China 3C Group Research Report - Possible Upside
This report reflects the research and analysis I've performed on this company. It is provided for informational purposes only and does not constitute personalized financial advice nor an endorsement or solicitation to purchase stock in this or any other company. Please do your own due diligence or hire a financial advisor before making any investment decisions.- Possible upside
- The company's specific business model allows for very little overhead, thus leading to higher margins vs. the industry.
- The store-within-a-store space on average is 200 sq ft and can be staffed by one person.
- All locations are leased based on a percentage of sales so no upfront rent expense.
- The company does little marketing for its brand or the products they sell. Mostly, they utilize manufacturer promotions
- In addition, the company has low warehouse storage capacity. They turn over inventory so quickly (~50x a year), their suppliers are kind of a de facto warehouse.
- Misc.
- Impressive cash flow and earnings growth in it short history.
- The company has no long-term debt.
- As opposed to other domestic companies, China 3C has no exposure in the domestic stock market bubble, according to their books. Other than interest income on their cash ($15M, ~30% of assets), all income and cash are from operations.
- Additionally, the stock only trades in America, not in the domestic market.
- Company plans on listing on one of the 3 American exchanges by year-end 2007.
- Good exposure to explosive Chinese economic growth and the rise of their living standards.
- Upcoming catalysts include a possible Nasdaq listing and the 2008 Olympics.
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