Value Propositions
ALN : NYSE Amex
Stock Price: $ 2.85
Market Cap: $ 86.2M
Industry: Consumer Goods
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American Lorain Corporation
American Lorain is a fast growing leading producer of chestnuts and Chinese snack foods, currently trading at a 5 P/E with EPS of $0.55 (ttm) in a sector that trades at a 10-12 P/E. Upside is over 100% from current price levels. The Company has $8.5 million in cash and continues to expand its retail locations with a target of 8,000 locations by 4th quarter 2010.
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AMCF : NasdaqGM
Stock Price: $ 3.90
Market Cap: $ 37.5M
Industry: Oil & Gas Equipment & Services
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Andatee China Marine Fuel Services Corporation
Andatee China Marine Fuel Services is the only U.S.-listed company in China’s marine fuel industry, which is expected to double by 2013. Management is executing an aggressive roll-up acquisition strategy in the fragmented market. Fiscal 2009 revenues were $124.2 million, up 57% from the previous year. Net income in 2009 was $6.4 million, a YoY increase of 334%. AMCF’s peers in the marine fuel industry trade at a P/E of 30x, while the stock is trading at 4.5x. If AMCF were valued at the peer average P/E, its stock would trade at $31, a potential return of over 600% from the current price.
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CEU : NYSE
Stock Price: $ 3.97
Market Cap: $ 125.7M
Industry: Education
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China Education Alliance, Inc.
China Education Alliance has $69 million in cash or $2.17 per share in cash. It is trading at an 8 P/E in a sector that trades at a 22-25 P/E. The stock should trade at $14.00, an upside of 196%. Buy now and be patient. The traffic jam will clear and the stock should run to its fair value.
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CECX : OTC BB
Stock Price: $ 3.00
Market Cap: $ 66M
Industry: Education
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China Executive Education Corp.
This company is experiencing explosive growth, training mid to high level Chinese executives in 1-2 day seminars that generate up to $2M per seminar. With GDP growth above 9%, China is generating millions of new mid- to highlevel Chinese executives each year. We expect 30% top and bottom line growth for this company over the next 3-5 years. The target price range of this stock is $8.00-$15.00. The Company will apply for NASDAQ listing in the near-term which should give the stock a strong boost.
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CHGS : AMEX
Stock Price: $ 1.17
Market Cap: $ 28.4M
Industry: Manufacturing
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China Gengsheng Minerals, Inc.
China Gengsheng Minerals Inc. is a producer of mineral-based industrial products. Their newest product, a precision abrasive used to polish silicon used in solar modules could be a game changer for the Company. Revenues were up 14.5% to $57 million in FY09 while net income increased 38% to $5.6 million. RedChip Research target: $4.50 based on a 15x 2010 estimated earnings. Strong upside potential on this stock which is currently trading below $3.00.
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CTXIF : OTC BB
Stock Price: $ 1.64
Market Cap: $ 32.96M
Industry: Consumer Goods
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China Linen Textile Industry, Ltd.
China Linen Textile Industry, Ltd is trading at a P/E (ttm) of 5x in a sector that trades at an average P/E (ttm) of 29x. RedChip research gives the stock a $4.00 valuation based on a 12x forward EPS of $0.34 cents. This stock is a bargain. Position at current levels and be patient.
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CMDI : OTC BB
Stock Price: $ 1.90
Market Cap: $ 20.63M
Industry: Advertising
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China New Media Corp.
China New Media has demonstrated its ability to land large contracts for its LCD outdoor advertising platform. Its 100 LCD order in Beijing, when fully built out, will generate revenue of approximately $150 million with net margins of 30%. U.S. listed China media companies have traded as high as 40x EPS. A 30 P/E on fiscal 2011 projected net income would put the stock in the $6.00-$7.00 range. A listing on NASDAQ would most likely give the stock a substantial boost. The Company plans to apply for NASDAQ in the near-term. With only 1.1 million shares in the float, early investors have the opportunity to benefit immensely in 2010. RedChip research target is conservative.
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DPDM : OTC BB
Stock Price: $ 0.11
Market Cap: $ 6.6M
Industry: Technology
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Dolphin Digital Media, Inc.
Dolphin Digital Media is a children’s social media network play founded by Bill O’Dowd, the producer of ZOE 101 and Nickelodeon #1 producer of children’s movies and TV shows. The site is rapidly gaining subscribers. With gross margins in excess of 50%, and a built in fan-club of over 1 million children from ZOE 101, it’s only a matter of time until this company emerges as a leader in the children’s social media network space.
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KGJI : NasdaqCM
Stock Price: $ 10.15
Market Cap: $ 423.9M
Industry: Consumer Goods
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Kingold Jewelry Inc.
Kingold is the largest manufacturer and distributor of 24K gold jewelry in China. The large and growing middle-class in China purchases and perceives 24K gold jewelry as a long-term investment. As a hybrid company, selling investment grade gold in the form of jewelry, the stock could trade at a P/E more aligned with actual gold producers (50x-100x). Revenues increased from $38.1M in 1Q09 to $60.5M in 1Q10. Net income was up 126% in 1Q10 to $3.9M. The Company expects top and bottom line growth of 40%-50% in 2010. Given the company’s rapid growth and low P/E, the stock has significant shortterm and long-term upside potential.
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LLEN : NasdaqGM
Stock Price: $ 8.50
Market Cap: $ 247.7M
Industry: Mining
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L & L Energy, Inc.
L&L Energy is an integrated coal producer with operations in southern China. Third quarter revenues are up 280% year-over-year, and net income increased 440% over 3Q09. The Company is executing an aggressive growth strategy, as demonstrated by its three recent acquisitions, which are expected to contribute $62 million in annual revenues. The opening of a new coal
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LPH : NYSE Amex
Stock Price: $ 2.13
Market Cap: $ 193.8M
Industry: Oil & Gas
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Longwei Petroleum Investment Holding Ltd.
Longwei Petroleum is a fuel distributor in north eastern China. With the largest non state owned storage capacity in the Shanxi province, and current annual doubledigit revenue and earnings growth rate, RedChip believes this stock should trade at $6.50. Current upside of over 100%.
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NTWK : NasdaqCM
Stock Price: $ 1.01
Market Cap: $ 36.6M
Industry: Application Software
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NetSol Technologies, Inc.
NetSol is an IT enterprise solutions company with a blue-chip client base. This is a classic turn-around situation that has recovered brilliantly from the recession. Its current back-log and sales pipe-line will support the Company’s return to profitability for FY10. The Company is confident it will maintain and improve the bottom line to sustainable profitability going into FY11. We estimate the potential upside from current stock levels is 150%-320%. Buy as much as you can below $1.00 to maximize your ROI.
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NG : NYSE Amex
Stock Price: $ 7.65
Market Cap: $ 1.691B
Industry: Gold
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NovaGold Resources Inc.
Nova Gold has the largest undeveloped, proven gold reserves in North America. George Soros is a large investor in this company, which should tell investors something. With $160.00 per share in gold indicated and inferred, this stock should continue to appreciate over the long-term.
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SHIP : NasdaqGM
Stock Price: $ 1.02
Market Cap: $ 61.4M
Industry: Diversified Investments
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Seanergy Maritime Holdings Corp.
This shipping company generated $35 million in net income (fiscal 09) and has $85 million in cash (mrq). It trades at a 2 P/E (ttm) in a sector that trades at a 6 P/E. Upside on this stock: 200%.
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SGAS : OTC BB
Stock Price: $ 0.33
Market Cap: $ 8.9M
Industry: Natural Gas
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Sino Gas International Holdings, Inc.
SGAS has exclusive concession right agreements with local governments for up to
30 years in the provinces where it operates. Chinese demand for natural gas is
expected to triple by 2020, and the Company’s 10% residential penetration rate in
its market in implies strong growth for years to come. Sales are up 48% (ttm) and
EPS more than 150% (ttm) in the past year. SGAS’ peers trade at a P/E of 14x,
while it trades at 5.5x. If the stock were valued at the industry P/E, it would trade at
$1.68, a return of more than 180% from the current price level.
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WEMU : OTC BB
Stock Price: $ 3.75
Market Cap: $ 21.2M
Industry: Manufacturing
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Worldwide Energy and Manufacturing USA, Inc.
Worldwide Energy is a solar module manufacturer and distributor that generated $70.2 million in revenue in the first six months of FY2010. The company's stock is currently trading at a 4.2 P/E (ttm) and projected to continue to grow its top line in the high double digits.
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ZSTN : NasdaqGM
Stock Price: $ 6.21
Market Cap: $ 72.3M
Industry: Technology
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ZST Digital Networks, Inc.
ZSTN serves the rapidly growing Chinese IPTV and GPS markets. The Company has a strong balance sheet and a growing bottom line on the income statement. At a P/E of 5.3x, ZSTN trades at a significant discount to its competitors, who trade at an average P/E of 16.0x. If ZSTN trades in line with its peer group, it would trade at $18.40, or a 200% upside for investors.
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0.08 Andatee (AMCF) - 3.90 
0.00 China Electric Motor (CELM) - 4.70 
-0.07 China Gengsheng (CHGS) - 1.17 
