Earnings and more

It's earnings time this week.

Harbin Electric (HRBN) is going to have a conference call and PR on earnings early Monday morning, but they already released 10Q Friday after hours.

The numbers look great! They beat on both revenues and net income. Margins are still nicely above 48%.

Six months results:

"For the six-month period ended June 30, 2008, we generated net revenues of $46.42 million compared to $27.62 million for the six-month period ended June 30, 2007, representing a 68% year-over-year growth. Linear motors and related integrated application systems contributed 44% to total revenues, automobile specialty micro-motors contributed 38%, and controllers, armatures, and other special motors contributed 18% compared to 76%, 0%, and 24%, respectively, for the six months ended June 30, 2007. "

"Net Income for the six months ended June 30, 2008 was $11.58 million compared to $7.96 million for the six months ended June 3, 2007, representing a year-over-year increase of 46%. This increase in net income was mainly due to new sales driven primarily by automobile micro-motor business and the tower-type permanent magnetic linear motor oil pumps. Earnings per diluted share grew 36% from $0.42 in the six months ended June 30, 2008 to $0.58 in the six months ended June 30, 2007. The income tax that the Company began to pay on earnings has resulted in a significant reduction in our growth of net earnings compared to previous periods."

Three months results:

"For the three months ended June 30, 2008, we generated net revenues of $23.96 million compared to $13.99 million for the three months ended June 30, 2007, representing an increase of 71% year-over-year. Linear motors and related integrated application systems contributed 45% to total revenues, automobile specialty micro-motors contributed 38%, and controllers, armatures, and other special motors contributed 17% compared to 66%, 0%, and 34%, respectively, for the three months ended June 30, 2007. "

"Net Income for the three months ended June 30, 2008 was $6.23 million compared to $4.56 million for the three months ended June 30, 2007, representing a year-over-year increase of 37%. Earnings per diluted share were $0.31 and $0.24 for the three months ended June 30, 2008 and 2007, respectively. The income tax that the Company began to pay on earnings has resulted in a significant reduction in our growth of net earnings compared to previous periods. Higher SG&A costs for the second quarter of 2008 versus the second quarter of 2007 also negatively affected the net earnings. Additionally, the Company received $763,408 in government grants in the second quarter of 2007, while none in the second quarter of 2008, also affected the comparison of the two periods unfavorably."


Now, in the next quarters the new acquisition numbers will kick in. Fundamentals are all there for an impressive growth. Company does not appear to slow down at all.

Summary: Excellent 2Q numbers (beat all analysts forecasts) coupled with great chart setup - if that doesn't give HRBN a nice jump, I would be really suprised. Anyways, no worries here for the long term as usual.



Tongxin International (TXIC) - Look, it's not a disaster that the company's stock is down less than 6% from the time they got the merger complete. Once again, many chinese stocks are down 40%+ in the past 6 months. Disappointed about lack of upward movement? Yes. Worried yet? NO. Give it time and wait for earnings.

Almost Family (AFAM) - What a beast. Great earnings, just great. Chart is getting overextended though. If you are not out of it yet, I would suggest to take profits here. Has to settle a bit.


Here is my thinking on the market:

So far, market acts as I pretty much expected: bottomed at 10,800-11,100 area. Now, pushed over 11,600's with Nasdaq and S&P500 breaking out technically. Unless something changes materially, we should see a next resistance at 12,200-12,300 area fairly soon. Still on target for 13k by late Sept or Oct.

Chinese market is about to start heating up again. It seems to be bottoming out at 2500-2700 area. Even if it goes slightly lower, this looks like a bottom. Statistically, stocks of the country with Olympics gain on average 30% in the next 9 months after Olympics. So, start nibbling on your favorite Chinese high flyers :), but I would suggest to stick with stocks that got great fundamentals. We are about to witness a next wave in Chinese stocks buying. Get ready for it...