Most Americans, of course, do not think it is wise to invest in Chinese businesses. Volume is very weak and prices are pitifully low. There is not much buying pressure at all. That, perhaps, is the best reason of all to invest.
1. IF one is convinced, after doing as much due diligence as possible (which is hindered by Chinese restrictions on foreign auditing od Chinese operations) that he/she is knowledgeable about the business, and that the managers and trustees are honest, the future would look bright indeed. Many, many Chinese stocks that appear very clean are selling for 20% or less of reported book value, for less than free cash, and sometimes for less than one times earnings. Taking a flyer at such a stock would seem to be worth the risk, again IF one is convinced about the honesty of the reports and personnel.
2. Many vies have heavy Chinese insider holdings. That gives some comfort to vie holders.
3. If a Chinese operation is perfectly legitimate, and the U.S. market remains hostile to and fearful of Chinese stocks, the company will eventually be taken private by Chinese insiders or sold to a Chinese firm. Frankly, that is my hope for CHGI. I believe it is legit and will grow as a business tremendously over the next few years. I do not, however, expect Americans to ever appreciate or trust it. Therefore, I expect a take-private or a buy out from some Chinese firm ( probably Fangda Graphite) in China. The buyout or take-private price will be, I think, higher that the current market price.
Having said that, I do not blame people for being wary of China stocks and would not have invested so heavily in them myself if I had not been so impulsive and blinded by the published numbers and hoopla.
I agree with you that my posts might look inconsistent. After many positive and bullish posts, I post some seemingly megative and bearish posts.
Here's a kind of summary of my views on CHGI:
1. Very good management. 2. Good niche products in ultra high electrodes and (yet to start up) nuclear. 3. Believable. Operations have been verified and financials look right. There is no way the balance sheet (with its high debt and low cash) has been padded, nor has the income statement, with it's fairly low sales and margins.
Not so bullish. 1. Lots of debt which makes it difficult to carry out business plan, at least in the near future. 2. Chinese mini. Some Chinese stocks, even vies. Get big multiples (such as BIDU, for example) but they are very big and well known. Small relatively obscure Chinese companies get no respect and are stuck with tiny multiples. 3. Very low trading volume. Price has been stable, which is a positive for a stock with such low volume, but there is no buying pressure.
Over all assessment. The stock is way undervalued and will eventually be bought out or taken private at a fair price. That could take a while.