Net cash is $$10.6258 per share: Gross cash of $535.7 million = $14.3744 p/sh Borrowings of $139.7 million ($3.7486) Borrowings increased from 871.7 RMB tat Q2 end to 953.6, a gain of only 81.9 RMB ($12 million at RMB 6.8282/$)
The implications for this on ongoing cash flow is enormous. At this earnings rate free cash flow could be implied to be at least equal to earnings per share - including changes in working capital.
So assuming positive effects of changes in w/c, FCF per share could be as high as $2.00. This gives the stock a FCF yield of over 13%.
A more realistic valuation would be at least 10%, implying a true value of at least $20 per ADR.
That $40 million is equal to $1.07 per share. Added to net cash of $10.625, the true net cash is $11.70 per share. The Sum-of-the-Parts (SOTP) at 15x earnings is (15x $1.86) = $$27.90, plus the $11.70 net cash for a total SOTP of $39.60. Even at 10x earnings (with no growth), the SOTP is $30.30, so the true value is somewhere between $30 and $40 per share.
You must mean $14 - not $4. This stock is never going to go to $4.
I won't ever see $10 - which is net cash.
The cash flow point is even more important. Any stock which can realiably produce close to $2.00 in free cash flow (and CYD produces much more than that), plus has $10.75 in net cash, is not worth $14.50.
Its true value is north of $30+, depending on specifics of FCF and the outlook for 2010 - which I am still analyzing