China HongXing: Chart Pattern Turns Bright!

China HongXing looks like forming a Higher High, Lower High type of up trend chart pattern. China Hongxing is finding a good support at $0.155 which is the 200D MA support and the 38.2% Fibonacci Support.  Next immediate resistance is $0.18 which is also the 61.8% Fibonacci Resistance.  It is important to watch whether this $0.18 can turn resistance into support. Breaking this $0.18 resistance, China HongXing may have a chance to go up to $0.198 followed by $0.22.

China HongXing: Is the Bull Coming?

China HongXing moves above all 3 Moving Averages today. Other bullish technical signs are observed too:

  • 20D MA starts to head up to cross 50D MA.
  • RSI and Stochastic starts heading north.
  • MACD starts to get bullish signal.
  • Stock Price is on top of Parabolic SAR.
  • Stock Price at the upper Bollinger Band.

China HongXing finds a good support at 200D MA at about $0.155.  Everything looks good but now the only thing is to closely observe whether there is enough sustainable trading volume to kick the bull to run!

China HongXing Fundamental Analysis and Chart Pattern

China HongXing Fundamental Analysis

  • Current Price = $0.16
  • Current NAV = $0.30
  • Current PE = 15.36 (At Fair Value)
  • Rolling PE = 31.68
  • Dividend Yield = 2.78%
  • FY09 Net Profit Margin = 6.6%
  • FY09 ROA = 2.9%
  • FY09 ROE = 3.1%
  • FY09 Current Ratio = 21.3 (CASH RICH!) 
  • FY09 Debt to Equity = Net Cash
  • Net Cash per share = $0.12

What can a company do if the company is cash rich?

  1. Shares Buy Back. –> Improve EPS  –> Lower PE –> Stock valuation is cheaper.
  2. Pay Extra Dividend to share holders.
  3. As a target to be acquired by other competitor. The other company just needs to pay $0.16 per share to get $0.12 net cash per share.
  4. Acquire other company or brands to boost revenue and profits.
  5. Buy back all the shares and delist from stock market.

China HongXing Current Chart Pattern

China HongXing is currently showing a Bullish (Declining) Flag pattern. This is a continuation pattern in an uptrend. $0.155 should serve as a strong support as 200D MA support.

In summary: China HongXing is suitable for short term trading but not for long term investing due to weak fundamental. However, there may be some surprises in stock price due to the company strong cash position and the current stock price is 47% discount to the NAV.