This OTC company is a huge retailer and distributor of electronic products in China:
China 3C Group, headquartered in Hangzhou City in China’s Zhejiang province, retails and distributes a wide range of consumer electronics, including cell phones, MP3 players, cameras, DVD players, stereo systems and household appliances. China 3C Group also distributes business electronic products such as FAX machines, computers and land line telephones. Four subsidiaries, each offering distinct product lines, retail a broad range of consumer electronic products. These are sold through more than 800 retail outlets, all but one of which are located on the premises of third-party supermarket chains. China 3C’s core markets are the city of Shanghai and the eastern coastal provinces of Jiangsu and Zehjiang, among the most densely populated and fastest growing in China. Around 70% of the company’s revenue is generated by its retail business. All but one of its retail units consist of 800+ “stores-in-stores” operating on the premises of supermarket chains. China 3C plans to expand significantly within its core markets, increasing the number of its stores to 2,000 by 2008, and 4,000 by 2010.
source: Taglich Brothers
Considering the booming middle class economy in China, anyone selling electronics is a great bet. So, let’s examine this thing further.
According to Seeking Alpha, the company had 86% growth in 2007 but has hit a stumbling block in the first quarter of 2008. That stumble being huge snowstorms in China.
The company reports that sales for 2008 expects to be lower by up to 20%, but I don’t think they are accounting for the rising middle class growth (read more in WikiPedia or Escape Artist) or the upcoming Olympic Games.
Their stock price is tumbling, as bad news usually knocks a stock down, but it looks like the bad news is merely paranoia. China 3C (homepage) is one of the strongest electronics retailers in a booming economy.
Looks like this stock is a bargain. The stock dropped 22 cents today to $1.30 (CHCG.OB) and dropping. The 52-week high was $8.50. I’m going to try to get in under $1 and see what happens from here to the Olympics.
TIBET RIOTS
One note about the big China news this week — Tibet. 50 years ago Tibet was a small, very poor rural country on the outskirts of China. China annexed Tibet in order to help bring that country economic growth and improve the lives of its people. GDP, healthcare, and sanitation in the country have all improved dramatically, yet some Tibetans riot (mostly monks who don’t care about the economy, healthcare or sanitation).
This is a small news story, considering how tiny Tibet is compared to the size of China - 1.3 Billion residents. The world’s media blows this story out of proportion because they are trying to find ways to knock down this rising giant (no one likes to hear good news when yours is all bad). It won’t happen. The Olympics will go as scheduled and China’s growth will continue to outpace the rest of the world, fueled primarily by the massive amounts of products it exports to the West.
If you want to hurt China, stop buying all your crap at Walmart. Have you ever noticed that 90% of what Walmart sells is made in China? Everybody likes the cheap prices of products coming out of China, but they hate the country. Seems like more hypocrisy to me.
1 Comment
March 18, 2008 at 12:42 pm
Hi,
The safe way to double your money is to fold it over once and put it in your pocket.
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