China GaoXian Fundamental Analysis

• Business: China Gaoxian Fibre Fabric Holdings Ltd is principally engaged in the production and sale of premium differentiated fine polyester yarn and warp knit fabric, which are targeted at the mid to high end markets. The Group’s products are sold under “HuaGang” and “DaHuaWei” brand names to more than 1,500 textile and garment manufacturers in China, who in turn use its products to manufacture apparels, upholstery for automobiles and aeroplanes, sports shoes and headgear, curtains, bedding, bags and umbrellas.
• IPO Listing Date: Sept 18, 2009
• Base on FY09 Financial Statement:
  • Net Profit Margin: 22.5%
  • ROA: 24.7%
  • ROE: 30.9%
  • Current Ratio: 3.77
  • Debt to Equity: Net Cash
  • NAV: $0.2185
  • Current PE: 3.64 (Base on current stock price of $0.23)

Base on the fundamental, China GaoXian’s financial looks solid and looks cheap with PE of 3.63. However, a word of cautious that company may make the financial numbers look good during when IPO. Currently China GaoXian only has one year data since listing and there is no sufficient data for comparison. In addition there are insiders selling in Sept 2010.  Current dual listing application to KRX will further dilute the EPS. Why China GaoXian still need additional cash through another listing with S$154 Million on hand? You may want to check it out before you are committing money into this stock.