First of all, look at this chart. In the space of less than a month, Universal Travel Group's (UTVG.OB) website, CNUTG.com (not to be confused with its CBA-HOTEL.com site), has gone from nowhere to be the ~4,400 most trafficked site in all of China. Additionally, the website is also gaining traction in South Korea (ranked ~11,000) and Vietnam (ranked ~24,000). This reinforces what I have already been saying - while UTVG's strategy last year was to shore up its physical footprint across China, this year is all about online presence.

In fact, the company's press release regarding its termination of financing agreement on Wednesday is illustrative of a perceptible shift in the UTVG's positioning. It described itself as, I quote, "a fast growing travel services provider in China specializing in online and customer representative services to the travel service industry." This positioning statement has been in place since late March. Is it an accident that "online" comes before "customer representative services"? I don't think so.

Just as things will heat up for the Summer Games (in ways good and bad), things will similarly heat up for the Chinese small caps. Just in case you haven't realized, a rebound is under way, led by stellar results from various companies' Q1 results. And even for those who have yet to report, bearish sentiments are fading away quite quickly. Just as an example, since I last reported on Universal Travel Group's (UTVG.OB) online gains, the stock is up by more than 40%, over the course of just 5 trading sessions.

Universal Travel Group is certainly a stock that will do well from the Games, benefiting from the confluence of greater spending power and increased travel from both domestic and international tourists. China Yida (CYID.OB) is another, with its world class tourist destination in the Great Golden Lake which, despite it being a little off the beaten path, makes for a great summer getaway.

The last time I checked, Universal Travel Group's (UTVG.OB) online presence China Booking Association, a hotel reservation website owned by subsidiary Shanghai Lanbao, was ranked ~45,000 in terms of the most popular websites in China. When I checked Thursday, it ranked ~14,000.

That is an impressive gain and it tells me two things about the company. First, while Universal Travel's strategy last year was gaining a physical footprint across China (with acquisitions in Shanghai, Xian and Foshan), the strategy for 2008 appears to be improving its online presence. Second, all the press about China being the most wired nation on Earth (with the most internet users) is not just talk but is indeed having a real (and very positive) impact on UTVG. Sure, Universal Travel's website has still a long ways to go before catching up with Ctrip.com (CTRP) and eLong.com (LONG), but at the rate it is going, this may not be entirely impossible.

The last time I checked, Universal Travel Group's (UTVG.OB) online presence China Booking Association, a hotel reservation website owned by subsidiary Shanghai Lanbao, was ranked ~45,000 in terms of the most popular websites in China. When I checked on Thursday, it ranked ~14,000.

That is an impressive gain and it tells me two things about the company. First, while Universal Travel's strategy last year was gaining a physical footprint across China (with acquisitions in Shanghai, Xian and Foshan), the strategy for 2008 appears to be improving its online presence.

I have been investing for more than 25 years. And with quite a bit of success, I might say. I have a MBA from a name US school, and a degree in economics from Oxford across the pond. I have traveled widely, and know the world. I have taken a company public myself, and understand the stock game both from the perspective of the insider and the outsider.

Above all, I am not easily impressed. I tend to be skeptical by nature, especially when it comes to investing. However, the opportunity I see right now in Chinese micro-caps is the single most attractive play I have ever encountered in my many years of following the market.

First announced in October and expected to close last month, Universal Travel Group (UTVG.OB) is now saying that it is unwinding its acquisition of Tianjin Golden Dragon travel services ("TGD"), the 29th largest travel agency in China.

UTVG's CEO had this to say: "Upon further due diligence, we determined that the operations of Tianjin Golden Dragon did not meet our parameters and the acquisition of the company was not in the best interest of shareholders."

Now that we know China is soon to become the most wired nation on Earth, what are the Chinese doing with all that connectivity? Well, E-commerce is one.

Research just released shows that online shopping is going to grow at a 75% CAGR for the next five years. If that doesn't sound a lot, what if I said that the sector is going to expand by 16.8 times from now till 2012? Barring logistical challenges, given the amazing speed the Chinese are adopting consumer behavior already prevalent elsewhere, I would say that this may perhaps be conservative.

According to CNNIC, China will easily surpass the U.S. in terms of the numbers of web users by early 2008. At the end of 2007, China had an online population of 210 million, compared to 215 million for United States. In 2007, online users in China increased by a mind-blogging 128%.

Given that, I thought it would be noteworthy to see which of our C.O.P. companies have significant online assets and present an interesting internet play. To me, the more compelling ones are as follows:

In a report released Tuesday surveying online businesses in China, online travel is expected to be the fastest growing segment in 2009, with a projected growth rate of over 90%. This follows a 65.4% expansion in 2007 and an estimated 71% increase for the industry in 2008.

The report cites two reasons for the acceleration: The Olympic Games (of course) and the further opening up of the domestic tourism market. This bodes well for market leaders such as Ctrip (CTRP)and eLong (LONG), but the effect will be felt industry-wide, benefiting smaller players such as Universal Travel Group (UTVG.OB).

As a quick preview of some of things I'll be looking at in the month of January:

1) Impact of the Beijing Olympics - on travel and tourism - Universal Travel Group (UTVG.OB), Intelisys Aviation [IAVA.OB], outdoor advertising - Network CN (NWCN.OB) and transportation information system - China TransInfo Technology (CTFO.OB).

China stocks are overbought; a dangerous bubble is forming; sooner or later this market will crash.

That's what we hear again and again. So is there no fairly or undervalued stock left in China? Should we stop buying and start selling? I don't think so.

Universal Travel Group (UTVG.OB) has upped its guidance for FY2007:

- Revenues expected to come in at approx. $44m-$45m (up from previous guidance of $35m-$36m)

A year ago, Universal Travel Group (UTVG.OB) was a small travel company is southern China, taking in $1.5m in revenues for Q3 2006. Its main asset was this company called Yu Zhi Lu ("YZL") which provided hotel reservations, packaged tours, and air delivering out of Shenzhen. Since then, much has happened. It has gone on an aggressive acquisition strategy, gobbling up companies to diversify its service offering as well as geographical reach.

In April 2007, it acquired Shenzhen Speedy Dragon, an international and domestic freight forwarding firm. In August 2007, it bought Xi'an Golden Net Travel Service Company, a travel services outfit with operations in western China. Also in August, it acquired Shanghai Lanbao Travel, a centralized real-time booking system providing hotel bookings, air ticket and tourism information via the internet and mobile phone. Shanghai Lanbao owns and manages the award-winning China Booking Association website, which receives about 200,000 visitors daily. Finally, in October, it snapped up Foshan Overseas International Travel as well as Tianjin Golden Dragon Travel, both leading travel services companies in their respective cities.

The size of China's travel market is relatively small compared to that of the United States—$134 billion and $1.3 trillion, respectively. Even so, China's swelling middle class and an unprecedented rise in disposable income have created one of the fastest growing tourism sectors in the world. In fact, the country is expected to eclipse Germany and become the third largest travel market by 2011, according to e-Marketer. And the World Travel and Tourism Council predicts that by 2010, China will receive more than 64 million tourists annually. The numbers and outlook justify the bullish sentiment among industry analysts, who forecast companies in the sector will grow 40% to 45% through 2008.

One player keyed into the China travel boom is Universal Travel Group (UTVG.OB), a small cap that provides travel services that include airline tickets, hotel and restaurant reservations, packaged tours and air cargo services. Based in Shenzhen, the nation's transportation hub and one of the world's fastest growing cities, Universal Travel Group serves domestic and international business and leisure customers traveling to, from and within mainland China, as well as the hot tourist markets of Hong Kong, Macao and Taiwan. Universal Travel has eight company owned reservation office locations, 103 franchised locations and a high-volume call center facility (which has reported a 30% jump in phone traffic each month since the end of last year).