It seems that most of the stocks trading near or under net cash valuewith positive cash flows are Chinese companies. Some other examplesare GRO and GU. I think that all three of these companies went publicsomewhat recently and have unaudited financial statements, though. Iwould not be too surprised if they were cooking their books.But I think the fact that the Chinese stock market is relatively newand so Chinese investors are less experienced could also have a lot todo with this. For example, I'd bet that HH is a Chinese trader who hasno grounding in fundamentals. If the mass majority of participants inthe market don't look at fundamentals, then the lower bound to stockprices will be much lower, because the value investors and contrariansare the ones who are willing to buy when prices are falling, andcreate the bottom. This is especially true for companies that don'tpay dividends or buy back shares or otherwise return value toshareholders.This brings me to my next point. Judging by what I've read, the management is very unfriendly toward shareholders... they pretty much refused buy backs of shares in a recent conference call even at this ridiculously low price (they dodged the question awkwardly when an analyst asked about it, saying something along the lines of "cash is king"). They also issued new shares in May 2008, diluting shareholders to raise cash even when they supposedly had tons of money sitting around doing nothing on their balance sheet. Why would management of any company do this? It's pretty suspicious to say the least.And finally, the numbers look too good to be true. Why hasn't acompany already bought them out at this point? I'm sure you alreadyknow the idea behind this, but I'll explain to HH. At the currentprice, the entire company is worth less than the cash on their balancesheet minus all the liabilities. So theoretically, someone, like arival corporation, could buy out the company and take all the cash,pay off the liabilities, and make a profit right then and there. Andhave the rest of the company for free. And to top it off, this companythat you're getting for free is very profitable with very high marginsand return on invested capital. It's just way too good to be true. These are just my initial impressions. It's pretty hard to find good info on this company...
By the way, you can ignore my comments about "HH". I first posted this on another board.
Here's a link I found about errors in XING, QXM's parent company's, financial statements, might be relevant: http://cn.reuters.com/article/companyNews/idUKWNAS6399200707...
thanks for your input. I continue to hold shares in QXM and continue to wonder why ? <smile>Best Wishes,Jon
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