	-21.61%	-19.38%
Mindray Medical	MR	37.32	-10.93%	-13.15%
Netease.com	NTES	21.79	-4.22%	14.93%
New Oriental Education	EDU	58.42	-11.15%	-27.51%
Ninetowns inter	NINE	2.05	-21.15%	-35.74%
Noah Education*	NED	5.4	-24.79%	-33.00%
O2Micro International	OIIM	6.65	-25.78%	-42.37%
Perfect World	PWRD	24.99	-7.34%	-10.37%
PetroChina	PTR	128.86	-9.60%	-26.56%
QiaoXing Mobile Comm.	QXM	4.93	-20.36%	-41.66%
Renesola*	SOL	17.3	-31.02%	33.08%
Semiconductor Manufacturing	SMI	2.91	-12.87%	-43.93%
Shanda Interactive	SNDA	27.15	-16.38%	-18.42%
Simcere Pharmaceutical	SCR	12.6	-18.23%	-9.03%
Sina	SINA	42.55	-20.12%	-3.95%
Sinopec	SHI	34.09	-16.28%	-44.17%
Sohu.com	SOHU	70.44	-19.52%	29.20%
Solarfun Power	SOLF	17.5	-23.25%	-46.40%
Spreadtrum Communications	SPRD	4.99	-46.91%	-59.30%
Suntech Power	STP	37.46	-11.94%	-54.49%
The9	NCTY	22.58	-12.78%	5.37%
Tongjitang Chinese Medicine	TCM	4.17	-53.41%	-57.66%
Trina Solar	TSL	30.64	-31.82%	-43.05%
UTstarcom	UTSI	5.47	13.96%	99.64%
VanceInfo Technologies	VIT	15.87	-15.94%	76.33%
Vimicro International	VIMC	2.84	-11.53%	-24.47%
VisionChina Media	VISN	15.87	-15.94%	86.71%
WSP Holdings	WH	7.03	-16.01%	-22.75%
Wuxi Pharmatech	WX	20.3	-0.73%	-30.57%
XinHua Finance Media	XFML	2.34	-20.95%	-61.00%
Xinyuan Real Estate	XIN	6.07	-31.41%	-57.34%
Yazhou Coal Mining	YZC	93.01	-14.83%	-4.17%
Yingli Green Energy	YGE	15.92	-22.64%	-58.82%

*2008 IPO

Two widely held ETFs that mainly invest in China also took a big hit last month. iShares FTSE/Xinhua China 25 Index (FXI) ended the month with a 14.47% decline and PowerShares Gloden Dragon Halter USX China (PGJ) suffered a deeper loss of 17.8%.

Comments

[tech man:]

I GUESS THE BEST THING TO DO IS TO GO ON VACATION AND FORGET ABOUT THIS MESS FOR A WHILE. TO DEPRESSING, HAVE LOST MY BUTTY. BUT WHAT GOES DOWN HOPEFULLY WILL COME UP IN A WHILE. HAVE TO THINK POSITIVELY. I LOSING ON SOL,AND SOHU. BAD MONTH.......

2008 Jul 03 08:56 AM

[gebby:]

chinese solars are approaching compelling values

2008 Jul 03 09:20 AM

[User 103266:]

...what to do now?

2008 Jul 03 11:35 AM

[rlirph:]

...to user 103266: I would just sit on my cash now. You can buy them later at an even cheaper price. The current PE valuation may seems appetizing. However with the ongoing cost increases in most companies their quarterly report will miss estimates as time goes on.

2008 Jul 03 11:43 AM

[Road Runner:]

Thanks for the good report.

2008 Jul 03 02:08 PM

[Boruma:]

I agree with Gebby. TSL has the best fundamentals and track record (which is important in this sector) they look the cheap at current levels - relative to their peers.

2008 Jul 03 03:03 PM

[Stockaccumu...:]

We at Stockaccumulator researched today's Solar Motley Fool articles carefully all day. (Strange: all three came out at the same time)...

The only thing we agree with: the other solars mentioned have a high PE. But SOL (Renesola)now has a foward PE of approx. 4 to 8 into 2009, and 9 to 14 current. Very low, compared to the others.

To include SOL (Renesola), with proven profit shown, exponential, every quarter, is strange... SOL is an excellent buy today, not a sell...

The articles cite nothing for evidence.

We here (and asians and europeans, who do not read Motley Fool, and could care less about Motley) will be buying SOL today. Hence it was up in London.

SOL was rated last month as the 4th best company in the world to invest in, and Zacks still has its highest rating on SOL, as do all analysts. Analysts would not put their good name on SOL as a strong buy, lightly.

SOL is a buyout candidate. SOL supplies to companies mentioned in the article as "potential competitors". The companies suggested as savy competitors, are potential customers of SOL, not competitors. I don't think the writers know what SOL does.

Or in the one article that cited SOL, the author did not mean to include SOL in all allegations, other than his strange one on "cash flow". These are short brief, murky articles that say little and prove and explain nothing.

Soon you will see articles touting SOL and solar again, and then you will see SOL go through the roof again. Nothing has changed at SOL, other than good change: the unbelievable higher price of oil/gas every day, and national and local governments worldwide jumping aboard the solar bandwagon.

All three articles are unclear, come out at the same time, and do not make much sense. Investment houses that we are researching, say the articles are silly, especially with inclusion of SOL (a forward PE at as low as 6 currently) as an "expensive stock", when Solar growth is expected to be explosive in 09' (especially for SOL and its products).

There is no evidence of a money shortage at SOL whatsoever, per analysts who practically audited SOL, but rather there is a money abundance at SOL, and each quarter proves it more to be true.

Are they alleging that the accountants doing the various solar's books are lying to the government and securities authorities in China (and all international securities authorities)? I don't think so. In China, there is serious jail time for such. It is unclear what the articles are trying to do other than spook the shares lower in the US... perhaps to buy solar shares for less, or for their short positions.

Many of the other companies cited do have minimal profit and high PE's... but not SOL (Renesola) hence why all analysts that looked at SOL carefully, including those who went to China visited the company, love SOL. SOL's product is very low cost, cheap to produce. Method of production is inexpensive, unique, SOL's products are strongly in demand. All the things you look for in a company to invest in.

As for solar as an investment in asia, investors located in asia are used to seeing solar panels on street lights everywhere.

And shorting at $13 is unbelievably risky, and a sure way to lose money.

We are buying at this opportunity, not selling today, probably a lot of shares to leverage our average position downward... not out or fear, but to make a great deal of money on SOL by next year this time... We are certain that by summer 09' SOL share price will be well over $58 US.

Strangest of all, a month ago, Motley writers were touting SOL as a fantastic mid and long play, citing endless reasons SOL was a must own. Take a look at the old Motley articles...

SOL currently is not a high flyer at $13 with a forward PE near 6. Not a good idea to sell SOL at a loss today, or ever, no reason to.

Best to all, THE STOCKACCUMULATOR...

2008 Jul 03 03:49 PM

[dr-p:]

Thanks to stockaccumulator for his excellent analysis of Renesolar. Similar may be said about Wuxi Pharmatech. WX is already one of the largest research partners for the global pharmaceutical industry and analyst do not seem to understand this company. The rational for pouring business into Wuxi is simple: Why would you want to spend 80-100k per year for a scientist in the US if you can have the same job done for less than half at Wuxi? Such FTE costs are not tenable in the long-term for US companies, and with the risk involved in drug development FTE's are even more costly if you rapidly have to cut jobs due to restructuring if projects fail. The brains need to be here, the hands can be at Wuxi. Working in the pharmaceutical industry myself I know that their reputation is excellent, and so is their service. Many of their scientists have been trained in the United States and quality of work is 100% of what is being achieved in this country. With Big-Pharma moving research activities to Asia (GSK for example operates centers of excellence in Singapore and Shanghai) and job-cuts in the US and Europe this company is only going to expand more rapidly. And be sure - this is NOT a biotech. Their operations are comparatively low risk with high growth. It is contract research and development. Service for fee. There is an additional advantage: Wuxi can help achieve compliance with regulatory requirements in China. The latter will be key to development of this vast market for current and new medicines. In my humble opinion, WX trading below their IPO price is a joke.

2008 Jul 04 12:24 PM

[buyforeclos...:]

YGE is the best Value if you Look at current P/E forward P/E and PEG...check it out and tell me I am wrong

2008 Jul 07 12:12 PM

[j_remington:]

buy stock at $6

hold stock until MPEL City of Dreams opens in mid 2009

2008 Jul 16 12:52 PM

[knowhere:]

Thanks for the good Richard.
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2008 Jul 30 12:57 AM