
As many of you know, we are very bullish on the long-term future of Chinese small cap and mid cap companies for two reasons:
1] The obvious reason – China is the fastest growing economy on the planet and nothing is going to slow down its ascent over the next 50 years and beyond. Investing in growth companies there just makes too much sense.
2] Great Results and Valuations - Despite some real problems in the Chinese small-cap space, we continue to believe that too many companies have suffered from “babies being thrown out with the bathwater” syndrome. Investors have to remain patient and wait for the smoke to clear – but when it does we see a great opportunity to profit from the real companies that have been left standing. As such, we’re going to continue reporting and remaining patient.
TODAY’S FEATURED COMPANY
China Modern Agricultural Information Inc. (OTCQB: CMCI) (PINKSHEETS: CMCI)

China Modern Agricultural Information Inc. (“the Company”) (OTCQB: CMCI) (PINKSHEETS: CMCI),is a high-tech livestock company specializing in the breeding of cows and calves, the production and sale of milk and the sale of organic fertilizer.
On November 14th 2011, they announced financial results for the three months ended September 30, 2011. Take a look at the numbers and then see my commentary below.
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2012 Fiscal First Quarter (USD) (unaudited)
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Three Months End September 30, 2011 2010 CHANGE
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Revenue $5.0 million $4.3 million 16.1%
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Gross Profit $3.4 million $2.1 million 57.7.%
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Gross Profit Margin 67.8% 49.9% 35.9%
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Net Income $2.6 million $1.5 million 70.7%
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Basic and diluted EPS* $0.07 $0.05 40%
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MY COMMENTS
Valuation is ridiculously cheap on so many metrics. Let’s go through them:
- Market Cap is $11M, yet company has cash on hand of $9.8M
- Market Cap is $11M, yet company has total assets of $34.5M
- EPS for the quarter were $0.07. If they just maintain this number in the next 3 quarters, CMCI will generate $0.28. Their share price is $0.27
This is easily a company that can be trading at $1.00 – $1.50 in the next 18 – 24 months. It appears to be a baby being thrown out with the bathwater based on Chinese Reverse Merger scandals. There is nothing to say that CMCI itself won’t turn out to be a problem company – but there are no indications as of yet.
If CMCI is still standing when the dust settles, investors stand to make several multiples from current levels.
Naturally, given developments in the small-cap Chinese market, investors have to be very careful and conduct thorough due diligence. However, such investors will be immensely rewarded when the dust settles and the remaining companies are trading at very cheap valuations. CMCI is one of those companies and I am adding them to our Cheap China category.
This has to be one to watch … do your due diligence.
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YOUR RESEARCH STARTING POINTS FOR CHINESE SMALL CAP AND MID CAP COMPANIES
We’ve provided investors with two great starting points to research great Chinese small cap and mid cap companies.
1. ChinaSecurities.com – ChinaSecurities.com tracks 250 of the best small cap and mid cap companies trading on North American exchanges. It provides you with the best of the best in two ways. First, the front page lists the best news of the day coming out of the space. It does so by giving you a text view of the best press releases by industry and via Chinese Stocks TV, a 5-minute broadcast every morning just after the open. Chinese Stocks TV is archived, so you can catch up on shows you missed.
Second, if you want to research each of the 250 companies to find candidates for your portfolio, it has a very intuitive directory that lets you quickly review each company on the master list, or parse it out by industry and exchange if you have a particular sector of interest. Cool stuff.
2. Right here on AGORACOM, you can refer to our China category for other featured Chinese Small-Cap Companies. As always, we will disclose any IR relationship with any public company. Given the sheer number of great Chinese Small-Cap Companies out there, you can expect us NOT to have an IR relationship with most of these companies.
Regards,
George
China Modern Net Income Increases 70.7% and Reports $0.07 EPS for the 2012 Fiscal First Quarter
China Modern Agricultural Information Inc. (“the Company”) (OTCQB: CMCI) (PINKSHEETS: CMCI), a high-tech livestock company specializing in the breeding of cows and calves, the production and sale of milk and the sale of organic fertilizer, today announced the financial results for the 2012 fiscal first quarter ended September 30, 2011. Net income increased 70.7% to $2.6 million or $0.07 per basic and diluted earnings per share.
Financial results for the 2012 fiscal first quarter ended September 30, 2011
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2012 Fiscal First Quarter (USD) (unaudited)
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Three Months End September 30, 2011 2010 CHANGE
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Revenue $5.0 million $4.3 million 16.1%
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Gross Profit $3.4 million $2.1 million 57.7.%
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Gross Profit Margin 67.8% 49.9% 35.9%
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Net Income $2.6 million $1.5 million 70.7%
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Basic and diluted EPS* $0.07 $0.05 40%
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Liquidity and Capital Resources
As of September 30, 2011, China Modern had approximately $9.8 million in cash and cash equivalents or $0.24 per share. As of September 30, 2011, total current assets and total assets were approximately $13.0 million and $34.5 million.
About
China Modern Agricultural Information Inc. (“the Company”) (OTCQB: CMCI) (PINKSHEETS: CMCI),is a high-tech livestock company specializing in the breeding of cows and calves, the production and sale of milk and the sale of organic fertilizer.
Last Trade: 0.27 52 Week: 2.00 – 0.20 Market Cap: 11.1 Million
No contact in news release