Even without a great earnings report in the short term, SORL has great prospects. It operates in a very predictable business (automotive parts), in a Chinese macro environment that will grow around 6-7% (conservatively) for years to come. Decent R&D budget for new products and you're picking up a slice of this for less than half of its book value. Very little debt, so no bankruptcy threat. Pitroski score is 8 out of 9 (very strong), Altman z score = 2.02 (also very good). Hard to find that combination of performance statistics.
On the risk side, it's a Chinese RTO and things could go wrong, but the idea that ALL Chinese RTO's are scams doesn't make sense. Some are, but most are not in my opinion. SORL's a decent size at 65M. They have tangible inventory, it's car/truck parts - a very real business. If there were issues, they likely would've surfaced by now.
SORL is a compelling business at these prices. Over time as the RTOs washout and the Chinese economy chugs along at 7% - SORL will report good earnings and investors will buy - sending the stock surging ahead to kind of shake off it's illogical valuation. Then it will just continue to grow along with Chinese economic engine which is decent in its own regard.
I'm buying and holding for a few years. Be interesting to see what happens..
The company has impressive properties and the management seems to be talented. However, I can't find anything specific on when these mines will start producing. So, it's great that they keep communicating their potential, but as a shareholder I need to know when these will startup...Seems like SSRI has mines that are just talked about. Does anyone have any info on when these 2 will be brought online? Perhaps there are problems with surrounding communities or the permitting process? Thanks!
So let me get this straight: A Chinese company importing luxury cars, growing revenues at over 100%, book value at less than 25%. No long term debt. Stock tripled from November. If I take ALL of their liabilities and subtract them from only their current assets, I'm left with $56 million. Because they have no long term debt, the common stock is free and clear.
It's rare to get business opportunities like this. To me, the worst case is that management decides to take it private or relist on an Asian exchange. If they do this, they will borrow a few hundred million, and buy the shareholders out. You'll at least double your money from here because book value is so low. So you can't lose. (Unless of course, you let these shorts scare you into selling at these levels).
To all the shorts, On November 6th, 2012 one week before earnings announcement, the stock shot up before retreating slightly over the next few days. Then, when they announced, it went nuclear and was NASDAQs biggest gainer for the day. four months later....the same thing seems to be happening. The stock shot up last week and was Nasdaq's biggest gainer - we're waiting for the announcement. Will it go nuclear again? We'll see soon enough.
And remember: when you roll up in a Benz, doesn't matter which country you're in. Everyone understands and wants a hot car. Even in China...