Dear forummers who follow qingmei,
I spent some time studying and researching QIngmei, and feel that its 4th quarter results is more probably better then Q3 for the following results.
1) From prospectus, factories stop production during "chun jie", that means qingmei manage to increase topline even after losing 15 days of production.
2) Demand side, from CTEI websites, marco conditions for textile and apparel industry continue to be favourable, up till may (5 mths), exports overseas from PRC for shoes went up 21.7% compare to a year ago. Sales of textile, including shoes, hats for 5 months went up 21.8%, PPI for clothing went up 4.4% in may, CPI, consumer price for textile remain stable, up 1.8%. So no worries from slowdown in China.
3) Xtep, one of the prominent customers of qingmei, 4Q sale fair secures order value up 24%, announced in 5-5-2011. I tried checking other prominent customers, but draw a blank... Even baidu yields no results.
4) Cost side, rubber, EVA, TPU made up almost 50% of the of the cost of raw materials, I check the prices, (From prospectus, their suppliers are mainly from fujian, I couldn't get such accurate reading, but found prices on these items in PRC from alibaba website, guess it should not be too far off), prices of EVA has been high since Q3 2010, and has remain relatively stable, although still high, but given the qingmei only signs 3-4 months contracts with supplier, the high price of EVA, should be already factored in in Q3 results. The same goes with TPU, prices are high, but are stable up till june, no sudden spiking of prices, unlike cotton, so the wild card of costs is relatively tame, and should not throw out surprises.
5) SInce QIngmei has a cash cycle of less than 90 days, it might not be useful to look at inventory, receivables and payables in Q3 to guage Q4, but the numbers are generally stable, except for payables.
6) So all in all, I expect Q4 to do better or worse come to worse, do as well as Q3, since the excess capacity would have already kicked in. So, observer2 full year forecast of earning might still be meet.
FInally, why bother to do all these research when you can know the results in 2 months time?? Well, first of all, its interest, and the responsibility in doing Homework, secondly, the counter in dirt cheap!!! at 19 cents!! I accumulate at 19.5 cents, with so many marco factors affecting sentiments, I would not be surprise if qingmei falls further. If it does falls further, I would accumulate futher! Next price for accumulation 15-16 cents. Hope is doesn't go there thou!!!