My China play: SDTH

[Ramsburg]

Update:

After another down session like this I felt really bad for setting the sell at $10.25... initially I always had the $10 as the exit level inside my head, but a few days ago while posting the update I decided to change this to $10.25, just because I knew that SDTH would cross the $10 barrier and go a little above it...

Anyway, there are also negative catalysts in play (relocation costs, etc), and technically if GIGM fails to go up right now and test the resistance level the layout becomes weak. We are keeping the same stop level, even if we are a few ticks of being stopped out of this position.

Trading Plan:
Sell SDTH @ $10 stop @ $8.40

[Ramsburg]

Update:

SDTH reacted positively near both the 200EMA and 50EMA.

Today, Roth Capital analysts published a new research note, adding a $13 price target to SDTH (see the attached pdf note)

We're keeping the same plan:

Trading Plan:
Sell SDTH @ $10 stop @ $8.40

[Ramsburg]

Update:

SDTH showed a lot of relative strength during yesterday's session, closing up more than 2% while the general market was deeply down. We'll keep the same plan, trying to sell SDTH at the top of the current range.

Trading Plan:
Sell SDTH @ $10 stop @ $8.40

[Ramsburg]

Sold SDTH @ $10.00

[Ramsburg]

Quick Analysis:

SDTH continues to trade inside an ascending channel, generating consecutive higher highs and higher lows. Fundamental prospects remain interesting, and we'll be buying it if it approaches the lower end of the channel.

Standby Trading Plan:
Buy SDTH below $9.00.

[Ramsburg]

Update:

SDTH is now close to our desired entry spot: the lower end of the channel. The standby trading plan remains:

Standby Trading Plan:
Buy SDTH below $9.00.

[Ramsburg]

SDTH bought today @ $8.95 for the Diversified Portfolio.

[la-onda]

nice entering Rams 

SDTH update:
SDTH: Short Interest DN 5.0% to 4.3M in Mid Aug 2008
Tuesday , August 26, 2008 16:22ET

According to new short interest data from NASDAQ, short interest for ShengdaTech, Inc. (NasdaqNM: SDTH) DECREASED 5.0% to 4,250,107 shares as reported in mid-August, 2008.
Based on SDTH's 20-day average daily share volume of 278,070, it would require approximately 16 day(s) of buying to cover this short interest.

profile:
http://www.shengdatechinc.com/files/pdf/06-30-08-SDTH-profile.pdf

chart:

[Ramsburg]

Update:

Technicals:
- Ascending Channel In-Play since March, bottom (support) at 8.75 and top (resistance) at 11.50
- Mid term Descending Resistance at 10.20
- Bullish setup on 50-ema and 200-ema
- Long term bullish, mid term neutral, short term bullish

Fundamentals:
Current EPS estimates consensus for 2008FY is 0.63 and 2009FY 0.82, making SDTH to trade at just 11.7 times earnings at current price while the sector trades with the same multiple at 16.5, this gives some backup on upside potential, in other words, SDTH is «cheap» according to current estimates (which been raised recently by 3 research departments).

Comment:
Our entry point was nice, a few ticks above the intermediate low and essentially near the bottom of the channel as we planned. SDTH reacted immediately to this support zone and showed relative strength against a volatile market like todays.
The main goal of this trade is to trade this ascending channel, and try to sell near the upper end of it (above $11), our main concern is the middle of the pattern where the descending resistance is crossing right now (10.20), so for those who want to lock some profits selling between $9.80 and $10.20 maybe a reasonable option, for now we'll keep the main goal on the table (but we may change it), our current trading plan is:

Trading Plan:
Sell SDTH above $10.75 stop @ $8.50

[Ramsburg]

Update:
During Friday's intraday selloff, SDTH tested one more time the lower end of the channel, but reacted positively. No reason for not trusting the current pattern, the plan remains the same for now:

Trading Plan:
Sell SDTH above $10.75 stop @ $8.50

[Ramsburg]

Update:
SDTH is testing the lower limits of our ascending channel, if it breaks it down we'll be out of it.

Trading Plan:
Sell SDTH above $10.75 stop @ $8.50

[Ramsburg]

SDTH stopped at $8.50

[la-onda]

  this market sucks....

SDTH: Brean Murray Starts @ Buy; Sets Tgt @ $11; Analyst Notes
Tuesday , September 09, 2008 08:29ET
Issuer: ShengdaTech, Inc. (NasdaqNM: SDTH)
Analyst Firm:  Brean Murray
Ratings Action: INITIATE
Current Rating: Buy
Target Price Action: INITIATE
Target Price: $11.00
Analyst Comments: The firm expects SDTH to benefit from growth in China's industrial economy and urbanization.

[la-onda]

ShengdaTech Updates Timing of Jinan Fertilizer Acquisition and Relocation of Chemical Facility
Monday , September 29, 2008 09:00ET

TAI'AN, China, Sept. 29 /Xinhua-PRNewswire-FirstCall/ -- ShengdaTech, Inc. ("ShengdaTech" or "the Company") (Nasdaq: SDTH) a leading manufacturer of nano precipitated calcium carbonate (NPCC) in the People's Republic of China (PRC) and a major manufacturer of coal-based chemical products in Tai'an City, Shandong Province, PRC, today announced that the Company expects to close the acquisition of Jinan Fertilizer Co., Ltd., ("Jinan Fertilizer") before the local government's mandated closing of its chemical facility in Tai'an City on October 31, 2008.

"Our affiliate, Shandong Shengda Technology Co., Ltd ("Shengda Group"), is currently in negotiations with the Jinan City government on the final terms of the acquisition. We are pleased with the progress being made and, per our purchase option agreement with Shengda Group, we expect to finalize the acquisition from Shengda Group before October 31, 2008," commented Mr. Xiangzhi Chen, President and CEO of ShengdaTech. "In the unlikely event that the acquisition is not completed by the relocation deadline, we plan to continue production by renting production facilities from Jinan Fertilizer and its subsidiaries. Although Jinan Fertilizer's product portfolio is somewhat different from our current product portfolio, we do not expect that this will have an impact on our revenue and earnings. We will be producing Jinan Fertilizer's product portfolio and benefiting from the high gross margin of Nitric Acid, a major product produced by Jinan Fertilizer, which has a high sales price. Should this interim step become necessary, we expect a smooth transition process from renting production to ownership," added Mr. Chen.

At its annual meeting of shareholders on September 15, 2008, the Company communicated that it was reasonably confident it would receive an extension from the local government to continue operating its chemical facility beyond October 31, 2008. However, as a result of the recent mining accidents and food safety issues in China, the Chinese government has tightened enforcement of environmental restrictions and workplace safety standards. Therefore, ShengdaTech no longer believes it will receive an extension and that it will be required to cease operations at the facility on November 1, 2008, as previously announced.

The Tai'an facility is not in violation of any safety regulations. Rather, the relocation notice is part of China's environmental law enforcement reform and was due to the facility's close proximity to residential and non- manufacturing business properties. The Company plans to relocate its chemical operations to Jinan Fertilizer's facility upon completion of the acquisition.

[Ramsburg]

Update:

Following the Market Comment published today, we're opening a position in SDTH today.

Not long ago, I considered SDTH cheap near $9.00, now below $4.50 the stock is trading at just 7 times 2008e earnings, but taking the current market environment in consideration the fundamentals are not a solid motivation anymore. On a rebound scenario I would expect SDTH to reach at least it's 50-ema which stands near $7.

Trading Plan:
Buy SDTH today (10% exposure), we'll be setting a stop near yesterday's lows.