Bullish China Stock – China Public Security Technology (CPBY.OB)
Aug 30, 2007 Small Cap Stock Picks
About China Public Security Technology, Inc.
Through its wholly-owned Chinese subsidiary, CPST is focused on the development and implementation of large scale, high-tech public security and Geographic Information System (GIS) related projects. The Company provides a broad portfolio of fully integrated solutions and services, including public security information technology (First Responder Coordination Platform, Intelligent Border Control and Intelligent Security Surveillance), Geographic Information System (Police-use GIS and Civil-use GIS), and e-Government Platform services, software sales and maintenance services. CPST currently has the licenses to 16 registered and copyrighted software applications in China, through its exclusive commercial arrangement agreement with Shenzhen iASPEC Software Engineering Company Limited (iASPEC). Under this agreement the Company acts as iASPEC’s exclusive subcontractor to all its customers. To learn more about the Company, please visit the corporate website at http://www.chinacpby.com .
CPBY seems to be experiencing a lot of growth over the past year since they have become a publicly traded company on the OTCBB market. Not to my surprise this is anther chinese stock under the radar and looking depressed in value at its current share price of 6.20 as of the close on 8/30/07. Price has been pretty unactive on low volume until a very interesting PR was released on 8/13/07 about the installation of their software for police survaliance vehicles in Southern China, along with information about 2 hedge funds doubling up there positions on this stock.
China Public provides surveillance software: report
Sunday August 12, 4:12 pm ET
NEW YORK (Reuters) – U.S.-financed China Public Security Technology (OTC BB:CPBY.OB – News) will provide software that links to at least 20,000 police surveillance cameras being installed along streets in southern China, according to the New York Times on Sunday.
China Public is also creating computer chip “residency cards” that will be issued to most of Shenzhen’s 12.4 residents and nearby neighborhoods, said the New York Times in its August 12 edition. Data on the cards will include the citizen’s name, address, work history, educational background, religion, police record, personal reproductive history and many other personal details, the newspaper said.
The company’s camera software will allow Chinese police to automatically recognize the faces of suspects and detect unusual activity, the Times said.
China Public has a market capitalization of $185.3 million, and two hedge funds that bought stakes have more than doubled their investment since February, the Times said.
Shares of China Public closed Friday at $4.70 on the over-the-counter bulletin board.
(Reporting by Sarah Coffey)
The day after this PR released shares surged premarket to gap open at 6.10 for mondays session from fridays close of 4.70 on heavy volume which has sparked interest as volume watchers became aware of this stock as i did with this recent rally after its pullback from the 13th of August. As of yesterdays close CPYB.OB has made a very bullish breakout on above average volume suggesting further bullish activity to continue in the coming weeks from a Technical Analysis point of view. But are their fundamental reasons for this breakout as well which also suggest a continuation? You betcha, otherwise i wouldn’t be writing this piece, ironically the name of my website doesn’t entirely coincide with my trading strategies. A bullish stock chart isn’t truly bullish unless it has fundamental backing. That said my trading style isn’t based solely on technicals the least bit, fundamentals tell me what stocks to buy, technicals tell me what stocks i should research, and when to buy. So a stock i want is a stock that has “Technifunds”, i suppose i’ll coin that term, which we’ll say means: has bullish technicals along with a positive and healthy fundamental outlook.
CPBY.OB released a very strong Q2 report and outlook for 2007 and 2008 which are very impressive:
Second Quarter 2007 Highlights (Pro-Forma measures)
-- Total revenues increased 200% year over year to $10.5 million;
-- Gross profit rose 143% year over year to $5.1 million, representing 49%
gross margin;
-- Operating income rose 163% to $4.2 million, with operating margin
reaching 40%;
-- Net income grew 228% to $4.6 million, or $0.12 per basic share and
$0.11 per diluted share.
Second Quarter 2007 Results
“Following a strong first quarter, China Public Security delivered exceptional growth in revenues and profits in the second quarter, as we continued to win important new contracts in the public security sector and expand the breadth of our product offerings,” Mr. Jiang Huai Lin, CEO of China Public Security said. “In the second quarter, we successfully implemented an Intelligent Border Control System at the Shenzhen Bay Port and Futian Port, and introduced an exciting new solution to deal with identity card management and internal immigration. Our recent wins strengthen our confidence that we will achieve our financial objectives for 2007 and beyond, as we continue to win additional contracts and expand our offerings to other major regions of China.”
Outlook for 2007
“The market for public security information technology is continuing to increase based on the ‘Police Force Technology Reinforcement’ initiative advocated by the PRC government. An increasing number of cities are eager to build or install public security information technology systems,” said Mr. Lin. “There are about 660 cities and 280 borders in China. Just within Guangdong province we see significant opportunities to deploy our public security information technology solutions. In addition, GIS has significant opportunities not only in police-use but also in civil use.”
For 2007, management increased estimated revenues to $32 million with net income of $12.5 million. For 2008, the company expects revenues of $53 million with net profit expected to reach $21 million.
So with that being said, they’re expecting a huge jump for 2008 almost doubling in growth for revenues and earnings with a very attractive forward price to earnings ratio. CPBY is listed under the applications software industry which is currently trading at a 27.3x earnings multiple compared to CPBY trading at a current forward 2008 P/E ratio of approximately :
39.4m shares outstanding
2008 net income estimated at $21m
2008 EPS estimate = $21,000,000 / 39,400,000 = .53
2008 Forward P/E = 6.20/.53 = 11.69x
With these #’s of forward growth we could possibly expect CPBY.OB to continue its bullish movement in share price to become fairly valued in the application software industry moving forward into 2008. Which would entail share prices near 14.46 {.53eps X 27.3x avg} aka 133% gain from todays closing price of 6.20 making this stock look undervalued as the outlook is over double from todays share price. CPBY also has a healthy looking balance sheet with zero long term debt, $5m+ in cash, and an outstanding current ratio of 14.96 which is probably the highest CR I’ve ever seen.
Technically this stock has made a very nice looking bullish breakout with volume to back it up, though the stock has made a very strong rally over the past 4 sessions which could possibly be followed by some profit taking proving this to be a false breakout. I’ll look to buy 1/2 tomorrow and look for the other 1/2 on weakness of profits are taken.
Dow Tumbles 280 Points at Resistance and Fed Minutes Meeting
Aug 29, 2007 Speculative Stock Analysis, TTT.net Updates
The general market ate up the bulls today with the Dow ending the day down 280 points. Two culprits i believe to be the cause. 1: The Dow had made a very strong rally off of its recent bottom and came to a halt once price had risen to the top resistance line of a short term bearish channel which would be a signal for going short. Technically the market is looking fairly bearish and wont be surprised to see the dow around 12,800 in the near future.
2: In the Fed’s meeting apparently investors were hoping to hear something about the Fed cutting the rates to fix all this credit mess that has sparked this recent bearish activity over the past months since the Dow hit a record high near 14k. I think its likely we won’t hear anything about a rate cut until the Feds Sept 18th meeting, if the rates get cut at all.
At this point the markets tough to bet on as many stocks fundamentals are looking very strong yet that doesn’t seem to matter to the street in the face of credit problems and the question of what the hell is the FED gonna do about it. With the market in constant turbulence i’ve been taking this time to take a small step back and enjoy the sun and the last days of my summer which is why i’m 60% cash and haven’t been too active on the blog or boards. I’m taking one last summer vacation this coming weekend before the 90-100 degree weather here in Boise says adios amigos until next June. Every year me and a group of best friends head out to the Columbia Gorge to watch Dave Matthews perform 3 nights in a row at one of the most magnificent Amphitheater’s around. Maybe I’ll see some of yah there 
I’ll be gone this thursday – Monday.
August 28, 2007, 4:11 pm
Four at Four: Dogs on the Street
Posted by David Gaffen
After July, 1990 and 1998 didn’t end well.
Gigamedia(Nasd:GIGM) – Undervalued and Poised for Growth
Aug 24, 2007 Small Cap Stock Picks
GIGAMEDIA LTD ORD Company Overview
GigaMedia Limited (GigaMedia) is a holding company that develops and licenses entertainment software and provides application services, owns and operates an online games portal and provides broadband Internet access services through its subsidiaries. GigaMedia’s entertainment software business is operated through its subsidiary, Cambridge Entertainment Software Limited. Its Taiwan online casual games business is operated through Hoshin GigaMedia Center, Inc. (Hoshin GigaMedia). Its Hong Kong and People’s Republic of China online casual games business is operated through FunTown World Limited (FunTown). Its Taiwan broadband Internet service provider businesses are operated through its subsidiary, Hoshin GigaMedia, which focuses on consumer users, and Koos Broadband Telecom Co., Ltd., which focuses on corporate users. In May 2006, the Company sold its ADSL business to Webs-TV International Corporation
I issued a buy alert earlier this week on GIGM saying we should try to buy some shares on a pullback near the 200ma or around 12.45 for a solid entry. As my “crystal ball” enlightens me of buy points, i used my jedi mind powers from the depths of mount doom to force price to dip to a low of 12.40 during todays session to give a chance to buy before a rally followed to end the day up 2.85% closing at 12.98 , i filled a position as stated 12.45 From a technical analysis standpoint this chart pattern is looking great as the 3 month down trend has been broken sparked by a bullish earnings call and now as of todays close price broke out of a bullish pennant continuation pattern suggesting further trending in favor of the bulls.
Fundamentally as of todays closing price GIGM is looking very attractive and undervalued. Currently GIGM is trading at just 24x earnings while the industry is set at 33x earnings, along with a low forwards PE of just 15.09x GIGM has much room to run into the future to catch up with its growth in revenues and income. GIGM expects to report EPS of .86 for 2008 giving them a fair value price for 08′ of [.86eps X 33x industry average PE = 28.91 aka 122% gain from todays close] making GIGM look dirt cheap at these prices. I’m issuing a “STRONG BUY” with a short term price target of $15-$16/share.
FOLLOW UP ANALYSIS AND PUBLIC DISCUSSION HERE AT THE GIGM MESSAGE BOARD TOPIC
CXTI.OB – So Depressed I’m Happy!
Aug 19, 2007 Small Cap Stock Picks
i have a very close eye on CXTI at this point. The stock has been damaged be resignation of its CFO which also led to the recent 5 day extension for reporting the EC, along with the depressed market.
The valuation of this stock is so undervalued at this point its ridiculous.
the company expects to report 1.01 eps in 2008 on a 75.3% jump in revenues. giving them a very low forward 08′ PE of just 3.42x earnings compared to the industry average is trading at 26.6x earnings.
Giving CXTI a fair value of $26.86/share for 2008 compared with todays closing price of 3.46 which is just about as attractive of a stock i’ve come across yet in my time as a trader.
Earnings should be out soon and i believe them to be in favor of the longs. I want to buy CXTI given a fair chance on Monday, Preferably below 3.50.
Headlines:
China Expert Technology Signs $22.8 Million e-Government Contract with Suizhou City
PR Newswire (Mon, Jul 16)
China Expert Technology Signs Three New e-Government Contracts
PR Newswire (Mon, Jun 25)
I dont have much time to dig into this as its saturday, 10pm, and i’m in the middle of celebrating my 23rd birthday here come midnight 
But this stock looks dirt cheap, its a china stock which i love, and the company has an awesome current ratio of 8.07.
I want this in my portfolio
Bought me a Pot of Gold – WGDFF.OB
Aug 17, 2007 Small Cap Stock Picks
If you’ve followed my analysis for the past few months you’re probably already familiar with this stock as i recently traded it for a solid 26% gain. Since then WDGFF endured some damage as the markets tumbled globally and hit a recent low of 1.69(yesterday) off of its recent high near $3/share less than a month ago. As of yesterday this stock looked dirt cheap for its future fair value though i was hesitant and was waiting for confirmation of a rebound before i did anything. Todays strong rally in the markets sparked by the FEDs decision to cut the discount rates which traders and investors have been dying for leads me to believe this is the spot where the markets will likely rebound and buying opportunities are in place. Not only from an economic market situation, but from a technical standpoint as i analyzed yesterday.
WGDFF.OB is some big plans going forward as i’ve stated previously they are expecting full production in early 08′ and expecting 160k-170k ouncs of gold annually with a cost basis of $355/ounce through 2015.
With these #’s the estimated fair value of WGDFF based on gold prices are as follows: Gold & Silver industry trading at 28x earnings
Current Share Price at todays close: 2.31
Gold Price: $550 – $6.50
Average annual EPS: .19
Fair Value: 5.32
Potential Gain: 130%
Gold Price: $700
Average annual EPS: .27
Fair Value: 7.56
Potential Gain: 227%
Gold Price: $800
Average annual EPS: .33
Fair Value: 9.24
Potential Gain: 300%
Western Goldfields Announces Second Quarter Results
Wednesday August 1, 9:30 am ET
- All second-quarter milestones achieved to bring Mesquite Mine into full production
- Term loan facility and related gold forward sales contracts in place
- Mine fleet deliveries and construction program on schedule
- Pre-strip mining commenced June 2007
- Full production expected January 2008
TORONTO, Aug. 1 /PRNewswire-FirstCall/ – Western Goldfields Inc. (TSX:WGI, OTC BB:WGDFF.OB) today announced financial results for the six-month and three-month periods ended June 30, 2007. The Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States (US GAAP). Dollar amounts are expressed in U.S. dollars unless otherwise stated.”Western Goldfields made significant progress in the first six months of 2007 toward bringing the Mesquite Mine into full production,” reported Mr. Randall Oliphant, Chairman. “We have met all of our second-quarter milestones and we have brought forward anticipated full production by three months. Everything is now in place to make Mesquite a successful producing mine and to establish a platform for the growth of Western Goldfields.”
“With the completion of the term loan facility for $105 million, the project is fully financed,” continued Mr. Oliphant. “To secure the terms of the loan facility, we have executed flat forward gold sales contracts for approximately 40% of our expected gold production during the life of the loan at $801 per ounce.”
“We have taken delivery of and commissioned six haul trucks and two shovels as part of our mine fleet,” said Mr. Raymond Threlkeld, President and Chief Executive Officer. “Pre-stripping commenced in June, and we are planning for full production of 160,000-170,000 ounces of gold annually commencing in January 2008.”
WGDFF looks attractive with its growth prospects and the recent sell it sustained i think provided us with an opportunity to hop back on the band wagon. Looking forward on a longer term basis i think you could expect to see potential gains of 100% +. Though for short term trading anything above 20% will suffice in my book. I bought at 2.25 today
To read more analysis on this stock from when i first purchased view the WGDFF topic on the message boards here: http://thetechnicaltrader.net/forum/index.php?topic=637.0
Is This Where the Stock Market Rebounds?
Aug 17, 2007 Speculative Stock Analysis, TTT.net Updates
Wednesday i was quick to sell most of my positions as the Dow had finally broken down its horizontal trading channel while concerns of Credit continued to spark volatility and fear across the global markets. Its really hard to make accurate calls in such a volatile market when the dow is moving triple digits daily like its no biggy, especially when the underlying fundamentals of a stock are proving to be worthless. Most analysts called for an average joe 10% re-tracement and we’re sitting around 8% down as of todays close. This market is nuts ! intraday i was saying to myself man i’m glad i decided to sell most of my positions yesterday as the down began to slide over 300 points! I wasn’t in the mood to watch anymore bleeding so me and some buddies hopped in the car and went and played 9 holes of golf and threw back a “couple” cold ones . To my amazement when i got back the market had made such a strong rebound managing to close only down 15 points when earlier that day the Dow was down almost 350 points!
From a technical analysis standpoint we are looking in pretty good shape for a rebound after todays move. Price is sitting on a spot where support is looking strong in 3 places as well as forming a bullish hammer candle to indicate that the stock market probably will rebound from this area. Too early to make any assumptions, but technically after Thursdays session we are seeing signs of a rebound in progress.
Asian Markets tumbling Friday:
Japan’s Nikkei 225 index was down 3.5 percent in early afternoon trading on the Tokyo Stock Exchange. Hong Kong’s blue chip Hang Seng Index was down 3.0 percent at midday, and the Korea Composite Stock Price Index was down 2.2 percent after dropping 6.9 percent in the previous session.
Commentary of the market from Yahoo! finance
Wall Street Rebounds; Investors Eye Fed
Friday August 17, 12:51 am ET
By Joe Bel Bruno, AP Business Writer
Investors Eye Fed for Momentum After Dow Reverses From 343 Point Loss NEW YORK (AP) — In what’s becoming a familiar story on Wall Street, stocks have had a dramatic late-session turnaround as buyers streamed back into the market. The question of course is whether Thursday’s surge, which pulled the Dow Jones industrials up from a more than 300 point loss to close only narrowly lower, will be the one that sticks.
The market, which has had several such comebacks this month, has been giving back all its gains of late and then some amid unrelenting volatility. And many analysts believe the answer lies with the Federal Reserve.
Bargain hunting rather than a belief that the bad times are over was partly behind this latest last-hour advance — stocks have fallen so far amid worries about the availability of credit that investors were willing to place some bets. The market pretty much ignored the Fed’s latest injection of cash into the banking system, a move designed to alleviate the fears about credit that have sent stocks plunging for weeks.
What investors really want is an interest rate cut, and one that comes before the Fed’s Sept. 18 meeting.
“I think there is more confidence of a lasting rally in equities if the Fed cuts rates, and that makes it easier on days like this to do bargain hunting,” said John Lonski, chief economist for credit-rating agency Moody’s Investors Service. “And, the more investors sense that the U.S. economy can shoulder losses arising from subprime mortgages, the closer we are to stabilization in equities.”
So far, though, the Fed shows no signs of acquiescing. It has relied on adding money into the banking system to try to soothe the markets. Central banks around the world have been supplying billions of funds to banks in the past week to make cash available for lending and keep interest rates from rising amid signs that credit was drying up.
The New York Fed — which carries out the central bank’s market operation — announced Thursday an overnight repurchase agreement worth $12 billion. This was on top of a 14-day “repo” worth $5 billion announced before the market opened. The Fed uses a repo to buy securities from dealers, who then deposit the money into commercial banks.
It’s not what the market wanted. The Dow was down as much as 343 points Thursday.
But the Fed has its reasons for not giving in — for instance, moving too soon could send a message that policymakers are being too reactive. Also, lower rates risk sending inflation higher, and keeping inflation in check has been the Fed’s primary concern.
“Speculation about what their move will be is what is going to control equities for the time being,” Lonski said.
The turnaround Thursday was driven by buying of blue chip stocks, specifically among beleaguered banks and brokerages. Before the buyers returned, the major indexes had reached the levels of a correction, defined as a 10 percent drop from the market’s highs.
The Dow, which closed just above 14,000 on July 19, was down about 1,150 points, or 8.2 percent, by Thursday’s close.
Some analysts were hopeful that the market will be able to build on Thursday’s momentum.
“The fundamental buyers are coming back into the market, and typically trading in the last half hour of the day is where the smart institutional money is going,” said Jack Ablin, chief investment officer at Harris Private Bank. “There’s a feeling that maybe we’ve pushed it too far, and this gives us a running start for positive markets worldwide on Friday.”
Still, the market is quite fragile. Thursday’s buying also came from traders or hedge funds trying to cover losses from what’s known as short trading. In short trading, an investor sells borrowed stock on a bet that the market will fall; when the market rises, the investor must buy stock to pay back the debt.
Moreover, analysts contend each trading day seems to bring about new worries about credit — needed to fuel corporate profits and takeovers — is drying up. The latest catalyst for selling was bad news from Countrywide Financial Corp., the nation’s largest mortgage lender, which had to draw on a billion-dollar credit line to fund its operations.
