Chinese Small Caps Red Hot SmartHeat and Guanwei Recycling See Huge Gains

The Paragon Report Provides Stock Research on SmartHeat and Guanwei Recycling


NEW YORK, NY--(Marketwire -04/12/12)- Chinese small cap stocks have been red hot recently. Chinese based companies have been some of the biggest movers in the market recently, with gains for these companies ranging from 20 percent to as high as 180 percent over the past week. The Paragon Report examines the outlook for China's small cap stocks and provides investment research on SmartHeat Inc. (NASDAQ: HEAT - News) and Guanwei Recycling Corp. (NASDAQ: GPRC - News).

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While a few of these companies had their own reasons for the sudden spikes, there has been one common factor. The China Securities Regulatory Commission (CSRC) nearly tripled the quotas for qualified foreign institutional investors to 80 billion Yuan from the previous limit of 30 billion Yuan. This will allow offshore investors to inject an extra $50 billion Yuan ($7.95 billion) into the country.

Although the dollar amount was not a significant sum it was still symbolically important as it appears that China is loosening its grip on their tightly controlled capital markets. The "move is a sign of a push for greater capital account opening," said Dariusz Kowalczyk, a senior economist at Crédit Agricole in Hong Kong. "It is also a step toward attracting more foreign investment."

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SmartHeat Inc., a market leader in China's clean technology, energy savings industry, announced financial results for the fiscal year ended December 31, 2011. Mainly due to goodwill impairment of $8.96 million taken in Q4 2011, the company experienced an operating loss of $8.82 million in Q42011 compared to an operating loss of $2.54 million in Q3 2011 and a net loss for Q42011 of $9.59 million compared to net loss of $4.0 million for Q3 2011. If not for one-time impairments to goodwill and inventory taken in Q4 2011, their operating loss would have resulted in operating income of approximately $3.77 million in Q4 2011 compared to operating loss of $2.54 million in Q3 2011.

Guanwei Recycling Corp., China's leading clean tech manufacturer of recycled low density polyethylene (LDPE), reported record sales and profits in 2011. Continuing strong domestic demand for the high quality, competitively priced recycled plastic manufactured at its zero discharge facility, also is expected to produce another year of record growth in 2012.

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