CHCG announced their earnings in the mid(China 3C Group Reports Third Quarter 2008 Financial Results)dle of this lame trading day. They earned 12 cents a share, which is pretty good for an "off-quarter" for a $1.08 stock. Of course the price went nowhere, but that isn't bothering me any more, I accept that the markets are irrational with fear right now.Here are some of the highlights, for those of you interested in joining my foray into China.
- Sales were up 36%
- Sales split is 32% wholesale and 68% retail
- Gross profit margin was way done from 22% to 15% (likely explains no move)
- The expected gross margin going forward is 14 to 16%
- Quarterly net income was about the same a year ago ($6.5m)
- They have $32m in cash with no debt
- They expect 4q sales to be higher than last year, with a lower tax rate and that cash will continue to grow
- Their market cap is $60m
- They have a market cap of $60m.
- They have $32m of cash, so Enterprise value = $28m.
- They are making over $6m (after taxes) a quarter!
See, I am not bothered any more by the market going nuts on my stocks. That is because I am i-n-v-e-s-t-i-n-g, a concept that seems to be forgotten. The short term will not matter and the long-term will take care of itself. Stocks like this, when (if) they demonstrate that they are for real, could easily go up 400% from today's prices.
About the current malaise over the market, remember the title of George Harrison's first album: "All Things Must Pass".
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1 comment:
When did you open your CHCG position? Will you keep it past the 1 year mark, or hold onto it? It sounds like the latter...
The reason I ask is that there are, of course, a number of MFI stocks that seem tremendously undervalued, but which have taken wicked beatings this year. Do you get rid of most of them as their one year mark approaches, and then move onto new stocks? Get rid of them and buy them back a month or two later (to take advantage of the capital loss)? something else?
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