Look at the valuation of some other China stocks:
30 P/E: NED - $2.29 / $0.08 = 30
10 P/E: CAAS - $7.32 / $0.74 EPS = 10
8.9 P/E: CREG - $2.48 / $0.28 EPS run rate ($0.14 in 1st 6 months) = 8.9
8.0 P/E: JST - $6.43 / $0.8 = 8
6.8 P/E: SORL - $4.48 / $0.66 = 6.8
5.3 P/E: CCCL - $3.77 / $0.08 EPS last quarter, loss prior quarter; $0.71 trailing twelve months EPS = 5.3
5.3 P/E: CHLN - $2.85 / $0.54 EPS run rate ($0.27 1st 6 months) = 5.3
If I exclude the top one (NED) and take an average I get 7.38
Where is GPRC?
$2.93 / $1.17 = 2.50
you can actually do it when you get a chance. it's pretty cool. just click on that chart to your right and then click on the 1Y chart. it's pretty cool huh?
I'm assuming lots of other value investors are coming to the same conclusion as they look for undervalued stocks that haven't risen significantly. I think that's why you're seeing non-internet related Chinese stocks rising. Muddy Waters will eventually be a blip on the radar in my opinion as the large majority of scams have been weeded out.
GPRC is very attractive even if they don't grow at all going forward. Given their cash flow, they should have about the same amount of cash on hand as the company is worth in 6 to 8 quarters. I know they will be looking to expand production which will consume cash but the company is still generated $1+ EPS without assuming any growth so it's trading at a little over 2 times earnings. They have about $1.50 a share in cash and no debt.
10 times earnings would actually be $11.70. They did $0.31 last quarter and it sounds like ASP and demand has picked up so they may do $1.40 or so next year.
problem i have with that company is it only has $1 million in cash, is generating negative free cash flows, and it doesn't have a history of consistent profits. GPRC has been profitable for the past 5 years, has free cash flow of around $1/share, has grown revenues and profits 3 fold and 4 fold, respectively, in the past 4 years, and it has almost half it's market cap in cash and no debt. Not really a comparison in my book.
any estimates on where that leaves them at year end? just seems like if they want to expand aggressively at some point they will need to do an equity raise as the cash balances are very low and the free cash flow isn't high enough yet. just trying to assess risk here.
Those are the headlines I got. Will be interesting to see what they say on the conf call about the industry but from each of the other calls I've listened to it sounds like things are looking up.
CREG dropped today probably because of GPRC earnings. They had a dip due to a 1 week closure of their plant for government inspections. Otherwise, earnings looked solid. Still don't quite understand the valuation on that one.
Oaktree Capital Group LLC (OAK), the world’s largest distressed-debt investor, is buying Chinese stocks after valuations tumbled, Chairman Howard Marks said.
The nation’s equities are “tremendous bargains,” Marks said at a media briefing in Shanghai today, declining to name the specific shares he’s purchasing. U.S. stocks are “fairly to fully valued,” he said.
“We are investing in Chinese equities along with emerging markets,” Marks said. “Investors have lost all confidence in China.”
While investors were too optimistic about China’s prospects three years ago, they may be too pessimistic now, Marks said. The Shanghai Composite’s price-to-book ratio is about half the level it reached in November 2010, while the measure’s price-to-earnings multiple is 42 percent lower.
“The swings of the pendulum were excessive,” he said. “Perhaps this time too.”