A company this cheap, can it get any more crazy?
Fuqi International, a Chinese jewlery designer, manufacturer, wholesaler and increasingly retailer:
- is depending completely on the growth of the Chinese domestic market. It has no exposure to other economies, zero.
- The Chinese economy as a whole is growing at 10% a year while the retail sector is growing considerably faster than that. It’s one of the few parts of the world economy that shows healthy growth..
- It might be that the Chinese authorities are stepping off the gas a little, but the Chinese growth story is not in danger
- It now has a 2010 p/e of 7, while it has grown in excess (and often far in excess) of 20% each year
- It has almost no debt
- It has some $6 in cash per share, or more than 1/3 of the stock price
- Technically, it’s oversold with an RSI of 27
- We wrote a large piece on it last December using several research reports from Wallstreet analysts
- It’s down another $3-4 since then, but the valuation is getting ever more ridiculous.