XING

[Melf Elf]

Short-term, XING has some technical problems.

The high prior to the big gap up was 10.49.  That's been filled at this morning's 10.50 low, but a H&S Top was broken (neckline 11.01 and 11.00) that put Target 10.11 IN PLAY, and there's a Symmetrical Triangle that was broken to the downside, after the H&S was put in.

The SOHU news doesn't help any.  They've lowered their next two quarters' revenue estimates due to changes in government regulations.

[Michael]

The last three weeks have been quite volatile and we are now entering a phase of consolidation. We are seeing a combination of profit taking and momentum traders closing out their positions. Short term I could see the stock drift lower from here, which could create some great buying opportunities over the support at 9.75.



Fundamentally the stock is still an amazing bargain and as we know the stock can take off without any warning so I wouldn't recommend to close your position here but rather trim it down to a core position so you have cash available if the market decides to offer us the opportunity to buy around 10 again.

There is an interesting piece of news out in the Chinese media. The google translation is as always a bit challenging but this one didn't come out too bad: http://www.google.com/translate?u=http%3A%2F%2Fcolumn.bokee.com%2F158005.html&la

In announcing the formal launch of Cosun brand mobile phone after three days, it triggered a chain reaction of the domestic mobile phone market, one time more than 200 dealers from across the country to come in swarms and full access Qiao Xing Industrial Park vehicles visited. In addition to the high rise market enthusiasm of the new brand Cosun surprises, but also bring more unprepared. "Market reaction is too strong, dealers queues to discuss cooperation, only three days to receive 400 million. "Qiaoxing Group Executive Director and Head of Qiaoxing Telecommunication Wuzhizhong said.

We must assume that this means that Cosun sold phones for 400 million Yuan or 50 million USD during three days. It is not clear whether this revenue comes in addition to the 50 million revenue Mr. Wu announced in the outlook for the rest of 2006:

Just a few weeks ago, HZQXCI was granted by the National Development and Reform Commission of China a manufacturing license for mobile phone terminal products. The last impediment to XING'S dual brand mobile phone strategy has been cleared. In the distributor fairs held recently, HZQXCI announced the launch of 22 new models of mobile phone handsets and received US$50 million's worth of orders. HZQXCI expects that the sale of its 'COSUN'- brand handsets will double in 2006. It has also been working on expanding its overseas markets for mobile phone handsets.

In either case it is nice to see that Cosun is executing their business plan. Most focus has been on CECT (for good reasons) and it seems like most investors has forgot that XING has other assets that are hugely discounted at today's share price.

Disclosure - I am holding XING and am not selling here. I am rather looking to add at around 10

[voova99]

Michael

What do you think about strong competition
in handset market in China. TCL and Bird already lose
money... 

http://messages.finance.yahoo.com/Services/Communications_Services/threadview?m=tm&bn=20255&tid=115748&mid=115748&tof=6&frt=2


Best,
Vova

[Michael]

Michael

What do you think about strong competition
in handset market in China. TCL and Bird already lose
money... 

Best,
Vova

Of course I am worried about competition but competition is not new to the Chinese handset market. On the contrary the major handset suppliers have been joggling for position for years investing a huge amount of money due to the size of the market. There will be winners and losers.

Judging from independent market research CECT is one of the winners. I guess it comes down to Business strategy and execution.

Compared to TCL and Bird, CECT has successfully positioned themselves at the high-end of the market, which seems to command better margin than the low-end, which primarily competes on price.



We have already talked a bit about their world leading handsets but their distribution and warranty terms are also outstanding. If I remember right they have more than 5000 service centers so they are really close to the customer compared to some of their competitors



Finally they have managed to build a strong brand, I posted a link to a market research previously, which showed that the value of CECT's brand is close to the market cap of XING!



So yes it is important to keep an eye on the competition but as long as CECT keep defending or increasing their market share and executing their strategy flawlessly we will do just fine 

[Melf Elf]

Short-term, XING has some technical problems.

The high prior to the big gap up was 10.49.  That's been filled at this morning's 10.50 low, but a H&S Top was broken (neckline 11.01 and 11.00) that put Target 10.11 IN PLAY, and there's a Symmetrical Triangle that was broken to the downside, after the H&S was put in.

H&S Top target MADE within one penny, at 10.12.

[voova99]

Thank You for  response, Michael.



Best,
Vova

[Michael]

The market gave us one more chance to buy below 10 before reversing and ending the day at the top of a beautiful white candle 

[magu]

Michael: Are you planning to sell XING?, it touched stop 9.75

Look at AERT, dropped below 2.58,  rebounded  and now it is going up

?? Thanks

[Michael]

Michael: Are you planning to sell XING?, it touched stop 9.75

?? Thanks

Hi Magu

Our stop for XING is 6.8 so no I am not selling XING 

It is a very generous stop and the reason is very simple. We know that the CECT IPO is going to happen soon after the release of earnings and there is no way (in my opinion) that CECT and therefore XING is not going to report stellar earnings.

We know that the revenue is there (not only for CECT but also for Cosun), The stock options is out of the way and Chinese economy has just recorded record growth (could it be that the increased wealth of the Chinese is used to buy mobile phones  )

This is a very bearish market and the 3SOV reflects this. We are only holding two stocks: KOMG and XING. For different reasons I think it is prudent to hold these two stocks during this correction of the market.

[tokyopua]

I was out again at 10.7, but have an order in again for 9.60 if I can get it filled.  That should be a good support area as its close to the 50sma and therecent open gap (which is very small now at .01 difference between 9.6 and 9.59, but still open nonetheless).  Looks like I may have missed my chance, as XING already bounced right at 9.60. 

[magu]

Michael, thanks for your answer, i noticed i was wrong about the stop, you said 9.75 was a support and it managed to recover so this might be a good chance to buy some.

thanks again.

[trademan07]

Numbers look great on this stock. Next Q should be announced next few weeks and should be great.  Upped guidance shows this stock now trading at 5 times EPS.  With their growth rate this one should fly soon.  I think the street is watching to see what the next Q brings before letting it go.

[Michael]

Michael, thanks for your answer, i noticed i was wrong about the stop, you said 9.75 was a support and it managed to recover so this might be a good chance to buy some.

Hi Magu

It certainly seems like buying at 9.75 is a good strategy 

We are getting used to great news from XING on a daily basis so it is nice to see a move to the upside without any news. Imagine what will happen when we get some real news 

[AussieTrader]

The $9.60 zone which is now combined with 50sma is providing very strong support for XING.

I guess the next few weeks leading up to earnings will be very interesting to say the least. XING should have a great number to show as well as the ongoing great story, new product launches, IPO, market share gains and don't forget China as a whole grew 10% in Q2.

Don't worry about the doomsayers complaining about options sucking profit out of Q1. Look at how many companies are currently struggling with the whole option granting issue relative to showing them as costs now. XING were fully disclosing what they did, and they have stated there would be no option expenses in Q2.

Good Trading

[AussieTrader]

This is the filing relating to the warrant holders and is not new news of dilution. I Hope the market remembers that, in the current climate you never know....

DJ Qiao Xing Universal Registers 10.2M Shrs For Holders   

WASHINGTON (Dow Jones)--Qiao Xing Universal Telephone Inc. (XING) filed Friday a registration to allow for the sale of up to 10.2 million shares of common stock from time to time by shareholders.

DKR SoundShore Oasis Holding Fund Ltd., Cedar DKR Holding Fund Ltd. and Worldwide Gateway Co. were listed as the selling holders.

The total shares covered under the registration will be issued to the selling holders upon conversion of their outstanding convertible notes and upon exercise of their outstanding warrants, Friday's filing said.

The company said it won't receive any of the proceeds of sales of common stock by the selling holders, but may receive up to $14.8 million from the exercise of warrants.

Edgar filing link http://www.sec.gov/Archives/edgar/data/1051846/000095013406014072/d38076fv3.htm