CTEK – China Chaintek United

Through my lazy trawl of high SR (StockRank) stocks I came across CTEK (Chnia Chaintek United), which boasts a SR of 94.

It is, of course, a China AIM stock.

It has all the familiar patterns of Chinese stocks:

  • absurdly large amounts of cash, if that is to be believed. CTEK is a negative enterprise value company
  • low PE: 0.86
  • raises capital via equity markets even though the balance sheet suggests it has plenty of cash
  • explosive growth in earnings that seem too good to be true
  • often passes several value screens like low PE, PSR, PBV, etc.
  • short listing history (less than 5 years)
  • choc-full of Chinese directors (although fair dues, it is a Chinese company)
  • operating margins so high that they beggar belief
  • f’ing Nomad/Broker Daniel Stewart rear their ugly head at some point.

Anything I missed? Its debtors days is 98, which is actually quite short for a typical Chinese company. They can often be over a year.

It’s as if they all operate to the same script!

In a way, we should be grateful for all of these Chinese stocks, as they give us a learning experience of what to avoid.

Avoid at all costs.

May you all be well.

32.5p

Edit 12-Jun-2015: formatting fixes

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About mcturra2000

Computer programmer living in Scotland.
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