The following was posted by Kevin Scully, executive chairman of NRA Capital, on his blog yesterday. Visit www.nracapital.com


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Last Friday at our "Investment Strategy for a Volatile Market" seminar organised by Lim & Tan I/we were asked what China stock/s investors could look at. 

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I told the attendees that we already had two China stocks in My Stock Picks (Sinomem and China Animal Healthcare). 

I was thinking of adding another - Fuxing China Group.  We have already produced an initiation report on China Fuxing Group on July 16, 2010. 

I was intending to add Fuxing to my list this Monday but had to make an unexpected trip to Penang that day. 

The shares of Fuxing rose more than 10% on Monday on high volume but retraced a little yesterday.

The key reasons for looking at Fuxing are:

a) its strong balance sheet. It has net cash of about RMB595mn or about S$0.15 to S$0.16 per share (higher than the current share price.

b) we expect the company, which has been paying dividends to see the dividend payout rise giving a running yield of about 6%.

c) the business of the company is set to improve following a collapse of margins in 2009 from the Global financial crisis.  We are forecasting profit growth of more than 100% in 2010.

d) the price target in our report is S$0.28 - which offers upside of about 100%.

e) technically the stocks seems to be breaking out of all its moving averages (see chart below) with some resistance expected at the S$0.20 level. The key to this rerating will be its results in 2010 - any confirmation in the earnings recovery that we expect will lead to a rerating.

Read the report for more details.

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Share Prices

Counter NameLastChange
AEM Holdings3.450-0.110
Avi-Tech Electronics0.280-
Best World2.4300.080
Broadway Ind0.1140.006
China Sunsine0.470-0.005
DISA0.002-0.001
Food Empire0.710-
Fortress Minerals0.360-0.010
Geo Energy Res0.330-0.010
Golden Energy0.790-0.005
GSS Energy0.048-
InnoTek0.505-0.010
ISDN Holdings0.570-0.020
ISOTeam0.099-
IX Biopharma0.122-
Jiutian Chemical0.081-0.002
KSH Holdings0.340-
Leader Env0.062-
Medtecs Intl0.158-0.005
Meta Health0.024-
Nordic Group0.4750.005
Oxley Holdings0.148-
REX International0.225-0.005
Riverstone0.675-0.010
Sinostar PEC0.185-
Southern Alliance Mining0.6000.005
Straco Corp.0.5100.010
Sunpower Group0.370-0.010
The Trendlines0.095-0.001
Totm Technologies0.113-
UG Healthcare0.182-0.005
Uni-Asia Group0.8900.015
Wilmar Intl4.100-0.030
Yangzijiang Shipbldg1.250-0.020

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