My China play: SDTH

[Ramsburg]

Update:

Positive developments in SDTH chart, but still inside current trading range. I'm setting a suggested stop level for now.


Trading Plan:
Hold SDTH with suggested stop near $3.65

[la-onda]

ShengdaTech Inc.
Wednesday, October 22, 2008 07:10ET

Oct 22, 2008 (Zacks Investment Research via COMTEX) -- ShengdaTech Inc. (SDTH) has that rare combination of strong growth and value characteristics. The stock is cheap. It trades at only 6.4x forward earnings and yet earnings are expected to grow 20.67% over the next 5 years.


Company Description

ShengdaTech manufactures nano precipitated calcium carbonate (NPCC) and coal-based chemicals. The company also converts limestone into NPCC using proprietary technology. NPCC is used in tires, paints, and polyvinyl chloride building materials. The coal-based chemical products include ammonium bicarbonate, liquid ammonia, methanol and melamine.

ShengdaTech's coal-based products are used in chemical fertilizers and raw materials in the production of organic and inorganic chemical products, especially formaldehyde and pesticides.

Acquisition of Jinan Fertilizer Company

In September, the company announced that it expects to close on the acquisition of Jinan Fertilizer Company before Oct 31 because ShengdaTech is under government mandate to close its Tai'an City facility by that same date. ShengdaTech is transferring production from the closing facility to the Jinan facilities.

In the event that the acquisition is not completed by the date the government closes the Tai'an facility, the company said it intends to continue production by renting facilities from Jinan Fertilizer and expects a smooth transition from renting production to ownership.

The company has stated that the government's closing of the Tai'an facility was not the result of any safety violations but was due to China's increased environmental enforcement reform as a result of food safety scares and the facility's nearby proximity to residential and non-manufacturing areas.

Revenue Jumped 75.7% in the Second Quarter

On Aug 15, ShengdaTech reported second-quarter earnings that beat Wall Street estimates by 28.57%. Net income rose 66.3% to $10 million, or 18 cents, from $6 million, or 11 cents in the second quarter of 2007.

Revenues surged 75.7% to $39.8 million from $22.7 million in the year ago period. The company attributed the growth to higher selling prices and increased demand for both chemical and NPCC products.

ShengdaTech added 3 new stainless steel NPCC production lines in April 2008 which boosted NPCC production capacity to 190,000 metric tons compared to 90,000 metric tons from a year ago. The increase in production boosted revenue from NPCC products by 76.4% to $19.1 million from $10.8 million in 2007.

During the second quarter, the company added 6 new domestic clients as well as expanded its international reach by adding a Korean tire manufacturer, Vietnamese and Israeli polyethylene manufacturers and a Singapore automobile undercoating company to its customer list.

Full Year 2008 Estimates Rise

Consensus estimates for the third quarter have been stable in the past 90 days, holding at 15 cents per share. Consensus estimates for the full year are up 4 cents to 64 cents in the last 3 months.

ShengdaTech reports third-quarter earnings on Nov 17. It has surprised on estimates 3 out of the last 4 quarters by an average of 21.18%.

Value Fundamentals

ShengdaTech is an attractive value play, with a forward P/E of 6.49. Its price-to-book is 2.45. The company has an outstanding 1-year return on equity (ROE) of 34.66%.

[la-onda]

SDTH: Short Interest DN 20.4% to 3.5M in Mid Oct 2008
Friday , October 24, 2008 16:21ET

According to new short interest data from NASDAQ, short interest for ShengdaTech, Inc. (NasdaqNM: SDTH) DECREASED 20.4% to 3,453,896 shares as reported in mid-October, 2008.
Based on SDTH's 20-day average daily share volume of 488,090, it would require approximately 8 day(s) of buying to cover this short interest.

&

ShengdaTech Inc breaks ground at NPCC facility in Zibo, China
Tuesday , October 28, 2008 06:30ET

Oct 28, 2008 (M2 EQUITYBITES via COMTEX) -- ShengdaTech Inc (Nasdaq: SDTH), a manufacturer of nano precipitated calcium carbonate and coal-based chemical products, said on 27 October that the company has broken ground on its new NPCC (nano precipitated calcium carbonate) facility in Zibo and has commenced construction.

The Zibo facility will have a revised total designed capacity of 160,000 metric tons (MT). In addition, the 58 acre land has room for additional capacity expansion in the future. The first phase will have total capacity of 60,000 metric tons (MT) and is expected to begin production in July 2009. A The company said it will reassess the demand/supply situation at the start date for the second phase of expansion (60,000 MT).

&

SDTH: Jumps +9.07%; Vol +131%; Last 90 Min of Trading
Tuesday , October 28, 2008 16:23ET

During the last 90 minutes of today's session, shares of ShengdaTech, Inc. (NasdaqNM: SDTH) demonstrated a strong UPWARD close relative to its 13:30 ET statistics. "Strong Closers" are determined by proprietary Knobias calculations performed during the last segment of each trading day.

sym: SDTH      @13:30 ET        @CLOSE      % CHANGE
----------   -----------   -----------  ------------
PRICE              $4.30         $4.69        +9.07%
VOLUME           111,344       257,051      +130.86%
#TRADES              532         1,171      +120.11%
DAY-HI             $4.49         $4.71       LATE-HI
DAY-LO             $4.01         $4.01           N/A

[eggman11]

Dear 3StocksonFire,

Almost a week since the last update, in both portfolios in this market enviroment is pathetic. No updates on anything. Not even general market updates. If the site was free I wouldn't complain, but if you are charging money, you really need to update your subscribers.

[berloga]

Hi Ramsburg and Aussie:

  I support eggman and on his request for an update. I am still paying in hopes that things will turn around for better in the economy and the trading. But as of August, I haven't bought or sold anything and feel like I receive no guidance. I believe no trading on fundamental values exists in today's conditions, so shouldn't we capitalize on fluctuations as we choose? If that's the case, then prompt updates are needed to be able to react in time.

Thanks.
Berloga.

[eggman11]

Actually it's bben alomst 2 weeks since the last update, with the market as volitle as it is, it really is unacceptable not to have any updates. I beginning to wonder if they are following the markets anymore.

[eggman11]

Amazing you guys are still hoping. I posted my request 4 months ago (the post was deleted promptly) and I concluded that my pre-paid subscription fee was lost already.

These guys are crooks. Had they been in US I would have initiated small-claim lawsuit long time ago. But since they are "hiding" outside US I had no recourse.

Actually this website used to pretty good, I think the guys who currently run went belly up in this market at stop caring.

[setravis]

One of the 4 stocks presently active in this portfolio.

Updated chart look...

[Henrique Costa]

Sold @ $6.67 mp for both portfolios.

Reasons: this stock doesn't fit the current portfolio strategy, and it's currently near the resistance.