Usually, when the management team of a public company
makes insider purchases of their own company it is announced to the
market. However, we've seen many Chinese companies announce share
buy backs and or management share purchases before the actual buying
has taken place. This is a very "Chinese" way of doing things and
it is something the market just doesn't give much credence to.
Investors are not dumb and realize these smokescreens from Chinese
companies are nothing more than "tactics". As we say in the U.S.
the "proof is in the pudding" and announcing buybacks mean nothing if
it is not actually executed.
This is another reason why we have to remind readers that China
Direct (CDII)...is an American company doing business in China and not
just another Chinese company listed on a U.S. exchange. Now, the
company is proving how American it is!
The CEO, CFO, and Directors of China Direct have quietly purchased a
significant amount of stock in the past week. Links are provided
so that readers can see for themselves:
http://sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0001088787
and http://finance.yahoo.com/q/it?s=CDII+Insider+Transactions.
We don't know about you but ...there's
peace of mind in
knowing the people behind CDII live in the U.S., have their families in
the U.S., and can also be held accountable legally. Now..these
same people are betting their own money on China Direct stock.
 |
Deeply
Undervalued |
|
As of August 12, 2011 there are approximately 40,334,892 shares
outstanding and with CDII publicly announcing net income esimates of
$12 million USD for
the fiscal year... earnings per share (EPS) is around $0.30 cents
Based
on
yesterday's closing price of $0.88 the current price to earnings
ratio for CDII is 2.9 current years earnings. That
is insultingly cheap for a US company. The problem is that CDII
is being lumped together with other Chinese companies trading in the
market while in fact it is really a US company doing business in
China.
The entire value of China
Direct (CDII) is a ridiculous $35.50 million USD. Compare
this figure to CDII's total assets of $130.6 million and shareholder
equity of $80.3 million. Its cash and cash equivalents were $10.3
million with
pre-paid expenses of $12.5 million at the end of June 30, 2011.
The balance sheet further reflects $19.6 million in marketable
securities available for sale.
China
Vesting has previously visited CDII's Florida headquarters and met with
the company's senior management team. We also visited CDII's
Shanghai headquarters and spent considerable time with its China
team. At the end of the day institutional and individual investors are
clamoring to invest in
China...SAFELY...we
believe
that
China
Direct
(CDII)
is
an
excellent
way
to
gain China exposure to
your portfolio while being assured that management can be held
accountable. That is
why we consider the company to be deeply undervalued and an incredible
opportunity to gain China exposure without the Chinese risk.
