HQ Sustainable Maritime Industries Inc. (NASDAQOTH:HQSM)

CAPS Rating: 4 out of 5

This China-based company farms marine products, primarily tilapia and white-legged shrimp, and also produces and sells marine bio-products such as shark cartilage capsule, shark liver oil, and shark liver.

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Member Avatar rwebankrupt (78.42) Submitted: 12/20/2010 10:45:25 PM : Underperform Start Price: $4.39 HQSM Score: +156.61

Is this a public company or a family reunion?
Forgot to tell shareholders their plans and direction on the conference call
Need to move the family from Seattle to California because it will help their business grow in China
It cost them 45 million to raise 10 million.They think they need 95 million to sell franchises
They think samples and gifts are accounts receivables.
Went from over $9 to under $3 in less than one years time
Went from raising fish to selling fish to making fish feed to selling fish feed to making health food products to selling health food products to selling franchises but giving that to do an IPO in Hong Kong cause Hong Kong better understands their business.
Love to know the name of one director whether it be sister, husband, brother-in-law has a 3 year beauty background to qualify for that Hong Kong IPO?
Better yet when will you board of directors look like this?
http://agrimarine.com/corporate/board-of-directors

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Member Avatar Monkeylochs (< 20) Submitted: 10/26/2010 11:34:23 PM : Outperform Start Price: $3.23 HQSM Score: -148.48

I think they are for real. They are on Amazon and now in whole foods. This stock is extremely undervalued and will be a winner.

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Member Avatar detroitigerz (< 20) Submitted: 10/20/2010 9:50:33 PM : Outperform Start Price: $3.55 HQSM Score: -161.05

Good fundamentals... not really a good looking growth play and not in the most interesting of fields but it's been beaten down and it's NCAV ratio has it up to at minimum of around 7-8$ long term play here at least until my price target of 8$ is reached which I'm expecting could take a while.

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Member Avatar lonelyposeur (< 20) Submitted: 10/10/2010 7:22:39 AM : Outperform Start Price: $3.18 HQSM Score: -163.05

It's a go.

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Member Avatar franktejon (< 20) Submitted: 8/13/2010 7:41:05 PM : Outperform Start Price: $3.12 HQSM Score: -177.15

good buy

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Member Avatar Zaakman (85.48) Submitted: 8/13/2010 10:35:28 AM : Outperform Start Price: $3.12 HQSM Score: -175.34

Seems to be a good price to pick this up.

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Member Avatar TDRH (99.68) Submitted: 8/10/2010 10:23:13 AM : Outperform Start Price: $3.25 HQSM Score: -170.45

No idea what I am doing, but it appears that I will be in good company with a lower cost basis, perhaps less room to fall, or receive a dead cat bounce.

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Member Avatar RobertJBanach (< 20) Submitted: 7/4/2010 8:41:53 PM : Outperform Start Price: $4.86 HQSM Score: -185.26

Will grow with economy.

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Member Avatar whomonkyoulus (28.53) Submitted: 6/15/2010 3:20:33 PM : Outperform Start Price: $4.72 HQSM Score: -171.55

Look, the Chinese share at least one fish every meal when they can afford it.

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Member Avatar angelawirya (< 20) Submitted: 3/17/2010 10:43:43 AM : Outperform Start Price: $6.86 HQSM Score: -164.68

i bought 800 shares at 7.58

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Member Avatar WTHAmIDoing (49.92) Submitted: 1/17/2010 6:04:47 AM : Outperform Start Price: $7.86 HQSM Score: -169.65

This is one of those companies that is really defines the investors from the gamblers. Financials are great but mixing the words "China" and "food" in the same sentence in this day and age almost guarantees disaster. That said - No debt, great business model and a hefty market share? I'm in. Originally bought at 9.60 and gave it another infusion at. 7.93. This is one stock that I love to buy on its down days.

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Member Avatar Dobbes (< 20) Submitted: 1/5/2010 3:19:38 PM : Outperform Start Price: $7.09 HQSM Score: -171.02

Very attractive on a relative valuation basis.

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Member Avatar paulshoe (80.88) Submitted: 1/2/2010 9:07:21 AM : Outperform Start Price: $7.07 HQSM Score: -170.66

Good value stock

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Member Avatar ed312ly (< 20) Submitted: 12/11/2009 12:34:31 PM : Outperform Start Price: $6.93 HQSM Score: -173.60

value

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Member Avatar ArgoNate (< 20) Submitted: 11/16/2009 6:55:33 PM : Outperform Start Price: $7.14 HQSM Score: -173.68

For a Chinese stock that sells two growth product lines to the U.S. and China, and which has a geographical competitive advantage (15% tax rate on the island, year-round harvesting, seeming control over the island's entire aquaculture industry, and room for expansion), this stock's P/E is WAYYY too small. The company's current expansion endeavors are no joke - this thing's going to grow.

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Member Avatar TheResurrection (91.55) Submitted: 11/16/2009 5:04:33 PM : Underperform Start Price: $7.14 HQSM Score: +173.68

HQS certainly has good financials with enough 60% of its market value in cash, no long term debt and consistent bottom and top line growth. There's a lot to like about the company and to those who chose to invest I say "Bravo!" I will not be an investor though. Here is why:

I'm concerned about the quality of Chinese foods. Chinese baby formula only recently killed a number of babies. If quality control isn't there for baby formula then I doubt it is there for fish farms. The EU certification does mitigate this concern somewhat, but I'm fearful that its just a once a quarter (or once a year!) dog and pony show that quickly falls by the wayside. Any sort of food safety issue would damage this company and its cash position.

I don't see a clear product differentiator. I looked in Wal-mart this weekend and saw frozen Tilapia for sale in fairly sizeable boxes. I don't see how anyone would know if it was HQS or some other brands or why they would care. Fish Farms are not particularly hard to start and, I believe, the available supply will quickly grow to outstrip demand. As more farms go online the price will go down and margins will decrease. What is the plan for when Tilapia margins go to zero?

I don't understand the argument about tilapia containing more protein than they consume. Is there a concern that the earth is facing peak protein production? I don't think this is a reason to invest or not invest, but I wish someone would explain why the protein argument matters in a world with a plentiful protein supply.

The company reports earnings in dollars, but its expenses are in yuan. The dollar continues to be under downward pressure while the yuan has upward pressure. For as long as this continues marginal labor costs will continue to go up while marginal revenue goes down.

I'll be cheering this company on from the sidelines.

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Member Avatar bluecollarbroker (49.39) Submitted: 11/15/2009 11:38:25 PM : Outperform Start Price: $7.20 HQSM Score: -174.55

value

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Member Avatar kevinottofro (98.10) Submitted: 11/15/2009 7:02:05 PM : Outperform Start Price: $7.20 HQSM Score: -174.55

low relative PE, good star & 2010 earnings. Bottom fishing week of 11/9

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Member Avatar guiganol (66.72) Submitted: 10/22/2009 2:30:10 PM : Outperform Start Price: $8.09 HQSM Score: -176.63

Looked into starting my own tilapia farm a while back and I guess all that research doesn't have to go to waste.

HQS is poised to do some really big things. These fish give a great return for what you have to put in---they grow incredibly fast and a good portion of their diet can come from agricultural waste (not garbage---just the parts we don't eat: rice bran, etc... And it's free). Great way to get something from nothing.

Well... almost nothing. Here's a case where working smarter gets you a great deal farther than working harder. A successful farm is pretty intensive (not so much labor-wise) but you have to know what you're doing. And the initial investment (pumps, what-have-you) will set you back a lot. Not really in the reach of the casual businessman or farmer.

So here's what I'm liking:
1) The new feed mill! It's the difference between paying someone a lot to turn that (almost) free stuff into pellets, or just cutting them out and doing it yourself. Again, a heavy initial investment... but it'll pay itself off many times over.

2) HQS is seriously looking into pond ownership now. After that, they will really have everything covered top to bottom. Then it's just a little labor, electricity, and upkeep.

3) To address the concerns about these claims of "toxin-free": it really is an issue. You got small operations using irrigation water filled with pesticides, farmers using hormones, and feed with fish and animal by-products. Some of these practices are acceptable but HQS really isn't taking any shortcuts here. And that organic certification will get them a great deal farther than their competitors.

And here's where I have concerns:
1) Tilapia farms are great but a well-thought out farm can be set up almost anywhere (you can do it with very little space and water). So I'm not sure if shipping these fish back to the U.S. is the most cost-effective thing to do. But with the advancements they've made, I'm sure they will, at the very least, establish an extremely dominant presence in the Chinese market. It pays to have a head-start.
2) I'll need to look further into the other part of their business that deals with health supplements. I hear it's doing well in China, but as an American, shark cartilage isn't really something we pick up at the supermarket.

All in all... the key word here is "sustainable". Whether you like fish or not (tilapia are actually pretty good), you have to know that we'll be running into a lot of problems with feeding the world in a few years. Tilapia is one great solution. No grain prices to worry about or depleted oceans. It's like the solar energy of meat (well, fish at least).

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Member Avatar spundun (22.29) Submitted: 10/9/2009 11:39:52 AM : Outperform Start Price: $8.24 HQSM Score: -180.57

HT bbb rknapton

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