'China' Tag RSS Syndication from SeekingAlpha.com Investment U submits:

By Alexander Moschina

You probably remember the agri-boom a few years back.

As grain prices rose to astronomical figures, it triggered an increase in food prices across the board.

Complete Story » Alfred Little submits:

Wednesday after the close China Green Agriculture (NYSE: CGA) reported its fiscal fourth quarter and annual results followed by a conference call discussion with the analysts following the company. Notably absent from the call was anyone asking tough questions or demanding management provide a detailed response to the due diligence findings of the International Financial Research & Analysis Group (IFRA) that I summarized and linked to earlier this week.

Yesterday my friend uploaded a copy of IFRA’s latest update. You can download a copy for yourself here.

Complete Story » Prieur du Plessis submits:

China’s CFLP Manufacturing PMI for August increased slightly to 51.7 from 51.2 – the first increase in 4 months. The uptick was in line with my forecast based on the historical seasonal pattern. Although the PMI is still above the critical level of 50, indicating continued growth in the manufacturing sector, the growth is weak and sub-par to previous years, excluding 2008 and 2009 as a result of the debt and liquidity crisis (click to enlarge).

Complete Story » Glen Bradford submits:

Today I want to discuss how short sellers are spreading what I consider to be rumors about Chinese microcaps for their own profit.

By definition, an undervalued company is a company that the market hasn’t valued correctly for whatever reason. I want to illustrate two examples of how investors can systematically short undervalued companies, do perfunctory research, and continue to do so until they decide to cover their shorts and disappear, in most cases. I also wanted to discuss ways that companies can combat this, as it is fairly easy to deflect but imminently damaging if not combatted head on.

Complete Story » Investing Hobo submits:

China Sunergy (NASDAQ: CSUN) is the smallest of the US listed Chinese solar companies and currently only operates in cell production vertical. At face value, their Q2 earnings (see earnings call transcript here) were quite good. Revenues soared 107% year over year and 23% sequentially to 117m. Earnings were also up significantly as gross margins expanded to almost 20%. Earnings on a per share basis totaled .33 on a diluted EPS basis, compared to .18 EPS reported last year. Not bad for a four dollar stock if they can keep these levels of earnings stable over a longer period.

The advantage of operating in a single vertical is that during boom cycles, CSUN’s level of earnings can look extremely good as they leverage their lower cost structure to meet periods of high demand. The disadvantage of operating in a single vertical is that during down cycles, margins may compress because they don’t have direct control over end sales. CSUN will always rely on the ability of their customers who produce modules to do well. Higher integrated module producing peers have more direct control over costs as well as end demand exposure. As a result, even during down cycles, the level of their business doesn’t fluctuate as wildly as for CSUN. In recent years, CSUN’s quarterly earnings have swung from one extreme to another while some peers have kept their earnings more on a consistent level. The company is in the process of acquiring their sister module manufacturers CEEG (Nanjing and Shanghai), but has experienced delays in completing the merger. If and when this deal is closed, CSUN will operate more as a two vertical module manufacturer much like their larger peer Suntech Power.

Complete Story » David Pinsen submits:

Alloy Steel International (AYSI.OB) is a nano cap company headquartered in Australia that uses a high tech, proprietary process to manufacture protective wear plates for mining equipment. Essentially, the company is a picks & shovels play on the mining industry (particularly iron ore and coal mining, currently), an industry which has of course benefited from the demand for industrial commodities by China and other emerging economies.

Alloy Steel was the subject of a few posts here by Seeking Alpha contributer Michael Alexander, including (most recently) this post from last February, "AYSI's disruptive technology leads to record growth and earnings". Since then, the stock has dropped by more than two thirds. Much of that drop occured after the company's most recent quarter showed lower earnings than shareholders (including me) expected.

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You haven’t really heard much from me on this site lately. The primary reason for that is the fact that this market just isn’t worth spending too much time on right now. We have no discernible trend in equities save for the miners, which I’m long, and certain international markets which I wish I was long but have avoided due to the action state-side, a mistake.

We’re seeing quite a disconnect between certain emerging markets, notably Brazil, Argentina, Colombia, India, anything in South East Asia, and Taiwan, from China and the western developed world. It really all comes down to the consumer, and the divergence between large cap China and small cap Brazil tells the story. The Chinese are having a hard time getting their people to spend money while the Brazilians are spending liberally. Consumers in the western world have throttled back their spending for an obvious reason, they are broke and trying to repair their balance sheets. They also don’t have jobs, something that isn’t changing anytime soon.

Complete Story » Carnegie Endowment submits:

Strong economic performance in developing countries will not only benefit the 5.6 billion people who reside there, but will also impact the likelihood of a double-dip recession in advanced countries.

As GDP growth in advanced countries slows sharply, emerging economies are set to help sustain the global recovery. Though growth in emerging markets has moderated from torrid post-crisis rates, it remains high. In addition, it has grown more reliant on domestic demand, and is broadening across sectors. This high rate of growth can help mitigate a sharp slowdown of domestic demand in advanced countries, but cannot compensate fully for it.

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The old tech bellwethers of the 1990s failed to meet the unrealistic expectations investors had of them. The stocks have fared poorly since the market peaked in 2000, but revenues and earnings have generally grown reasonably well. The result is that these stocks, so overpriced a decade ago, can now be considered value stocks. In addition to having low P/E ratios and decent growth, most of these companies have strong balance sheets with plenty of cash.

There is now a new crop of tech favorites. Many of them are expected to profit from the rise of “cloud” computing, and no doubt some of them will. But the lesson from a decade ago is that the big winners are hard to spot ahead of time and if they are all priced for perfection, the safest bet is probably to stay away from them altogether, or perhaps even take positions against them.

Complete Story » Invest With An Edge submits:

By Brandon Clay

August was ugly for most market sectors – the dollar may have been the only safe place. One group of stocks bludgeoned in a particularly nasty way was U.S. for-profit education stocks.

Complete Story » Xiaofan Zhang submits:

Focus Media (FMCN) and NetEase (NTES) are two of the best-performing stocks in the Chinese Internet and New Media sector year-to-date. My research suggests these two stocks are now attractive trading opportunities: Focus Media represents a buying opportunity, while NetEase represents a shorting opportunity.

Focus Media's turnaround story has not been fully recognized by the market. With the Chinese advertising market continuing its recovery and Focus Media increasingly refocusing on its core businesses, I forecast Focus Media will grow non-GAAP EPS by 54%-62% year-over-year to $1.05-$1.10 in 2010. According to my calculations, currently investors on average are estimating around 30% Y/Y EPS growth in 2010, much lower than my forecast range. I believe the market's conservative stance on Focus Media is due to the uncertainty regarding whether the U.S. economy is heading toward a double-dip recession, which could have a negative ripple effect on global economic growth and advertising spending. In my opinion, even in the worst-case "double-dip" scenario, Focus Media is still a turnaround story mainly because of the steps it has taken to refocus on its core businesses (Commercial, In-Store, Poster Frame networks). I believe the market will eventually become more optimistic and raise its 2010 EPS growth estimate to at least 55% for Focus Media, which implies significant upside to current stock price.

Complete Story » FINalternatives submits:

There are a lot of China-focused hedge funds, but there are not any truly Chinese hedge funds. That is about to change as a pair of Chinese asset managers prepare to launch the country’s first genuine hedge funds.

Chinese regulators in July eased restrictions on asset managers’ trading of index futures, giving the green light to launch separately-managed account products aimed at high-net-worth investors. The first firm to walk through that new door will be E Fund Management, which plans to launch China’s first officially-registered hedge fund.

Complete Story » Carnegie Endowment submits:

China recently surpassed Japan to become the second largest economy and is now the world’s assembly plant. Its share of trade to GDP surged from 10 percent in 1979 to over 70 percent today. The country’s continued development will have implications for the world, but China faces tough challenges in lifting millions more out of poverty. As China’s largest trading partner, the European Union can play an important role in ensuring that competing interests don’t exacerbate tensions — instead, shared interests should strengthen Europe’s relations with China.

China’s rise — and that of Asia more generally — has created a triangular power relationship between North America, Europe, and Asia. But China is unique because it produces goods at both ends of the technology spectrum — it has more poor than all of Africa and a middle class larger than any nation in the Organization for Economic Co-operation and Development. In debates between the developed and the developing world, Beijing often finds itself straddling the interests of many but not fully aligned with either side.

Complete Story » Michael Lofing submits:

The company posted improved revenues, gross margin, and net margin in the second quarter 2010. The company built upon the promise shown in the first quarter 2010. Yingli Green Energy managed to sell more solar module shipments, improve capacity efficiency and increase overall capacity which it expects to reach 1 gigawatt by the end of 2010. The company needs to maintain improved sales volume as revenues might be impacted in the second half due to the expected decline of average sales price of solar modules in the second half of 2010. The company currently trades at 10.4 times 2011 earnings estimates.

Following an improvement in the second quarter 2010, many of the company’s rankings are near the top of its peer group, including operating cash flow-to-net income (1st), cash conversion cycle (5th), gross margin (6th), research and development (9th) and SG&A expenses (9th). Significant capital expenditures and an acquisition force free cash flow-to-net income to number 17 among the peer group. The lack of clear disclosure of the amount of receivables sold leaves us unable to quantify the enhancement of the cash flow-to-net income ranking and the cash conversion cycle. The company relies heavily on debt to finance its operations and expansion, which contributes to the company’s number 22 ranking in debt-to-equity and number 27 ranking in cash-to-debt. This is a minor improvement compared to the 28 ranking in debt-to-equity and number 29 ranking in cash-to-debt for the first quarter 2010. The company provides limited information in quarterly filings. It does not provide full footnote disclosures or a statement of cash flows. Furthermore, the company does not provide total megawatts sold or produced in its quarterly filings and many of the key performance indicators are only found in annual filings. Warranty and allowance for doubtful accounts data can only be found in annual filings. Governance is below average because three of the company’s seven directors are not independent. One director serves as the chief financial officer while another director serves as the vice president of the company. Furthermore, the financial controller serves as the internal audit manager and assistant to the chief financial officer. The company is in the middle of the pack on a cost-per-watt basis relative to its peer group. For the past two fiscal years, the company has been just slightly above the industry average. Costs and sales are disclosed for each of the company’s segments, including: solar modules and solar systems. Quarterly megawatt shipments are never explicitly stated, but the company claims second quarter 2010 shipments increased from the first quarter 2010 by “high-single digit percentage.” The company states its production capacity was 130% in the first quarter 2010, based on 600 megawatts of capacity. This translates into production of 195 megawatts in the first quarter 2010. In the second quarter 2010 conference call the company confirmed an analyst’s assertion of annual capacity of 840 megawatts in fiscal 2010 without any additional expansion. The figure 210 equates to a quarters worth of production and a single digit growth in the second quarter 2010 compared to the first quarter 2010. On the downside, average selling price decreased in the second quarter 2010 because of the ongoing depreciation of the euro against the renminbi. Going forward, the company says the average selling price might go down or not keep pace with the industry, especially in the third quarter 2010. Analysts expect pricing to remain flat or slightly up for the rest of year, Yingli has locked its pricing into annual contracts. The company announced in its second quarter conference call that its polysilicon manufacturing facility, Fine Silicon, has commenced commercial operations in August 2010. The company expects to produce 3,000 metric tons of polysilicon annually to be used in its photovoltaic modules. The company stated in expects to produce 400MT for the rest of year and 2000MT in 2011. Initially the costs of the polysilicon during production ramp up could be $60 to $65 per kilo. This number could drop to the $40 level once the company reaches full capacity. After three quarters of full capacity operation, the company expects the cost to be $25 per kilo. Overall gross margin was at its highest point in the last eight quarters, reaching 33.5% in the second quarter 2010 just besting the high of 33.3% in the first quarter 2010. Gross profit margin was 23.6% in 2009, compared to 23.4% in 2008. The company said, “Moving forward towards the second half of 2010, after taking to consideration the impacts from the ramp up cost of 400 megawatts new production lines and the 3000 metric tons of Fine Silicon, we expect our gross margin in the second half of 2010 will decrease temporarily from the first quarter and the second quarter level.” The continuous increase in gross margin for recent periods was primarily due to the continuous decline in the blended cost of polysilicon, decreasing polysilicon usage per watt and continuous reduction in non-polysilicon cost. Cost reductions were largely offset by decreases in the average selling price for solar modules. The company has had high debt-to-equity ratios relative to its peer group, exceeding the industry average for the past eight quarters. On July 9, 2010, the company announced it had received a ¥36 billion line of credit from the China Development Bank. In the second quarter conference call the CFO said, “And this ¥36 billion strategy framework line will be used for future projects on a case-by-case basis.”
Disclosure: No positions
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Japan

Software

• China enterprise software maker Pansoft Co. Ltd (PSOF) will invest 18 million yuan (US$2.7 million) to set up a joint venture (JV) with two Japanese companies in order to enter Japan's mobile software outsourcing market. Pansoft will hold an 80 percent stake in the JV named Pansoft (Japan) Co. Ltd. with the remaining stakes going to Management Information Center Co. Ltd. (MIC) and Seven Colors Corp. The JV will test 3G mobile software for Sharp Corp. at Pansoft's headquarters in Jinan City, Shandong Province. The JV is the first step of what is potentially a major move for Pansoft into mobile software outsourcing for the Japanese market, said Pansoft CEO Hugh Wang. Pansoft Japan currently accounts for 10 to 20 percent of Sharp's software testing business. Hugh anticipates that Pansoft will be able to secure more outsourcing contracts from Sharp and other Japanese IT companies in future due to their competitive prices.

Complete Story » Matthew Rossi submits:

CNinsure (CISG) took a small nose dive Tuesday, dropping over 7% to $21.84 and now is down 12.3% from our sell recommendation at $24.90. Volume was slightly above average and we expect the selling to continue in the near term. Our price target is $20.50 and we will hold that price target but we strongly recommend a hedging strategy to lock in the 12%+ gains from the last 3 weeks.

[Originally posted August 9, 2010:]
We are seeing multiple indications of a potential downward movement for CISG, CNinsure Inc., from our proprietary investment program and believe CISG will move down to $20.50 within the next two months. The option chart below shows the increase in put options over the last several weeks which we believe is based on an impending move down for CISG.

Complete Story » Zacks.com submits:

China Petroleum and Chemical Corporation (SNP), or Sinopec, targets more than 40% natural gas output for this year based on growing confidence on its gas fields. The company said that Yuanba gas field has similar potential to the neighboring Puguang field’s output. Both the fields are being developed by Sinopec.

While oil production experienced sluggishness in the first half, natural gas production showed solid growth. China is ramping up gas production as it seeks to find alternatives to coal, which emits high carbon levels. It is set to raise the country's energy needs from the current 3% to 10% by 2020.

Complete Story » David Wolf submits:

Jack Perkowski continues our serve-and-volley on the future of China’s construction equipment makers on his Managing The Dragon blog, and he brings out the Caterpillar (CAT) fanboy in me when he notes:

How should Cat, Komatsu, and the other global leaders prepare for Chinese competition overseas? By far, the best way is to compete successfully with them in China. That is why the battle for the construction equipment market in China is so critically important.

Complete Story » ChinaBio Today submits:

Roche Holding AG (RHHBY.PK) is planning to make “massive” job cuts soon, according to newspaper reports, involving “more than several hundreds” of employees around the world including positions in sales, R&D, production and administration. The reduction in employee counts comes at the same time Roche is expanding in China.

The reports said decisions about the cuts would be made this week, which Roche spokespersons denied, though they did not quarrel with the underlying story that the company plans to reduce costs by shrinking its total staff.

Complete Story » The Business Insider submits:

The latest from Andy Xie highlights the peculiar relationship that exists between rising Chinese land prices and the expansion of Chinese industry.

First, here's a quick refresher on the extent of land price inflation:

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