mrmarket
07-07-2009, 03:31 PM
Wo ai zhongguo ren. (I like Chinese.)
Wo ai zhongguo ren. (I like Chinese.)
Wo ai zhongguo ren. (I like Chinese.)
Ni hao ma; ni hao ma; ni hao ma; zaijien! (How are you; how are you; how are you; goodbye!)
I like Chinese.
I like Chinese.
Their food is guaranteed to please,
A fourteen, a seven, a nine, and lychees.
I like Chinese.
I like Chinese.
I like their tiny little trees,
Their Zen, their ping-pong, their yin, and yang-ese.
I like Chinese.
I like Chinese.
Do you love Chinese food? If you do, you are not alone-it is one of the most popular ethnic cuisine choices out there. But, while fortune cookies are delicious and fun, they are not real Chinese food. What is traditional Chinese cuisines? It is as varied as the country is big. Every region has its own specialty dishes that make it unique and different from the others. I love the spicy hot dishes and I love my own egg rolls, egg drop soup and hot-and-sour soup.
http://www.florenceasianbuffet.com/image/2681822.jpg
Yum.
There is only one thing better on the planet than Chinese food and that is Chinese motors. That’s right. Get some electricity. Get a rotor. Get a stator with some baked and sticky windings and you are ready to spin spin spin to your heart’s content. Boy does China make those motors run.
Today I bought HRBN (Harbin Electric) at 15.79. I will sell it in 4 to 6 weeks at 18.21. Here’s why I like HRBN:
First of all, look at this chart:
http://chart.finance.yahoo.com/c/1y/h/hrbn
That’s right…momentum plus. HRBN is up 274% off of its March 2009 low. That’s 274% in only 4 months and it is going up in a straight line!. So if it continues on this track, it will go up 68% in one month and 15% in only a week. A stock moving like a rocket with a PE of only 12. I like momentum like that. But why is it going up?
Harbin Electric, Inc., through its subsidiaries, engages in the design, development, manufacture, supply, and service of various electric motors in China and internationally. The company offers linear motors (LM), automobile specialty micro-motors, and industrial rotary motors. Its LM product line includes flat linear asynchronous motor series and flat three-phase linear asynchronous motors used in transmission systems, such as the production transportation line, crane, postal service sorting machine, baggage sorting machine, printed matter sorting machine, automatic linear door, and revolving door applications; and integrated linear motor systems used in oil services, factory automation, packaging, logistic systems, and food industry. The company’s automobile specialty micro-motors product portfolio comprises car seat automation, back seat folding, electric power steering, automated window, and automated trunk opening used for various automation functions in automobiles. Its industrial rotary motors product line includes high/low voltage motors, AC/DC motors, and speed control motors used in various applications, such as petrochemical industry, metallurgical and mining industry, textile industry, agricultural machinery, transportation machinery, machine tools, medical devices, ventilation equipment, air compressor, and electric pumps.
So it makes lots of motors for cars. Last year people thought that no one was buying cars. Wrong…people will always buy cars and Harbin will always sell motor systems for cars along with all of the other stuff that sells when the economy rebounds. In many cases HRBN is the only supplier of linear motors to their clients. That’s how dependable they are.
Harbin is headquartered in China with operations in Harbin, Shanghai and Weihai. The story is not a Chinese story. It is a story of growth. 2008 vs. 2007, Sales were up 85% with Net Income up by 50%. In fact, this double digit growth in top and bottom line has been going on for over 4 years. They have strong barriers to entry to protect these margins with strong R&D and patented technology. Their growth strategy is fueled by new products being sold to new industries in new markets. It is new new new. Think about new Chinese food…not the old stuff that sat in your fridge for 2 weeks.
Harbin has global talent in strong in-house R&D and collaboration with top scientific & engineering institutions. They are the only Chinese firm to receive a government contract for the subway linear motors. Think about the urban mass transit upside in China…yea..right. Feel the love. The next 15 years will be the “golden period” in China to develop metro railway transportation and Harbin is sitting right on the sweet spot. They government has decreed over 2000 miles of urban railways to be built by 2020 as part of their stimulus package and the domestic components (Chinese made) must exceed 70%. The estimated investment is $70 billion. This is a multi decade growth opportunity for HRBN. Don’t be fooled by what you read – China continues to grow.
The business story is not only bright for Chinese consumption. Overseas sales have grown from $1.2 MM in 2006 to $20.2 MM in 2008. They have established a US Office and will most likely be kicking out butts soon (oh well). The upside earnings potential will come from higher volumes, new products, new customers and higher gross margin. It’s a 4 pronged killer attack!
How did they do last quarter? Revenues increased 36.8% to $30.72 million from $22.46 million in 2008. Net income for the quarter totaled $8.65 million, compared to $5.35 million for the same quarter of last year, a 61.7% increase year-over-year. Earnings per diluted share increased 44.4% to $0.39 from $0.27 in the first quarter of 2008, with an additional 2.2 million weighted average number of shares.
Alright. A good story so far. So how is it going to end? If you ask the ANAL-ysts, they will tell you that HRBN will earn $1.36 this year and $1.60 next year on revenues of $149 million and $189 million, respectively. Even with these ridiculously low predictions, HRBN’s stock is undervalued.
$$$MR. MARKET$$$ will tell you the real story. First of all, HRBN is sitting on $2.87/share of cash. That’s a nice place to start when the share price is only around $16 bucks. The book value per share is $7.87. This stocks is already cheap!
Revenues for 2009 will be $155 million which will generate EPS of $1.90. The year 2010 will be ridiculous, but there is no need to predict that one since HRBN will be long gone from my portfolio by then. At the $1.90 earnings clip, and a meager PE of 12, the stock price generated would be around $1.90 x 12 = $22.80/ share which is way past my target. Here’s what the boss has to say:
“Despite the weakest economic environment we have seen in decades, we continued to execute well and maintain bottom line growth,' said Tianfu Yang, Chairman and Chief Executive Officer of Harbin Electric. 'During the first quarter, we focused on cost control and margin improvement. We further strengthened our balance sheet by increasing our cash position to $63.57 million from $48.41 million at December 31, 2008 with intense focus on reducing accounts receivables and inventories. I am very pleased with our successful execution in areas under our control. We believe we are well positioned to take advantage of a turnaround in the Chinese economy under the government stimulus package.'
Mr. Yang commented, 'With the first quarter behind us, we see strong signs of economic improvement in China, largely driven by the Chinese government stimulus package. Our customers and markets are primarily in China and we expect to benefit from this. We have started experiencing strong demand growth in our industrial rotary motor business as a result of the government stimulus package that focuses on infrastructure and agriculture development. We expect sales of industrial rotary motors in the next quarter to surpass that in the first quarter.'
'We expect our legacy linear motors business to remain stable, with upside potential in a few areas. First, we would like to reaffirm our expectation to double the volume of tower-type oil pumps over the prior year. Second, we expect meaningful sales contribution in the second half of the year from linear motors for the mass transit systems. We have just delivered a few units to our customer and expect the testing of the first domestically made linear motor driven subway train to begin soon. Additionally, we continue to focus on developing new products and new markets and expect new products in our pipeline to reach market in the coming months.'
Mr. Yang continued, 'As for our specialty micro-motor business, we experienced a decrease in demand for our products during the first quarter of 2009 and a delay in the start-up of the Shanghai facility, due to the severe global economic downturn and the downturn in the U.S. auto industry. However, I strongly believe that these weak market conditions are only temporary. We have already started to see improvement in auto sales in China, from which we believe our business will benefit in the longer term. We continue to explore other markets outside the U.S. and expect to gain new markets and new customers in the future.'
Mr. Yang concluded, 'With strong signs that the Chinese economy is improving across the board, we believe that our Company is positioned very competitively to benefit from China's continued economic growth.
Gentlemen, start your motors!
If you like this write up, please share with a friend and encourage them to register for free at www.mrmarketishuge.com (http://www.mrmarketishuge.com/)
I am HUGE!
$$$MR. MARKET$$$
PS. Happy Birthday Jeffrey! This stock pick is for you!
Wo ai zhongguo ren. (I like Chinese.)
Wo ai zhongguo ren. (I like Chinese.)
Ni hao ma; ni hao ma; ni hao ma; zaijien! (How are you; how are you; how are you; goodbye!)
I like Chinese.
I like Chinese.
Their food is guaranteed to please,
A fourteen, a seven, a nine, and lychees.
I like Chinese.
I like Chinese.
I like their tiny little trees,
Their Zen, their ping-pong, their yin, and yang-ese.
I like Chinese.
I like Chinese.
Do you love Chinese food? If you do, you are not alone-it is one of the most popular ethnic cuisine choices out there. But, while fortune cookies are delicious and fun, they are not real Chinese food. What is traditional Chinese cuisines? It is as varied as the country is big. Every region has its own specialty dishes that make it unique and different from the others. I love the spicy hot dishes and I love my own egg rolls, egg drop soup and hot-and-sour soup.
http://www.florenceasianbuffet.com/image/2681822.jpg
Yum.
There is only one thing better on the planet than Chinese food and that is Chinese motors. That’s right. Get some electricity. Get a rotor. Get a stator with some baked and sticky windings and you are ready to spin spin spin to your heart’s content. Boy does China make those motors run.
Today I bought HRBN (Harbin Electric) at 15.79. I will sell it in 4 to 6 weeks at 18.21. Here’s why I like HRBN:
First of all, look at this chart:
http://chart.finance.yahoo.com/c/1y/h/hrbn
That’s right…momentum plus. HRBN is up 274% off of its March 2009 low. That’s 274% in only 4 months and it is going up in a straight line!. So if it continues on this track, it will go up 68% in one month and 15% in only a week. A stock moving like a rocket with a PE of only 12. I like momentum like that. But why is it going up?
Harbin Electric, Inc., through its subsidiaries, engages in the design, development, manufacture, supply, and service of various electric motors in China and internationally. The company offers linear motors (LM), automobile specialty micro-motors, and industrial rotary motors. Its LM product line includes flat linear asynchronous motor series and flat three-phase linear asynchronous motors used in transmission systems, such as the production transportation line, crane, postal service sorting machine, baggage sorting machine, printed matter sorting machine, automatic linear door, and revolving door applications; and integrated linear motor systems used in oil services, factory automation, packaging, logistic systems, and food industry. The company’s automobile specialty micro-motors product portfolio comprises car seat automation, back seat folding, electric power steering, automated window, and automated trunk opening used for various automation functions in automobiles. Its industrial rotary motors product line includes high/low voltage motors, AC/DC motors, and speed control motors used in various applications, such as petrochemical industry, metallurgical and mining industry, textile industry, agricultural machinery, transportation machinery, machine tools, medical devices, ventilation equipment, air compressor, and electric pumps.
So it makes lots of motors for cars. Last year people thought that no one was buying cars. Wrong…people will always buy cars and Harbin will always sell motor systems for cars along with all of the other stuff that sells when the economy rebounds. In many cases HRBN is the only supplier of linear motors to their clients. That’s how dependable they are.
Harbin is headquartered in China with operations in Harbin, Shanghai and Weihai. The story is not a Chinese story. It is a story of growth. 2008 vs. 2007, Sales were up 85% with Net Income up by 50%. In fact, this double digit growth in top and bottom line has been going on for over 4 years. They have strong barriers to entry to protect these margins with strong R&D and patented technology. Their growth strategy is fueled by new products being sold to new industries in new markets. It is new new new. Think about new Chinese food…not the old stuff that sat in your fridge for 2 weeks.
Harbin has global talent in strong in-house R&D and collaboration with top scientific & engineering institutions. They are the only Chinese firm to receive a government contract for the subway linear motors. Think about the urban mass transit upside in China…yea..right. Feel the love. The next 15 years will be the “golden period” in China to develop metro railway transportation and Harbin is sitting right on the sweet spot. They government has decreed over 2000 miles of urban railways to be built by 2020 as part of their stimulus package and the domestic components (Chinese made) must exceed 70%. The estimated investment is $70 billion. This is a multi decade growth opportunity for HRBN. Don’t be fooled by what you read – China continues to grow.
The business story is not only bright for Chinese consumption. Overseas sales have grown from $1.2 MM in 2006 to $20.2 MM in 2008. They have established a US Office and will most likely be kicking out butts soon (oh well). The upside earnings potential will come from higher volumes, new products, new customers and higher gross margin. It’s a 4 pronged killer attack!
How did they do last quarter? Revenues increased 36.8% to $30.72 million from $22.46 million in 2008. Net income for the quarter totaled $8.65 million, compared to $5.35 million for the same quarter of last year, a 61.7% increase year-over-year. Earnings per diluted share increased 44.4% to $0.39 from $0.27 in the first quarter of 2008, with an additional 2.2 million weighted average number of shares.
Alright. A good story so far. So how is it going to end? If you ask the ANAL-ysts, they will tell you that HRBN will earn $1.36 this year and $1.60 next year on revenues of $149 million and $189 million, respectively. Even with these ridiculously low predictions, HRBN’s stock is undervalued.
$$$MR. MARKET$$$ will tell you the real story. First of all, HRBN is sitting on $2.87/share of cash. That’s a nice place to start when the share price is only around $16 bucks. The book value per share is $7.87. This stocks is already cheap!
Revenues for 2009 will be $155 million which will generate EPS of $1.90. The year 2010 will be ridiculous, but there is no need to predict that one since HRBN will be long gone from my portfolio by then. At the $1.90 earnings clip, and a meager PE of 12, the stock price generated would be around $1.90 x 12 = $22.80/ share which is way past my target. Here’s what the boss has to say:
“Despite the weakest economic environment we have seen in decades, we continued to execute well and maintain bottom line growth,' said Tianfu Yang, Chairman and Chief Executive Officer of Harbin Electric. 'During the first quarter, we focused on cost control and margin improvement. We further strengthened our balance sheet by increasing our cash position to $63.57 million from $48.41 million at December 31, 2008 with intense focus on reducing accounts receivables and inventories. I am very pleased with our successful execution in areas under our control. We believe we are well positioned to take advantage of a turnaround in the Chinese economy under the government stimulus package.'
Mr. Yang commented, 'With the first quarter behind us, we see strong signs of economic improvement in China, largely driven by the Chinese government stimulus package. Our customers and markets are primarily in China and we expect to benefit from this. We have started experiencing strong demand growth in our industrial rotary motor business as a result of the government stimulus package that focuses on infrastructure and agriculture development. We expect sales of industrial rotary motors in the next quarter to surpass that in the first quarter.'
'We expect our legacy linear motors business to remain stable, with upside potential in a few areas. First, we would like to reaffirm our expectation to double the volume of tower-type oil pumps over the prior year. Second, we expect meaningful sales contribution in the second half of the year from linear motors for the mass transit systems. We have just delivered a few units to our customer and expect the testing of the first domestically made linear motor driven subway train to begin soon. Additionally, we continue to focus on developing new products and new markets and expect new products in our pipeline to reach market in the coming months.'
Mr. Yang continued, 'As for our specialty micro-motor business, we experienced a decrease in demand for our products during the first quarter of 2009 and a delay in the start-up of the Shanghai facility, due to the severe global economic downturn and the downturn in the U.S. auto industry. However, I strongly believe that these weak market conditions are only temporary. We have already started to see improvement in auto sales in China, from which we believe our business will benefit in the longer term. We continue to explore other markets outside the U.S. and expect to gain new markets and new customers in the future.'
Mr. Yang concluded, 'With strong signs that the Chinese economy is improving across the board, we believe that our Company is positioned very competitively to benefit from China's continued economic growth.
Gentlemen, start your motors!
If you like this write up, please share with a friend and encourage them to register for free at www.mrmarketishuge.com (http://www.mrmarketishuge.com/)
I am HUGE!
$$$MR. MARKET$$$
PS. Happy Birthday Jeffrey! This stock pick is for you!