XING

[David Randolph]

XING is exasperating 

Yesterday the CEO comes out and says:

«Qiao Xing Universal Telephone Presents its Forecast of the Financial Performance of its Operations for 2005
Expected Increase in Net Sales, Gross Profit and Income from Operations of 23%, 66.7% and 243.9%, Respectively, from Those for 2004
Dec 14, 2005 9:40:00 AM

HUIZHOU, Guangdong, China, Dec. 14 /Xinhua-PRNewswire/ -- Qiao Xing Universal Telephone, Inc. (Nasdaq: XING) today presented its forecast of the financial performance of its operations for the whole year of 2005. Mr. Wu Rui Lin, Chairman of XING, said, ''In this last month of the year, I would like to share with the investor community my forecast about the financial performance of XING's operations for the whole year of 2005.

''Sales revenue is anticipated to be over US$300.0 million for 2005. This would represent a growth of 23.0% from last year's US$244.0 million. The last quarter of a year is usually better than the other quarters. From January to September, 2005, XING have achieved sales revenue of US$210.8 million, with a quarterly average of US$70.3 million. We expect to make about US$90 million for the final quarter, which means an increase of about 27% from the quarterly average of the first nine months. Purchase orders we received so far and the recent trend show that this is highly attainable. In the mobile phone business segment, CEC Telecom Co., Ltd. (''CECT''), a major subsidiary of XING, has been doing well. The multimedia phones, the pocket PC phones utilizing Microsoft's operating system and the Palm Treo 650 Smartphones that it recently launched have met with enthusiastic reception in the China market. The sale of the mobile phone handsets developed by Huizhou Qiao Xing Communication Industry Ltd. (HZQXCI), another subsidiary of XING, has been encouraging. HZQXCI has secured numerous orders for its 'COSUN' brand mobile phone handsets in a distributor fair recently held in China.

''We anticipate gross profit margin of 15.0% for the whole year of 2005, compared with 11.1% for 2004. This would mean a forecast gross profit of US$45.0 million for 2005 compared with US$27.0 million for last year. This forecast increase in gross profit margin would result from the cost-saving measures carried out by CECT on its supply chain and the upgrading of the indoor phone product portfolio of HZQXCI to one which includes more and more high value-added products. ''We expect income from operations (before other income/expenses, interest, tax, minority interests and extraordinary items) to reach over US$28.2 million for 2005 (2004: US$8.2 million).

''The acquisition of a further 25% equity interest in CECT was completed in July this year. Our effective equity interest in it has increased to the current 72% from 52% before. XING therefore stands to reap increased benefits commensurate with its increased stake in CECT. So far as profitability is concerned, our shareholders will remember 2005 as the year in which XING turned the corner, after a period of consolidation necessary for the integration of the acquired CECT, and we expect it to continue in 2006 and thereafter.''»

Remember, the reported market cap of this company is $143.77M. So, revenue growth is 23% and the price to sales ratio is 0.48.

Gross profits go up 66.7% and the share price did nothing in the period.

It looks like nobody trusts this management. Everybody thinks (and they're probably right), XING is selling shares in the open market, and when the actual results come out, we'll see the dilution and we'll then acknowledge that the market cap is much higher.

I don't know how much dilution people are expecting, but probably a lot. It's a shame they don't publish quarterly EPS numbers. That explains why investors don't trust management, they've been burned before.

Now the question is: is dilution going to be higher or lower than expected? It's strange, but the stock has been rising lately, so maybe, just maybe, the company isn't selling all that much shares in the open market.

I'll give it the benefit of the doubt, for as long as the stock isn't set to close below $7.5. If it does, I'll dump it without regret and will be watching when the actual yearly earnings release comes out.

[David Randolph]

I'm almost positive that XING will indeed break $7.5 on the downside, nobody seems to trust the Chinese these days ... Chinese stocks have been coming down because their accounting policy allegedly isn't accurate.

Why don't they file a 10-K report like everybody else? I know that by law they don't have to, but would that cost all that much?

The cost in market cap terms seems to be huge.

Although this is true, looking at a medium term chart I find $7.5 so significant that I can't let go for as long as that level is defended. Therefore I'll continue holding XING for as long as it is set to close above $7.50.

[shawFund]

It closed at $7.50 exactly today.

You said that "hold it as long as it closed above $7.50".

Does that include equal to $7.50?

Have you already sold?

[David Randolph]

It closed at $7.50 exactly today.

You said that "hold it as long as it closed above $7.50".

Does that include equal to $7.50?

Have you already sold?

I still hold it. But with the kind of press releases the company is releasing and the stock heading down I have no doubts that this is going to be a losing trade. When I see a loss, I'll take it before it gets big.

That's what I'll do today, selling XING around the open.

[David Randolph]

As planned, I sold XING at the open, what an ugly sell off it followed 

After the close I'll move this thread to the «Previous 3 SOF Picks» Board.

[Ramsburg]

I believe we have a good timing opportunity here, XING was on David's radar, showed up today on EliteG's scans, and also in my Volume/Breakout scans for the day... If that's not enough, Michael has a strong Fundamental opinion about XING (you can read more on this excellent XING thread here).

XING is already a very popular stock among our T2T community, discussed on several threads and «covered» by many members, so we'll skip the presentations, and we go straight with our trading idea:

In the last two months, XING is developing an up-move, having a very steady ascending support working great. Today XING went up over increasing volume and had a breakout of its descending resistance, showing at the same time a nice relative strength against the market...
This kind of technical behaviour is very bullish, and sometimes can be interpreted as anticipation of good news...

Daily Chart:



5m Chart: (thanks EliteG )




A good confirmation for this breakout would be a close above $7.75, but we are not waiting for that, so we'll buy XING tomorrow at the open for the 3SOF portfolio.

Our trading plan will be further developed here, but the target of this breakout is $9.20, and we'll be setting a stop below the ascending support @ $7.15.

My best regards!


.

[Maestro]

A good confirmation for this breakout would be a close above $7.75, but we are not waiting for that, so we'll buy XING tomorrow at the open for the 3SOF portfolio.

Do you mean to buy it today, March 22?

Maestro

[Ramsburg]

A good confirmation for this breakout would be a close above $7.75, but we are not waiting for that, so we'll buy XING tomorrow at the open for the 3SOF portfolio.

Do you mean to buy it today, March 22?

Maestro

Hello Maestro,

Yes today at the open

[Maestro]

Thanks, Ramsburg. Bought it at the open at 7.75. Bought it at the open at 7.75 and am now going to place the stop order.

Maestro

[Ramsburg]

Thanks, Ramsburg. Bought it at the open at 7.75. Bought it at the open at 7.75 and am now going to place the stop order.

Maestro

You made the same price we did

Going in the right direction so far... Volume is good, and the breakout looks legit

[akclide]

Missed it.Hoping to get a pull back

[Ramsburg]

Interesting session, we got our breakout confirmation, and luckily a nice entry point at the opening
Both, a close above $7.75 and $7.94 along with a very strong relative volume, make this a nice start for this trade.

Our target for short term is $9.20, and we have only one obstacle in the middle: which is the $8.54 barrier (last relative high from November's rally), after that I believe we can easily reach our target, and probably more.

There's also a risk on this trade, which is the common throwback after a breakout, but we'll skip this possibility for now.

So the trading plan will be the same with the addition of a selling order:
We are Holding XING, with a stop @ $7.15 and a limit sell order @ $9.20

Best regards,

[Maestro]

We are Holding XING, with a stop @ $7.15 and a limit sell order @ $9.20

I've got a problem with this with Ameritrade. With the stop order already in place, Ameritrade's system will not accept, in addition, a limit sell order, indicating that the quantity I want to sell exceeds my holding.

Does anyone using Ameritrade have experience with this and can advise me? Otherwise, I shall call Ameritrade later today.

Maestro

[AussieTrader]

Maestro, Do you have Ameritrade Trade Triggers? You can have multiple orders with these

[Maestro]

Thank you, AussieTrader. Funny enough, I came across that feature yesterday and thought I wouldn't need it.

So what I should do on Ameritrade, I now see, is place neither a stop order nor a limit sell order for XING but instead create two triggers, one to initiate the stop order if that condition (price 7.15) should be met, the other to initiate the market sell order if that condition price 9.20) should be met.

Is that what you are doing?

Maestro