Interested in gaining exposure to China? We ran a screen with that idea in mind.
We began by screening Chinese stocks trading on US exchanges for those that appear undervalued relative to earnings growth, with PEG below 1.
We then screened for those stocks with strong sales trends, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables the healthier the company's revenue.
We screened for stocks seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.
We were left with 3 stocks in our list.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall. More investing ideas on Kapitall Wire.
Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.
1. Hollysys Automation Technologies, Ltd (HOLI): Provides automation and control technology and applications in the People's Republic of China. Market cap at $717.92M, most recent closing price at $12.82.
Revenue grew by 1.04% during the most recent quarter ($88.07M vs. $87.16M y/y). Accounts receivable grew by -3.9% during the same time period ($157.77M vs. $164.17M y/y). Receivables, as a percentage of current assets, decreased from 42.57% to 33.92% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.74.
2. RDA Microelectronics, Inc. (RDA): Designs, develops, and markets radio-frequency and mixed-signal semiconductors for cellular, broadcast, and connectivity applications. Market cap at $484.04M, most recent closing price at $11.40.
Revenue grew by 30.24% during the most recent quarter ($109.31M vs. $83.93M y/y). Accounts receivable grew by -25.46% during the same time period ($28.23M vs. $37.87M y/y). Receivables, as a percentage of current assets, decreased from 16.22% to 10.71% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.79.
3. SouFun Holdings Ltd. (SFUN): Provides marketing, listing, technology, and information consultancy services to real estate and home furnishing industries in the People's Republic of China. Market cap at $521.35M, most recent closing price at $28.06.
Revenue grew by 17.14% during the most recent quarter ($127.24M vs. $108.62M y/y). Accounts receivable grew by 0.8% during the same time period ($55.56M vs. $55.12M y/y). Receivables, as a percentage of current assets, decreased from 21.72% to 21.29% during the most recent quarter (comparing 3 months ending 2012-09-30 to 3 months ending 2011-09-30). PEG at 0.71.
*Accounting data sourced from Google Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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