Part of my job as I see it is to give you all some ideas that are not as crazy as others but in the same realm of craziness if that makes any sense. stocks that are still in fascinating lines of business and represent unique opportunities but maybe not four letters in the symbol. So Today I'd like to highlight E House Holdings. A play on Chinese real estate!
This has been an ugly little stretch if you monitor for break outs, it looked like it was on it's way up $2 & it collapsed. Today it was soaring and gave it all back almost i wanted to cry. Other stocksters would wait till they were nicely up before recommending this stock that's not how stoney plays ball-- you too can have it cheap... FIRST NEG (1) EJ is taxed higher than most Chinese companies (many have exemptions) Look under the hood and you have a real mature situation and a powerful big story highly unlike most Chinese stocks. But with every other Chinese stock of high beta soaring it's just a matter of time before investors settle down and get into one or two quality names. EJ is one of those names. Let me introduce you.
From the prospectus:
We are a leading real estate services company in China based on scope of services, brand recognition and geographic presence. We provide primary real estate agency services, secondary real estate brokerage services as well as real estate consulting and information services.
EJ has been the largest real estate agency and consulting services company in China for three years now (2004-2006). EJ has 2,100 real estate professionals in twenty cities throughout China. In the past five years they've sold 5 million square feet of properties worth $5.4 billion. EJ also operates the only information system that provides up-to-date, comprehensive and in-depth information covering residential and commercial real estate properties in all major regions in China!!! That's huge folks it's like getting a huge real estate internet site for free here (I think)
Chinese sector leaders in fast growing sectors have done very well in the US market the past few years, usually garnering aggressive multiples. Sector leaders tend to outperform non-sector leader Chinese ipos. EJ would appear to fit in the 'sector leadership outperformer' category.
EJ has been named "Chinaâs Best Company" from the National Association of Real Estate Brokerage and Appraisal Companies in 2006, and the "Leading Brand Name in Chinaâs Real Estate Services Industry" from the China Real Estate Top 10 Committee in 2006. No LEAD paint here sirs!
The real estate sector in China has experienced rapid growth with primary property sales revenue growing 38% over the past five years. Primary property refers to the sale of new properties, which is EJ's focus. As such, EJ's clients tend to be real estate developers (big money) who utilize EJ's middle-man services to consult on development and to sell their properties. 82% of revenues in 2006 were from services relating to 'primary' (newly developed) properties. Could they expand into a lower $ market?
DRAWBACK 2 (after the tax issue)
Governmental Control - Since 2006, the PRC has instituted a number of initiatives to slow the swift property growth rates. These include: requiring that at least 70% of the land approved by a local government for residential property development for any given year be used for developing low-to-medium cost and small-to-medium size units and low-cost rental properties; 70% of construction be for 'small unit space' properties; increasing the down payment required for larger properties; imposing a resale tax on properties held less than five years.
- EJ has very high 'receivables' for their revenues stream. The June 2007 quarter saw approximately $23.5 million in revenues, while receivables on the book totaled $48.5 million. This appears due to EJ receiving payment for services only after a development (or phase of development) has been completely sold. EJ reports revenue upon each sale, however they do not receive the actual monies until the entire development project has been completed and all units sold.
Tax Rate - EJ's current tax rate is in the 25%-30% ballpark.
Historically, EJ has booked an outsized revenue number in the FOURTH quarter of the year. For example, in 2006 quarterly revenue numbers were (in millions) $4, $10, $8 and $34. I'm making a bet for this 4th qtr. That they will just blow the number away.
2006 - Revenues were $56 million, a 44% increase over 2005. Operating margins were a strong 44%. Net margins were 34%. Earnings per share were $0.24.
2007 -impressive 100%+ revenue growth in Operating margins should improve to 50%!
You just let this plow ahead ugly sytyle folks!- I need to see this up to $25 before I feel good enough about it to give it to my mother but I give it to you all now. ~ stoney
This has been an ugly little stretch if you monitor for break outs, it looked like it was on it's way up $2 & it collapsed. Today it was soaring and gave it all back almost i wanted to cry. Other stocksters would wait till they were nicely up before recommending this stock that's not how stoney plays ball-- you too can have it cheap... FIRST NEG (1) EJ is taxed higher than most Chinese companies (many have exemptions) Look under the hood and you have a real mature situation and a powerful big story highly unlike most Chinese stocks. But with every other Chinese stock of high beta soaring it's just a matter of time before investors settle down and get into one or two quality names. EJ is one of those names. Let me introduce you.
From the prospectus:
We are a leading real estate services company in China based on scope of services, brand recognition and geographic presence. We provide primary real estate agency services, secondary real estate brokerage services as well as real estate consulting and information services.
EJ has been the largest real estate agency and consulting services company in China for three years now (2004-2006). EJ has 2,100 real estate professionals in twenty cities throughout China. In the past five years they've sold 5 million square feet of properties worth $5.4 billion. EJ also operates the only information system that provides up-to-date, comprehensive and in-depth information covering residential and commercial real estate properties in all major regions in China!!! That's huge folks it's like getting a huge real estate internet site for free here (I think)
Chinese sector leaders in fast growing sectors have done very well in the US market the past few years, usually garnering aggressive multiples. Sector leaders tend to outperform non-sector leader Chinese ipos. EJ would appear to fit in the 'sector leadership outperformer' category.
EJ has been named "Chinaâs Best Company" from the National Association of Real Estate Brokerage and Appraisal Companies in 2006, and the "Leading Brand Name in Chinaâs Real Estate Services Industry" from the China Real Estate Top 10 Committee in 2006. No LEAD paint here sirs!
The real estate sector in China has experienced rapid growth with primary property sales revenue growing 38% over the past five years. Primary property refers to the sale of new properties, which is EJ's focus. As such, EJ's clients tend to be real estate developers (big money) who utilize EJ's middle-man services to consult on development and to sell their properties. 82% of revenues in 2006 were from services relating to 'primary' (newly developed) properties. Could they expand into a lower $ market?
DRAWBACK 2 (after the tax issue)
Governmental Control - Since 2006, the PRC has instituted a number of initiatives to slow the swift property growth rates. These include: requiring that at least 70% of the land approved by a local government for residential property development for any given year be used for developing low-to-medium cost and small-to-medium size units and low-cost rental properties; 70% of construction be for 'small unit space' properties; increasing the down payment required for larger properties; imposing a resale tax on properties held less than five years.
- EJ has very high 'receivables' for their revenues stream. The June 2007 quarter saw approximately $23.5 million in revenues, while receivables on the book totaled $48.5 million. This appears due to EJ receiving payment for services only after a development (or phase of development) has been completely sold. EJ reports revenue upon each sale, however they do not receive the actual monies until the entire development project has been completed and all units sold.
Tax Rate - EJ's current tax rate is in the 25%-30% ballpark.
Historically, EJ has booked an outsized revenue number in the FOURTH quarter of the year. For example, in 2006 quarterly revenue numbers were (in millions) $4, $10, $8 and $34. I'm making a bet for this 4th qtr. That they will just blow the number away.
2006 - Revenues were $56 million, a 44% increase over 2005. Operating margins were a strong 44%. Net margins were 34%. Earnings per share were $0.24.
2007 -impressive 100%+ revenue growth in Operating margins should improve to 50%!
You just let this plow ahead ugly sytyle folks!- I need to see this up to $25 before I feel good enough about it to give it to my mother but I give it to you all now. ~ stoney
