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China New Borun Corporation Message Board

  • wamble99 wamble99 Mar 7, 2013 6:53 AM Flag

    Book value $9.39/share, cash $4.24/share

    When you look at 2012 results, they don't seem great. Revenues fell 3.6% and net income per share came down almost 40%. That being said, book value per share grew 14.5% and cash position almost tripled.

    Sure, last year wasn't great but when we look at the share price movement it's as the company is going out of business very soon, but that's not the case at all. Since 2010 BORN sales have surged 51%, EPS has come down 34%. The share price has fallen during the period some 85%, tough. But one has to consider that even tough the baijiu and corn market have been tough, BORN has still managed to be profitable! Looking at the share price it seems that the company must be in deep loss.

    And one more great thing is that while the demand is falling, the management is not sitting on its hands waiting for things to turn better by themselves. They announced an expansion to foam insulation and CPE plant that will contribute 300 million RMB to annual revenues.

    At 1,5 x 2012 EPS, I see as if the market expects no expansion of BORN, in fact it seems that market participants expect that the bankruptcy will be filed tomorrow. Yeah, I know it's a small Chinese company, meaning that the numbers might not be 100% accurate, but isn't a 80% discount to book value a bit much???

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