ChinaPharmaSleuth

Back to Brazil, China and Hong Kong for Intermediate Term

“The 19th century belonged to England, the 20th century belonged to the U.S., and the 21st century belongs to China. Invest accordingly.”

Warren Buffett

And although Mr. Buffett would not invest in CHGY.OB (China Energy), you might want to check out how they went from breaking even in the first 9 months of 2008 to making .09/share in the last quarter alone. Forward PE of 0.5 anyone?

Buy China: It's Actually Benefiting from Global Recessions

Darren,

I agree with the popints in your article, but why settle for a mutual fund with a PE of 13?

There are some excellent China microcap stocks (whose numbers I trust more than American bank stocks now), with PEs of 2.

Look into CHGY (China Energy) for example.

In the last Q of 2008, they completed a major expansion of their power plant, including upgradeds that vastly increase efficiencies. They went from breaking even in the first 9 months of 2008 to making .09/share in the last Q.

EPS projections for 2009 at $55-$60/ton coal prices (conservative) are from .35-.40/share, and the stock is about .20/share right now for a forward PE of 0.5...yes, that's Zero Point Five PE.

Naturally volatility and risk are greater in an individual stock- especially a microcap, but for some risk capital, the rewards can vastly outstrip anything that FXI or CXC will return over the next 6-12 months.

Disclosure- I am long CHGY, and about 10 other China microcaps right now. Many are just now starting to move nicely based on fundamentals, but most remain vastly undervalued.

regards,

China's Solar Stock Rally: Avoid Being Burned

I'll buy more CHGY.OB with a ttm PE of under 2, and the probability of making .35-.40/share in 2009 based on $50-55/ton coal prices before I'd buy any more solar stocks (which I own several of already in YGE and TSL). This company increased capacity and efficiencies with their new plant opening in the last Q of 2008 to where they made .09/share vs. breadking even the first 9 months of the year. Forward PE of 0.5 anyone?

Small Energy Stocks Offer Big Opportunities

You neglected to add CNEH, (China North East Petroleum) to your list.
In fact, it has much higher revenue and net income/share growth rates thay ANY of the companies you list, and has a PE of 2 currently. It's an OTC China microcap so one can only trust their numbers... about as much as the big American banks.

China Bio in Review: Partnerships and Financials

This is good information, thank you.

I think the AR issue on some of these China pharmas is a concern that should be pointed out as you have done in the past and are now with the CPHI numbers: "Unfortunately, increasing accounts receivable numbers have been the price for expanding China Pharma’s top line so quickly. The company said it ended 2008 with $15.9 million in accounts receivable, a sizable increase from $5.4 million a year earlier."

One badly beaten down stock of a company that seems to have turned the corner on this issue is LTUS.OB (Lotus Pharmaceuticals).

LTUS has not reported their full year yet, but based on the cash-empowered purchases they've announced in Q1 of 2009 that were made possible through collections of accounts receivable balances, it appears as though they've turned the issue around.

In a February 2009 pr, LTUS announced that they had paid $26M in cash for land use rights for the development of a pharmaceutical park. Their press release states: "Lotus generated the RMB180 million that it paid for land use rights by speeding up its collection of accounts receivable in 2008." They also announced (last month) that they bought rights to a drug that had an estimated $9.8M in revenues and 75% margins in 2008, paying just $7.9M for it with cash from operations...and (I presume), more accounts receivable collections.

Due to overall market conditions, the fact that LTUS has not reported their full year yet, and possible concerns that they will miss their make good target of $13.1M in net income for 2008, the stock has remained badly beaten down and is trading at a ttm PE multiple of 0.5 (yes, that's zero point five). But on the accounts receivable front at least, the company is sending strong signals that they've done a good job of collecting, and investing those funds for future growth.

Disclosure- long LTUS.OB

Accounts Receivable Prevent China Pharma from Being a Great Value Play

I like what LTUS.OB (Lotus Pharma) has done with their formally large AR balance of $14M in their last reported quarter: they aggressively collected it, and used the cash to buy rights to a new drug for less than it's revenue was in 2008.
This tells me that in the case of LTUS at least, the ARs were real, and they were successful in collecting them- a nice plus for a beaten-down company with a ttm PE of about 0.5 right now.