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.
Edit 12-Jun-2015: formatting fixes