Chinese markets outperformed the U.S. markets during the week ending November 2. The Shanghai Stock Exchange Composite Index was up 2.46% for the week ending November 2. The S&P 500 Index was up 0.16% and the Nasdaq 100 Index was down 0.36% for the week ending November 2. Based on this observation, I screened with Finviz for top five performing U.S.-listed Chinese stocks trading above $1. Here is a look at these five stocks.
1. China HGS Real Estate (HGSH) engages in the real estate development in the Peoples Republic of China. It is involved in the construction and sale of residential apartments, parking lots, and commercial properties. The company develops multi-layer, sub-high-rise, and high-rise apartment buildings, as well as office buildings.
The company reported the third-quarter fiscal 2012, which ended June 30, financial results on August 13 with the following highlights:
|Net income||$1.3 million|
The company expects two additional real estate properties under construction to be completed and delivered to the consumer in the fourth quarter of fiscal 2012. For the two additional residential buildings to be completed in the fourth quarter of fiscal 2012, the company's contracted sales by the end of June 30, 2012 were approximately $6.4 million, and the customer deposits balances was $3.0 million at June 30, 2012. No revenue has been recognized for the nine months ended June 30, 2012 for these two additional buildings.
Despite the declining transaction volume and cooling real estate market, housing prices in Tier 3 and Tier 4 cities and counties have not shown a substantial correction. While short-term market correction is a process that the property sector is bound to undergo, the fundamental demand for residential housing will remain given the rising per capita income, accelerating urbanization and increasing demand for better living environment.
The stock was up 462.50% for the week ending November 2 with no news. The stock has a $9.38 price target from the Point and Figure chart. The stock is trading at a P/E ratio of 25 and has a 69.88% insider ownership. I have a neutral bias for the stock currently.
2. Suntech Power Holdings (STP) produces industry-leading solar products for residential, commercial, industrial, and utility applications. With regional headquarters in China, Switzerland, and the United States, and gigawatt-scale manufacturing worldwide, Suntech has delivered more than 25 million photovoltaic panels to over a thousand customers in more than eighty countries. Suntech's pioneering R&D creates customer-centric innovations that are driving solar to grid parity against fossil fuels. Suntech's mission is to provide everyone with reliable access to nature's cleanest and most abundant energy source.
Suntech Power Holdings announced on October 31 that its Wd poly, Wd mono and Ve poly series modules are highly resistant to potential-induced degradation [PID] as confirmed in recent tests performed by the Association for Electrical, Electronic and Information Technologies [VDE], one of the world's leading testing and certification institutes.
According to the VDE test report, the tested Suntech modules "show no significant degradation at the end of the test sequence..." with all of the modules exhibiting negligible change in output power within the test lab measurement accuracy, and no changes in visual appearance.
The company reported the first-quarter financial results on May 23 with the following highlights:
|Net loss||$133.0 million|
Commenting on the second quarter outlook, Dr. Zhengrong Shi, Suntech's chairman and CEO, said:
We anticipate more than 20% sequential growth in shipments in the second quarter as demand for high performance, bankable product increases across all our markets. Operationally, we will continue to streamline our wafer and module manufacturing operations, reduce cost and focus on cash management. These initiatives will further improve our financial position and set the platform for future growth.
The stock was up 25% for the week ending November 2. The stock has met its bearish $1 price target from the Point and Figure chart. The company has a book value of $4.40 per share and a cash position of $2.61 per share. I am cautiously bullish on the stock currently.
3. Bitauto Holdings (BITA) is a leading provider of Internet content and marketing services for China's fast-growing automotive industry. The company's bitauto.com and taoche.com websites provide consumers with up-to-date new and used automobile pricing information, specifications, reviews and consumer feedback. The company also distributes its dealer customers' automobile pricing and promotional information through its partner websites, including major portals and search engines operated by Baidu, Tencent, and Netease, as well as social networking websites.
Bitauto manages its businesses in three segments, namely bitauto.com business, taoche.com business and digital marketing solutions business. The company's bitauto.com business provides subscription services to new automobile dealers that enable them to list pricing and promotional information on the company's bitauto.com website as well as partner websites and search engines. The company also provides advertising services to dealers and automakers on its bitauto.com website. The company's taoche.com business provides listing services to used automobile dealers that enable them to display used automobile inventory information on the company's taoche.com website and partner websites. The company also provides advertising services to used automobile dealers and automakers with certified pre-owned automobile programs on its taoche.com website. The company's digital marketing solutions business provides automakers with one-stop digital marketing solutions, including website creation and maintenance, online public relations, online marketing campaigns and advertising agent services.
Bitauto Holdings announced on November 2 that certain existing pre-IPO shareholders of the company entered into definitive agreements with AutoTrader Group (ATG), operator of the largest digital automotive marketplace in the United States.
Pursuant to these agreements, AutoTrader Group has agreed to purchase 9 million ordinary shares, representing an approximately 21.8% stake in the company, from the selling shareholders for a total purchase price of $58.5 million in a private transaction. Concurrently with AutoTrader Group's signing of the definitive agreements, Bitauto's senior management team, namely, Mr. William Bin Li, chairman and chief executive officer, Mr. Jingning Shao, president, Mr. Andy Xuan Zhang, chief financial officer, and Mr. Weihai Qu, senior vice president, also entered into definitive agreements with a pre-IPO shareholder of the company pursuant to which they agreed to purchase an approximately 2.4% stake in the company from the selling shareholder for a total purchase price of $6.5 million. The senior management team funded the purchase through a four-year term loan from AutoTrader Group.
The share purchase and sale transactions are expected to close in November 2012, subject to the satisfaction of customary closing conditions.
The company reported the second-quarter financial results on August 9 with the following highlights:
|Net income [non-GAAP]||$4.5 million|
Bitauto currently expects to generate revenue in the range of $39.4 million to $40.9 million in the third quarter of fiscal year 2012, representing a 41.5% to 47.1% year-over-year increase. Bitauto currently expects non-GAAP diluted earnings per ADS, each representing one ordinary share, to be approximately $0.12 in the third quarter of 2012.
The stock was up 18.62% for the week ending November 2 with news. The stock has a $8.25 price target from the Point and Figure chart. The stock is trading at a P/E ratio of 15.03 and a forward P/E ratio of 8.88. The company has a book value of $3.59 per share and a cash position of $1.85 per share. I am cautiously bullish on the stock currently.
4. CNinsure (CISG) is a leading independent intermediary company operating in China. CNinsure's distribution network reaches many of China's most economically developed regions and affluent cities. The company distributes a wide variety of property and casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China, and provides insurance claims adjusting as well as other insurance-related services.
The company reported the second-quarter financial results on August 21 with the following highlights:
|Net income||$5.2 million|
|Net cash||$391.0 million|
|Shares outstanding [ADS]||50 million|
|Net cash per share||$7.82|
CNinsure expects its total net revenues to remain approximately flat for the third quarter of 2012 compared to the corresponding period in 2011.
The stock was up 16.81% for the week ending November 2 with no news. The stock is trading at a forward P/E ratio of 6.42 and is currently trading at a 14% discount to its net cash per share value. I believe the stock could be a good pick below the net cash per share value.
5. Recon Technology (RCON) is a non-state-owned oil field service company in China. The company has been providing software, equipment and services designed to increase the efficiency and automation in oil and gas exploration, extraction, production and refinery for Chinese oil and gas fields for more than 10 years.
The company reported the full fiscal year 2012, which ended June 30, financial results on October 1 with the following highlights:
|Net loss||$0.6 million|
Mr. Yin Shenping, CEO of Recon, commented on October 1:
The high-end segment of China's oilfield service industry has opened more to private companies, and we believe there are opportunities for Chinese oilfield services companies, especially experienced companies that can provide all-in-one solutions for customers. As a small company, Recon now is more focused on oilfield automation and production stimulation-related services. But we also seek to extend our business on the industrial chain by providing more integrated services and incremental measures and growing our business from a predominantly up-ground business to include some down-hole services as well. We believe our experience and reputation will help us remain competitive in this arena.
The stock was up 16.60% for the week ending November 2 with no news. The company has a book value of $3.21 per share, and the stock has an insider ownership of 52.46%. I am cautiously bullish on the stock currently.