Last Two China Companies

My final 2 Chinese companies announced this week. It was a case of good news and bad news. First the bad news.

KHD - this is a Hong Kong-based supplier of commercial building supplies. They announced their earnings and they were actually very, very good (KHD Humboldt Wedag International Ltd. Reports Third Quarter and Nine-Month Results). They made a blazing 80 cents a share versus analyst estimates of 55 cents. Of course the problem was their outlook. With the credit crisis, it is making it more difficult for their customers to borrow money and they are canceling orders. KHD has suspended guidance going forward until they get more visibility. Then again,

1. they have a $1.1b backlog (which will likely get pared back),
2. they have $399m in cash (very strong balance sheet) and
   
3. the analysts still expect them to earn over $1 per share in 2009.

The stock sold off sharply and is now just $9.10 per share with a market cap of $277m (way less than cash and book value (11.18 per share). I won't be selling KHD any time soon.

QXM, the Chinese cell phone company had what I felt was a stellar earings report on Friday (Qiao Xing Mobile Reports Third Quarter 2008 Financial Results). They made 39 cents a share (this is a $2.85 stock) for the quarter. What I found extremely positive was they think the 4th quarter will be better than 4q last year, when they made 45 cents per share.

They have $435m in cash with no LT debt. Their market is is a measley $141m, which is 36% of their market cap. Not sure why they are so cheap, and despite the strong earnings and guidance, the stock was only up 4 cents on Friday. Another one I won't be selling any time soon.

PCR announced that they would begin buying back their shares with their excess cash (Perini to buy back up to $100 million in shares). I think if some of my other cash-rich MFI stocks do the same, the stock prices will start to climb. These are companies with extremely strong balance sheets.