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  • Chinese Companies Should Follow (NasdaqGS: HRBN) 1 comment
    Oct 12, 2010 8:33 PM | about stocks: HRBN, CSKI, GURE, LPIH, CBEH, FUQI
    Harbin Electric, Inc. (NasdaqGS: HRBN), caught everyone off guard by announcing 
    a
     proposal to go private via LBO (Leverage Buy-Out). According to aarticle published by Eric Rosenbaum at the TheStreet.com, the company's decision may reflect their frustration with the lack of market support and valuation.
    Many
     US-Listed Chinese companies along with their shareholders share the same grievance and perhaps this move by Harbin Electric, Inc. will motivate other companies to do the same.

    If a company like Harbin Electric, Inc. is listed in Hong Kong, their valuation could easily be higher than 12x earnings which is approximately where they are 
    trading
     at now after the LBOannouncement. IMO, a two fold increase in PPS could easily be achieved. 

    I believe Baring Private Equity has figured out one of the most attractive arbitrage 
    opportunities today. Using leveraged capital to Buy-out undervalued Chinese 
    companies
     in the US that have been beaten up by short sellers, false
     rumors, or simply just lack of interest and list them in Asia for an immediate return on their investment. Since the capital is leveraged any incremental increase in valuation once re-listed will produce significant returns

    Access to capital in Asia is fairly accessible, so de-listing and re-listing in Shanghai or Hong Kong, is truly a win, win situation for all parties.

    Goldman Sach is advising Harbin Electric on the deal. I wonder who thought of 
    the idea
    ? Partners at Baring or Goldman? Either way, I'm sure more funds and companies will follow suit.

    Companies like (NasdaqGS: GFRE), (NasdaqGS: CSKI), (NasdaqGS:FUQI), 
    (AMEX
    : LPH), (NasdaqCM: CBEH) all of which I am long may all be considering this opportunity. I sure hope so.


    Disclosure: No position HRBN, Long CSKI, Long GFRE, Long LPH, Long CBEH, Long FUQI
    Stocks: HRBN, CSKI, GURE, LPIH, CBEH, FUQI
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  • The Deliberate Investor
    , contributor
    Comments (5) | Send Message
     
    VmanEIC,

     

    I completely agree with your thoughts and have echoed them in my own piece regarding the situation. Check it out, here:

     

    seekingalpha.com/insta...
    13 Oct 2010, 12:32 PM Reply Like
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