Jinpan International Limited (NASDAQ:JST)

12/17

-60 points

HG

It's undervalued, it's profitable, and China isn't going to use less electricity any time soon.

China growth will slow or recess. This may become a buy in the $3 to $5 range in a year or three.

Despite the negative of being a Chinese stock, this is a company that is growing internationally and seems to be well-managed. Absent a nasty surprise, this is a sure double in the next year and a quadruple is more likely than a 50% drop.

If this company can earn 1.5 in the next year or two and grow at 20%, it will generate great returns.

Solid fundimentals.

Go JST GO

A strong competitor in the cast resin transformer industry in Asia and Europe. It is a very competitive industry but, with a strong back log of orders and an asia-centric location Jinpan looks over sold at this price. With a 25% growth outlook over the next few years I am a buyer around $10.

I like the growth prospects of this stock.

It is currently near the low end of its swings over the last year. This is a momentum play only. I know nothing about the business.

Low P/E. Stronger than average margins. Int'l business opportunities.

Power transformer manufacturer based in China, serving the Chinese market. As China's economy continues to develop, expect solid growing demand for power infrastructure investments to benefit Jinpan. Pays a reasonable dividend.

Trailing P/E (ttm, intraday): 12.23
Forward P/E (fye Dec 31, 2011)1: 8.50
PEG Ratio (5 yr expected)1: 0.57
Price/Sales (ttm): 1.16
Price/Book (mrq): 1.18
Profit Margin (ttm): 9.83%
Operating Margin (ttm): 11.07%
Return on Assets (ttm): 5.09%
Return on Equity (ttm): 10.51%

EV/FCF ratio is 10. Projected growth rate is 20%. And did I mention -- this is one of the few Chinese companies out there that respects its shareholders enough to actually provide cash flow statements so we can know what its free cash flow *is*.

chart gazing

Bought shares in MRLP today at 11.87 / share. It scares me how small this cap is on this stock, but year after year this thing keeps plugging away in an economy that is a growth machine. Stock trades at about Net Book Value as well, so I'm going ahead and taking a chance that this isn't a scam, but actually a genuine company with real growth potential. If this ends up being true, then the PE on this stock should expand significantly, and the return on the stock should be great even if earnings don't grow all that much.

bravobevo

This longshot is one of several Infrastructure plays that could rock the market this decade.