Monday, May 19, 2008

Blast from the past and some updates

Back in February I highlighted a promising chinese wind power stock - "China Wind Systems" (CWSI.OB). At that time it was trading at $2.00-$2.10. It had a quick run up to $2.50 and then retreated. Again - very promising due to the growth that the management expected. The trading has been really quiet for 3 months, as the momentum from china wind power never caught on with this stock. Well, lately it has been chinese stocks all over again and especially the ones with profits.

On Thursday, the company released great earnings, which actually were expected as the management provided the business outlook earlier, but for some reason these results were really NOT expected by the momo crowd :). And, what do we have? The stock suddenly jumps over 160% to close at $6.00 (up 134% on a day). I guess this is where the saying "patience pays" really applies.

I can't really predict the movement from here on, as this is now purely a momentum play and anything is possible at this point - from pump&dump to a run similar to PDO or MXC. Take your pick and be careful with it.


Now, some updates on other stocks -

China North East Petroleum (CNEH.OB)

Posted excellent earnings last week and stock did not sell off even after an impressive run up. Instead, it kept on going and today it hit the resistance right near the all-time high. Just a month ago, the stock was trading below $2 and many have lost their patience with it. Once again - "patience pays." It is turning out to be a great play of 2008 as expected, and it's not finished yet.

Highlights from the earnings release:


  • 1Q08 Revenue Increases 476% to $10.8 Million
  • 1Q08 Net Income Increases 1,052% to $3.3 Million
  • Net income for the first quarter increased significantly to $3.3 million, or $0.17 per diluted share, versus $287 thousand, or $0.01 per diluted share, in the first quarter of 2007.
  • We now have 157 wells in production as of the end of the first quarter and expect this number to grow on a quarterly basis as we progress through the year. Our increased cash position provides us with greater flexibility to not only drill new wells this year, but also allows us to further develop oil extraction technologies and selectively pursue acquisition opportunities.


The company is delivering and it's definitely gaining the Wall Street trust.
Once again, it hit the resistance at all-time high, and currently going through a small technical correction. In the long run, the stock and the company should continue to perform.


Basic Earth Science Systems (BSIC.OB)

Since highlighting this stock in $1.70, it has gained 50% (closing at 40% today), and I believe it's just starting to gain Wall Street atention. Its prospects are impressive. Nice micro oil&gas play with low O/S and float in the hottest area. Fundamentals are great for this small company. With other similar type plays making huge runs, such as PDO, MXC, FPP, I don't see why this company can't have another at least 100% run. It usually runs similar to FPP, so the race is on, in my opinion.
In the long term, I believe this is going to be a very successful company. We should hear about the new 16 wells soon, as well as the yearly results at the end of June. I expect more updates from the company between now and then.

Harbin Electric

After releasing impressive earnings that beat on both revenues and income, the stock has been in accumulating mode for at least 5 trading sessions. It's trading in very tight range between 17.80 and 18.20, and getting ready to resume the uptrend.
The company presented at Roth today. The new presentation has been posted on SEC:

http://sec.gov/Archives/edgar/data/1266719/000114420408030589/v115042_ex99-1.htm

Few highlights from it:


  • Reiterating revenues projections for 2010 -> 350 million excluding acquisitions
  • Latest acquisition -> Weihah Hengda Electric:
    2007 annual sales - 46.5 milllion growing at 30% annually would mean roughly $100 mil by 2010
  • Meaning at least 450 millon in revevenues in 2010 for HRBN compared to only 65 mil in 2007.
  • Foreign sales just getting started -
    -- Grew international business from 3% in 2006, 12% in 2007, 17% in 1Q2008.
    -- Established US office for business development
  • Top Four Customer sales distribution -
    Went from 81% for top 4 customers and 19% for others in 2006 to 66% from top 4 customers and 34% for others
  • Showing consistent revenue and income growth with stable gross margins consistently above 46%.


This company definitely has a great future. Remember $13's, $14's and $15's, and all the table pounding? :) These prices are starting to look further and further away. I believe they will be far away in 2010 and beyond.


No updates on AAAC (Tongxin International). Still waiting on Nasdaq. As the two stocks (CWSI.OB and CNEH.OB) showed - patience pays. It's just a matter of time before this stock makes a move.


This is all for today. Good luck!
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