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The name "Dutch Trader" refers to The Golden Age. This was a period in Dutch history, roughly spanning the 17th century, in which Dutch trade, science, military and art were among the most acclaimed in the world. Dutch ships hunted whales off Svalbard, traded spices in India and... More
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  • Healthy life with China Kangtai Cactus Bio-Tec (CKGT)
    China Kangtai Cactus Biotech, Inc. is a leading grower, developer, producer, and marketer of cactus-derived products, including nutraceuticals, nutritious food, health and energy drinks, beer, wine and liquor, extracts and powders, and animal feed. China Kangtai controls over 387 acres of plants and maintains an active R&D group that holds 18 product patents and is seeking another 12. China Kangtai's high-quality “green” products are sold throughout China via a distribution network that covers 12 of China's 23 provinces and two of China's four municipalities.
     
    In April they announced that it has signed a three-year marketing and sales agreement with Yongkangmen Health and Drug Chain Store Group Ltd. to sell its nutritious and patented cactus-based products, including nutraceuticals, health food, and health and energy drinks.
     
    Yongkangmen Health and Drug Chain Store, headquartered in Beijing City, has controlling ownership in more than 3,000 drugstores throughout China. Additionally, Yongkangmen owns one pharmaceutical manufacturer and three pharmaceutical wholesalers in Hebei Province, and farms Chinese herbal medicine plants on its land in Baekdu Mountain (also known as Changbai Mountain) in Jilin Province.
     
    Under the agreement, all the Yongkangmen drugstores nationwide will promote, market and sell China Kangtai’s cactus-derived products for the next three years.
     
    China Kangtai CEO Jinjiang Wang said, “Traditional Chinese beliefs view herbal-based medicine and dietary supplements as an alternative to healthcare. The demand for our cactus health products has been expanding every year. By leveraging Yongkangmen’s prominence in the health product retail industry, we can expand our market share into new territories exponentially, which creates a win-win situation for both Yongkangmen and Kangtai.”
     
    Last Monday they released their first quarter results (ending March 31). Revenues 2010 increased 66% to $5.5 million from $3.3 million. Net income totaled $2,352,638 as compared to the net income of $956,673 in the same period of 2009. The increase in net income was caused partially by the income from revaluation of Series A Preferred Stock and A, B, C, and D warrants with characteristics of liabilities at fair values. (See Note 11 to Financial Statements in 10-Q). Absent this income, the company would have had a net income of $836,723 in the first quarter of 2010, as compared to net income of $693,948; and basic and diluted earnings per share would have been $0.04 and $0.04.
     
    With other words: Adjusted net income was up 20.5% to $836,723 or $0.04 per share. GAAP net income was $2.4 million versus $956,673. Gross profit margin was 27% compared with 37% in the first quarter of 2009, primarily attributable to the increased sales of our raw and intermediate materials. The gross profit rate is about 11% for our raw and intermediate materials products. Income from operations increased 34% to $1.2 million from $880,530 in 2009.
     
    Weighted average number of diluted shares outstanding was 21.7 million as of March 31, 2010 compared with 19 million as of March 31, 2009
     
    Especially the Q1 Product Categories Performance was good. 
     
    Nutraceuticals revenue increased 32.6% from $1.4 million in 2009 to $1.8 million, or 33% of the total Q1 2010 sales.
    Beverages revenue increased 43% from $1.0 million in 2009 to $1.4 million, or 25% of the total Q1 2010 sales.
    Raw and intermediate materials segment revenue increased 170% from $0.6 million in 2009 to $1.6 million, or about 30% of the total sales.
    Cactus feed revenue increased 82% from $257,844 in 2009 to $468,373, or about 8.5% of the total sales, due to cactus hog feed launched in Q4 2009 after the successful launch of cactus cattle feed and fish feed in July 2008.
    Packaged foods provided no revenue in the quarter, compared to $123,592 in Q1 of 2009
    Cactus cigarettes, launched in Q4 2009, reported revenue of $212,638, or 4% of total sales.
     
    Management Comment
     
    China Kangtai CEO Jinjiang Wang said, "Our first quarter of 2010 was marked by continued strong product sales in our largest product segments nutraceuticals, beverages and raw and intermediate materials. Sales in our two traditional core businesses, nutraceuticals and beverages rose 33% to $1.8 million and 43% to $1.4 million respectively. Sales of raw and intermediate materials were up 170% to $1.6 million. This had a negative impact on our gross margin because the gross profit rate for raw and intermediate materials is about 11%, compared with substantially higher margins in the other two categories.
     
    “We were pleased with the 82% gain in cactus feed, reflecting the introduction of new animal feed lines. And we saw our initial revenues from the sale of cactus cigarettes, which we believe will provide us with excellent growth for the remainder of the year,” Mr. Wang said.
     
    What attracted me to this story were the health benefits that some Cactus plants seem to have. My wife is from Mexico and in Mexico Nopales is widely used in capsule form for all kind of treatments.
     
    The Nopal cactus (Opuntia ficus-indica), also known as "prickly pear," is a plant native to the mountains of Mexico. It has been used since ancient times as both a food and as a medicine for its health benefits. The Aztecs considered the cactus, which derives some of its properties from the volcanic soil in which it grows, as a food fit for royalty and a fortifying substance for warriors. A powdered form of Nopal has become popular in modern times as a treatment for a variety of metabolic, digestive and heart problems.
     
    Stabilizes Blood sugar
     
    Nopal cactus contains a large amount of slowly-digestible fiber and tends to slow down the digestion of foods when it is taken just before or with a meal. The cactus has the effect of lowering the Glycemic Index (a measure of how quickly a food raises blood sugar levels) of any foods it is eaten with. Clinical testing has shown that people with high morning blood-sugar levels who ate Nopal cactus for breakfast subsequently had lower or normal blood- sugar levels.
     
    Lowers Cholesterol
     
    The fiber and sterols in Nopal bind with a bile salt in the intestines, which helps limit the amount of blood fats (cholesterol and triglycerides) absorbed by the body, thereby lowering blood cholesterol levels.
     
    Scrubs Blood Vessels
     
    Plaques are areas of inflammation that form on the walls of the blood vessels, where they trap blood fats that can harden or even block the arteries. Nopal cactus sterols, along with its polyphenols and glycoproteins, serve as antioxidants that help reduce inflammation and keep plaques from forming.
     
    Sweeps the Colon
     
    The insoluble plant fibers in Nopal cactus provide dietary roughage, which make it easier to maintain bowel regularity. Nopal also contains soluble plant fiber, which helps absorb toxins, including carcinogens, as it sweeps the colon clean.
     
    Soothes the Stomach
     
    Nopal contains a high amount of mucilage, which helps balance the pH of the stomach and soothes the stomach lining. Tests have shown that Nopal stimulates the healing of stomach ulcers and reduces stomach inflammation.
     
    Protects the Liver
     
    Because Nopal contains antioxidant flavonoids, it helps neutralize free radicals before they can overtax the liver. It also helps absorb toxins, decreasing the liver's load. By supporting the liver, it frees that organ to balance bodily functions, including the immune system.
     
    Hangovers and Obesity
     
    Nopal is sometimes used to help counteract the effects of alcohol consumption. It helps rehydrate the body, soothes the stomach, and improves liver function, thereby preventing the headache, stomach ache and toxic "morning after" feeling. When taken before meals, Nopal's roughage can help create a sensation of fullness that may help prevent overeating and helps stabilize the blood sugar, to ward off hunger. Nopal cactus also contributes calcium and valuable amino acids and other nutrients.
     
    If you ask me a lot of health benefits, also the recent price drop from $ 3.00 in January to $ 1.60 right now makes it an interesting play in the health scene. The book value per share is around  $1.56. Because of the  marketing and sales agreement with Yongkangmen I think there is enough space for healthy growth. 
     
    Also the sale of low nicotine and zero nicotine cigarettes under the registered trademark "Shengcao" brand, have a huge potential for growth in China and abroad. China has about 390 million smokers, accounting for 30% of global smokers. Their revolutionary product can not only capture a significant portion of smokers, but also promote consumer consumption in their other health products such as nutraceuticals, nutritious food, health and energy drinks, beer, wine and liquor.

    POSITION: NOT YET "NEVER CATCH A FALLING KNIFE"
     


    Disclosure: NO POSITIONS
    Tags: CKGT, Health
    May 20 9:26 AM | Link | 3 Comments
  • The Life of a Chinese Contrarian Value Player
     
    It is important to realize that investing using contrarian value strategies is a long-term game. One roll of the dice or a single hand at blackjack is meaningless to the casino owner. He knows there will be hot streaks that will cost him a night's, a week's, or sometimes even a month's revenues. He may grumble when he loses, but he doesn't shut down the casino. He knows he will get it back.

    As an investor, you should follow the same principles. You won't win every hand. You will have periodes of spectaculair returns and others you might diplomatically describe as lousy. But it is important to remember that contrarian value strategies, like the odds for the casino owner, put you in the catbird seat. Professional investors, along with everyday folks like me, normally forget this important principle and demand superior returns from every hand.

    Even though a strategy works most of the time and generates, excellent returns, no strategy works consistently.  The fast-track, aggressive growth stocks will, on occasion, knock the stuffing out of low-P/E or other contrarian methods for several years at a clip-sometimes longer. But over time, it's simply no contest. Still, human nature being what it is, our expectations are almost always too high.

    Even when we look at the record of these superb returns (which encompass both bull and bear markets over decades), we are still disappointed that a contrarian value strategy doesn't win each and every year. The probability is zero that any investment strategy would, just as it is that you will win a hundred straight hands at blackjack.

    It is widely known that contrarian value strategies have an excellent record of doing better in bear markets. So if we are still in a bear market or we are going to be in one, your Chinese(OTC)stocks with a low P/E could be a nice hedge and outpace the market handily for years to come.
    SOURCE: Contrarian Investment Strategies - The Next Generation -David Dreman

    Disclosure: No
    Tags: Strategies
    May 14 7:15 PM | Link | Comment!
  • China Insonline Corp (CHIO) ready to Rock & Roll
     
    If one stock is hated, loved and out of favor than it is CHIO. This stock is a trader’s ball that sometimes scores. For an investor like me that has CHIO shares at prices way above $ 1.00 it is just waiting to see a rebound.

    A lot is said about the company. But one thing is for sure it is damn cheap. Fundamentals don’t say anything about a company some investors say. But for me it is just that margin of safety. If book value is much higher than the stock price, P/E is lower than five, etc. etc ……… I love it.

    Of course a lot can go wrong with a company, but life is not sure especially the life of a contrarian value investor. To see other people making money and your money being hammered is never easy. Sometimes it takes time and guts to see a company rise like a phoenix from the ashes.

    The Case

    China INSOnline Corp. (OTCPK:CHIO), incorporated on December 23, 1988, is an Internet services and media company focusing on the China’s insurance industry. The company operates in three segments: software development, online insurance advertising and insurance agency within China. With localized Websites targeting Greater China, the Company primarily provides, through Beijing Zhi Yuan Tian Xia Technology Co., Ltd. (ZYTX), a network portal through its industry Website, soobao.cn (Soobao), to insurance companies, agents and consumers for advertising, online inquiry, news circulation, online transactions, statistic analysis and software development. The company is also a licensed online motor vehicle, property and life insurance agent generating revenues through sales commissions. On October 28, 2008, the company acquired Guang Hua Insurance Agency Company Limited (GHIA).

    China INSOnline Corp. reported their net income for the second quarter of fiscal 2010 jumped 33% to $1.16M. The company’s book value per common share jumped emphatically to $0.61/share, attributed to 23% growth in the company’s total assets, when compared to the prior quarter.

    http://www.tradestationfundamental.com/Credit.asp?ticker=chio


    Modest growth (3%) in revenues and superior margin growth during the quarter are credited with producing a greater bottom line. “[…] An array of high margin services to the insurance industry in China consistently delivers profits to our shareholders. We will continue to focus on high margin opportunities with our online platform and continue focus on creating greater shareholder value going forward," commented Ms. Betty Xu, the company’s CEO.

    Earning $0.11/share, or $4.29 M in the six-month period ended December 31st, 2009, the company’s twelve month trailing Earnings-Per-Share (NYSEARCA:EPS) totals $0.25. Where the price-to-earnings (P/E) ratio is among the most common and reliable measures of value, the company is in my opinion undervalued. Given the recent market price, the company trades with a P/E ratio less than 2.5. If value investors are willing to pay for bargains at these prices, they are likely to find CHIO attractive at twice the current market price. For every other investor that could mean a large ROI. Especially with the hiring of veteran Mr. Han in January the company is ready to Rock and Roll again.

     


    Disclosure: POSITION: LONG
    May 13 5:49 PM | Link | 10 Comments
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