Chart update and more

Update on HRBN chart ->

One more push to close to $15 level and the chart will look really pretty.



As you can see from this 1 month chart, MACD is about to turn positive, and the fast line is about to cross above signal line, which is called MACD crossover. This is a very bullish short term indicator. Stochastics still shows oversold, so we are good to go. If market doesn't crash, we should start seeing a nice uptrend developing. First stop would be the 200 dma, of course, around $17.65.



Update on CNEH.OB

In the past few days we witnessed a very strong bounce from the lows that were set in $1.60's. I believe this is in anticipation of earnings that will come out next week. We'll probably see some obvious profit taking. Who wouldn't mind booking 40% profits from just last week and getting out just before earnings?
But, if the earnings as good as most people expect, this stock will continue to appreciate throughout this year and beyond.


Update on JST

Last month I again mentioned this stock - JST (Jinpan). The stock got punished with the market, as it is a very low float stock, which doesn't usually have a strong volume.
Today the company reported incredible earnings, beating all estimates. The Y2007 net income was impressive $2.04. Even better was the business outlook for 2008, where they anticipate to make $2.64, and that is usually conservative, as they always beat their estimates.

Here is the paragraph from the release:

-- 4Q07 Revenue Increases 72% to $41.9 Million Compared to 4Q06 -
-- 4Q07 Net Income Increases 120% to $6.7 Million -
-- Full Year Revenue Increases 45% to $119.6 Million -
-- Full Year Net Income Increases 120% to $16.5 Million -

And on business outlook:

For the full 2008 fiscal year, the Company currently anticipates revenues of approximately $155 million, which is a 30% over 2007 sales of $119.6 million. The Company anticipates net income of approximately $21.4 million, or approximately $2.64 per diluted share, which is a 30% increase compared to 2007 net income of $16.5 million, or $2.04 per diluted share.

One word - Incredible!

Table Pounder

This is something new from me. I don't like doing that, but I must say the following:

Harbin Electric (HRBN) is an absolute table pounder at these low prices, if you are looking at the long term.

Stock has retraced to just below $14 today and turned around to close higher. Yes, the whole market jumped today, and one might argue whether we've seen the bottom for HRBN. Looking at the charts, I would have to say we did.

Take a look at this 2 year chart:



You can see the line of support from the lows developed due to retrace in March of 2007, August 2007, and now.

In the next few days, I'm expecting a detailed update from Dutton Associates, who has been very accurate in the past reports on HRBN. Also, as far as I know, the company is planning to begin making the conference calls starting with their 1Q results, which should come in May.

Once the market returns to normal, where fundamentals do matter, investors will find the great value in this company. $13,$14,$15 will look like a joke in 2-3 years.



Other updates:

Still waiting on Asia Automotive Acquisition (AAAC.OB / AAACW.OB)... Less than a month remains here. Few days ago they filed another amended registration statement, reflecting the change in the Record Date.

Earnings are almost here in China North East Petroleum (CNEH.OB). Should be released on or around April 1st (and it should not be a joke) :)
There were news of investor conference, where CNEH is going to be participating.
Hopefull, we'll here about the status of Nasdaq/AMEX application soon.

Update on Harbin Electric (HRBN)

Here is the beaten down stock. The stock is roughly 40% off its highs reached 2 months ago. Market conditions have been bad. The stock broke out to the downside from its trading range of $21-$24, as explained earlier. That followed breaking 200 dma to the downside as well - bad technical sign. Low float stocks always get punished in market weakness. Coupled with that was an uncertainty over earnings, but the company delivered again!

Yesterday after hours the company released its 10k, and today it released very detailed PR highlighting the financials and providing a business outlook.
One analyst has been right on the money constantly with this company - Dutton Associates. They've given pretty accurate forecast, and they continue to believe in the long term of this company.

No need for me to copy all the highlights from the PR. I'll just mention a few, which caught my attention and will comment on them in red.

• Revenues from the acquired automobile specialty micro-motors business contributed approximately $10.5 million to total revenues, representing 42% of the total revenue growth. Dutton Associates have forecasted the revenues from this business to reach $10.0 million. This is going to be a major revenue driver moving forward, and it has had a very nice growth already.
  
• The remaining 58% of total revenue growth came from increased purchases by existing customers of linear motor, armature and micro-motor products, and the new Tower Type Oil Pump which was launched in early 2007. This is another important revenue driver. The Company delivered only 13 units of the Tower Type Oil Pump in 2007, but is planning to deliver more than 200 units in 2008. That's huge
  
• We are continuing the joint development of the linear motor driven train system for urban mass transportation with the Institute of Electrical Engineering of the Chinese Academy of Sciences (''IEECAS'') and expect that this product could begin to contribute to our business in 2009, assuming a successful test run at the end of 2008. Will be interesting to see how this works out in the long term
  
• Our proprietary technology and product development capability helped gross profit margin increase to 49.6% in 2007, in our view, a remarkable achievement given that gross margin very rarely exceeds 45% in our industry. This truly is a remarkable achievment having consistent growth margins so high.
  
• The Company's products that were sold directly to markets outside China increased to 12.4% of total sales in 2007 from 3.1% in 2006, reflecting the rapid growth of the Company's international business. Another revenue growth driver. This is important, as the company is beginning to sell their products outside of China, particularly in US.
  

Finally, just want to add that they forecast their revenues to reach over $350 million in 2010. The outlook is still very good. If anybody expected bad earnings, they sure were wrong. The company posted the numbers for the most part in line with the analyst expectations. The stock may not take off right away, as it will struggle with resistance points now, plus the market is still not out of the woods, but the long term for this company is very bright. It continues to deliver on
consistent basis, and whenever the fundamentals become crucial in the market again, the stock will find its value much higher from the current levels.

Update on Asia Automotive Acquisition (AAAC.OB)

The stock has been taking a big hit lately. It's understandable - there is just over a month remaining to close the merger, and it has been a while since they filed an amended registration statement with the date of shareholder meeting.

It's not very clear why the the common (AAAC.OB) is taking a hit, as it's now trading below cash available in trust account. That's just irrational trading to me.
Warrants is different story. Since the warrants would expire worthless in case of no-deal, the risk in warrants increases dramatically; therefore, the warrants take a bigger hit. But judging by relatively low volume in both, it seems that there are just a few panic sellers.

Now, to the good news - the S-4 registration has been filed today after market close. And everything looks good for the meeting on April 4th, which gives them plenty of time before the deadline of April 19th.
Here is the link to filing:

http://sec.gov/Archives/edgar/data/1332552/000095012408001164/k22454a6sv4za.txt

One final thing remains - the actual voting, which should not be an issue (but keep in mind, there is always a risk in any investment). After voting takes place (on April 4th, assuming no additional changes), the merger should be complete within 2-3 days after that.

Another update on favorite stocks

First update is on China North East Petroleum (CNEH.OB) ->

As mentioned earlier, financing was expected to be announced shortly. And finally, today, the long awaited financing deal has been announced. This has been a major uncertainty for this stock for a few months. Many have expected this to be a toxic financing or a financing with major dillution to the shareholders. It actually turned to be very attractive deal both for the lender and the company.
You can read the PR here -> http://biz.yahoo.com/prnews/080303/cnm030.html?.v=12. Few highlights from the PR that made it look even more attractive:

• Majority of Proceeds to be Used to Drill 100 New Wells in 2008


• The average price of the three tranches of warrants is US$2.51 and represents a 17% premium to the closing price on February 27, 2008


• Of the 4.8 million warrants, 1.5 million are callable at the option of the Company if after one year the stock price is trading at or above US$4.80 which is 150% of the strike price of $3.20, assuming certain liquidity criteria are also met.


• And one of the most important: In connection with this financing, the Company is required to obtain a listing on a U.S. exchange within one year.

Once again, this was a major uncertainty with the company, that kept the price very low, while oil has been reaching new highs. Now, the company is in position to execute its plans, and I believe the stock could appreciate over 100% within a year or less. Long term projections are even higher.


Second update is on Asia Automotive Acquisition Inc. (AAAC.OB) ->

As expected, the company extended the Equity Acquisition Agreement all the way to April 30th, but in reality April 19th is the deadline to complete the acquisition. Jeff Feinberg just disclosed having 24%+ of O/S, which is 4% higher than he had disclosed previously. As mentioned earlier, he continues to buy the stock.

Third update is on Harbin Electric (HRBN) ->

Rough times in the market usually mean rough times for low float, low volume stocks, as they can be easily manipulated. Notice my last note on HRBN: "Stocks with low float like this can react violent in both directions :), especially if market conditions match; therefore, if you are in for the short term - proceed with caution". Well, HRBN always suffers a lot during rough times like DOW -300 last Friday. We broke through $21-$24 range to the downside, and it may take some time to recover. With earnings coming up within a few days or a week, most will be careful and would not risk entering a position here. Long term, it is still a very good investment, and nothing has changed in its long term outlook.

Good luck out there.