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China XD Plastics Company Ltd. Message Board

  • iq180plus iq180plus Dec 5, 2013 10:32 AM Flag

    A-fool. You might want to look at q3 results, full year guidance and you will find your answer

    learn to do DD.

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    • Thanks for pointing me in the right direction. I was researching the series D preferred shares in the 10-k, 10-q sec filings, and had read through the earnings call transcripts - I should have gone back and checked all Q3 announcements.

      I found the guidance you referred to

      "Given the Company's positive outlook on customer demand and successful geographic market penetration with the backdrop of on-schedule ramp-up of its production capacity during the second quarter of 2013, the Company now reiterates its annual guidance and expects revenues for fiscal 2013 to range between $960 million and $1 billion and net income for fiscal 2013 to range between $117 million and $132 million]."

      This is great news! I will sleep well tonight, knowing that Morgan Stanely Private Equity Asia should not be able to redeem for series D for cash in 2013. I am not sure if this threat has been keeping the share price suppressed these past years but once 4th quarter earning are finalized and on the books - the only way MSPEA makes money on their $100 million investment is if CXDC trades above the $6.25 conversion price. A stock price of $8.25 would give them the $39 million they just missed out on. Maybe this will be the catalyst to get this stock followed and recommended by a major broker.

      Sentiment: Strong Buy

      • 1 Reply to ariesjvfool
      • A point about the preferred is that they were created as an investment vehicle to Morgan Stanley Asia private equity, and with such an investment they have two members on the board of directors. This is what erases any chance of possibe fraud as apposed to the mulitude of seemingly undervalued stocks in the chinese small cap sector. Also the convertible value is $6.25 a share and that was years ago, when EPS run rate was less than half the current $2.64 if one annulizes q3 results.
        On the downside, Mprgan stanley will likely team up with management and take the company private at a fraction of what it's worth. See YONG where they had a 50 million dollar preffered convertible investment. One can't blame management for doing such as it is being ignored in the US market, thus instead of $20 we will likely get a measly 6.5-7 dollars.

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