GEO Investing

Our last review, on March 3rd, showed 29 ChinaHybrid companies that had released earnings. Seventy more have issued quarterly financial results since then. What follows are the companies that we believe are worth tracking. You can view all of our notes on companies that have released earnings thus far on our blog.

Be sure to click on the symbol for links to each stock’s research notes on GeoInvesting.

Companies that came public via IPO:


Significantly beat revenues and EPS estimates. 2011 estimates will likely move up as the company guided revenues higher than estimates. Applying current margins, 2011 revenue guidance and current share count would lead to an EPS target of $2.00, exceeding analyst estimates of $1.39. If they can attain a trailing P/E of 30, a price of $50.00 could be in the cards. But HMIN is fairly valued by most measures.


High end 2011 first quarter revenue guidance of $60 million is short of the $64 million estimate. However, GPR looks to be a solid 8 and the company is expected to return to levels of profitability not seen since 2008. (based on a cursory glance). The stock may able to attain a P/E of 20 with 2011 EPS estimates of $0.40, since the company seems to be entering a new EPS growth cycle. We want to see how the stock reacts to the light revenue guidance, which has not been good so far.  We also would like to observe analyst EPS estimate revisions.


Stock beat 4th quarter EPS estimates. but more importantly, they guided 2011 first quarter revenues to be well over analyst est: $133 million vs. $109 million estimate. 2011 first quarter EPS would come in at about $0.69 vs. a $0.39 estimate, using current margins and shares. However, the company did mention that margins might come down in the first quarter due to a higher R&D expense. Assuming a more modest net margin number of 20%, 2011 first quarter EPS should translate to $0.53 and annualized EPS to $2.12, well above $1.69 est. If these numbers pan out, SPRD will still only have a GPR 2, but possibly more if momentum builds. Postulating that estimates are still conservative, we think a P/E of 15 on forward EPS is a reasonable target, giving us a potential price target of $32.00. We will listen to the upcoming CC to gauge where margins may fall in the 2011 first quarter. It has been revealed that SAIC filings match SEC filings.

Since our note, 2011 analyst estimates have risen to $1.91

CNTF (GeoSpecial)

GeoSpecial CNTF came through with a great quarter. We find it interesting that the company’s revenue guidance for the 2011 first quarter is expected to come in higher than the just completed 2010 fourth quarter. (despite the first quarter being a seasonally slow quarter). This leads us to believe that 2011 will be a very good year of growth for the company, at least for the first two quarters.


The company has a rich P/E, but deserves it given that XUE is expected to grow its EPS at 71% in 2011 followed by 50% in 2012. Too rich for our blood, but we will track and maybe consider LT options.


After a period of lumpiness in the past, it looks like the company is about to enter a period of consistent EPS growth. GPR is only 2, but EPS is expected to grow at least 20% in 6 of the next 8 quarters– this could lead to P/E expansion as the year-end approaches when the GPR will go to 4. We do not expect the stock to explode, but slow and steady is not such a bad scenario.

Company came public via a reverse merger transaction:


This small company, with an illiquid stock, has posted 4 straight quarters of at least 30%+ EPS growth. However, taking a peak into history reveals an EPS trend that has pegged results between $0.01 to $0.05. While we don’t know too much about the animation industry, we have witnessed that companies who operate in this sector can be subject to inconsistent growth. Nonetheless, we will continue to track this story due to the company’s desire to finance growth in-house, “unless external financing can be completed on favorable terms.” (we all know what that means.. Look out!!!!!!)