Opportunities In Out-of-favour Stocks

Hi, Ethan999,
I would not be overly concerned over the lack of clarity in this instance as the more important issue is whether Qingmei is able to meet its production target ASAP and be able to maintain its profit margin. If the demand for its products is strong, as the Chairman has said, and the scheduled second capacity expansion is justified, one would expect the company to be able to maintain its margins or profitability, at least for the next Quarter.
Based on Qingmei sales figures and EPS over the last 3 Quarters, it would appear that the sale of every one million pairs of shoe soles would translate into an earning of 0.9 cts(RMB) in in the EPS. The new expansion capacity of about 5 million pairs of additional shoe soles in each Quarter could therefore raise its EPS by up to 4.5 cts(RMB) for each Quarter.
We could expect to see an interesting set of results in the August reporting season.

Dear All,
I did a research on the lead director in Qingmei, who is also director in 3 diff s-chip and found out all are not involved in any scandal. (touch wood)
I did some search around, and found of one of the stock that this director sits in, regularly give out dividends whenever there is a consistent of profit year to year.
You all can do a check also.
On Qingmei production, I think we still may not see full capacity in next quarter since they are only finish testing and tuning last quarter. The Chairman give 6 months to ram up another production lines, has his own rational. The 6 months is for them to ram up the capacity. 
 
So far, the founder is the biggest shareholders, thus giving out dividends will definitely benefit himself too. So I don't think he will stop giving dividend if there are continuous earning.
Having said that, I believe many S-chip founders/CEO caught in scandals didn't think about long term. If your business is good, just pay our dividends and enjoy the $$. Why kill the golden goose which lay golden egg for you?

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[ethan999 19-05-2011]:
             
2. In prior quarters demand for MD 2 soles had been increasing over MD 1 but in the latest quarter this trend was reversed, nevertheless resulting in an overall increase in shoe soles sold. But why has the trend changed since I thought MD 2 soles were initially favoured for their greater flexibility and what do they anticipate to be the trend in future?
They need to paint a clearer picture of their growth story because the potential certainly seems to be there. 

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Hi Ethan999, I try to answer your question in part 2. Basically Qingmei is contract suppliers, where the shoe makers will look for Qingmei to customise the shoes soles. The demand and supply or MDI or MDII I believe is seasonable, where eg CNY, we prefer fancy sport shoes, while summer time, we prefer functionable shoes for running etc.. having said that, if Qingmei production is limited, they will have to sacrify some customer order because of production capacity limitation. If Qingmei have the production ready 100%, then what they need to concentrate doing is just to get more orders, right? Sometime, the public company can't give too detail picture too, else they will lost it to small competitor who copycat.

These 2 stocks seem v under-appreciated by the market, and there is a growing following in this forum. Why don't you guys organise yourself and make a trip to Fujian to say hello to your heroes and visit their plant and see if the business is really all that great?

Dear Forummers,
Qingmei is one of the S-chps that has caught my attention. I have done the financial analysis and believe that the accounts are quite trustable.
I will be going down to Fujian to see a few companies. Qingmei is one of them. I understand that they are in Jinjiang, around a 2 hour ride from Xiamen.
Let's see how good is this Company.
 
 

Dear Forummers, Qingmei is one of the S-chps that has caught my attention. I have done the financial analysis and believe that the accounts are quite trustable. I will be going down to Fujian to see a few companies. Qingmei is one of them. I understand that they are in Jinjiang, around a 2 hour ride from Xiamen. Let's see how good is this Company.