Is QXM a value play at $6.1 today?

**buzz520** Fri Mar 07, 2008 3:05 pm

Is QXM a value play at $6.1 today?
Thanks in advance for any opinions.

**blast_investor** Thu Mar 13, 2008 1:59 pm

Hi buzz520,

This Qiao Xing, a Chinese stock.

The problem with this stock is not how much value it is worth. It is whether you can trust its book and management team.

There is not much information on this stock here. I would not touch this stock until more information is unavailable.

**buzz520** Thu Mar 13, 2008 4:27 pm

Hi blast_investor, nice to hear back from you!

The reasons I bet on QXM are: 1. I used to try their cellphones, which have really nice quality and features and cheap price as well. 2. I used to see an in-depth interview to Wu Ruiling, who is the father of QXM's chairman. I felt he is a great person and business man. You know, QXM is controlled by XING, so in reality they are "family business". I personally bought 10k shares at 7.8, which seems high (30% premium) compared to 6.

However, if their book is trustworthy, I think the target would be at least 10.

**littlebird** Fri Mar 14, 2008 5:32 pm

blast is absolutely right on the trust issue. I was burnt seriously on bbc(now bbcz.pk) last year. You just cannot assume the Chinese management, especially those of private companies, are morally decent.

**buzz520** Tue Mar 18, 2008 11:22 am

Any reasons to suspect?
Blast/littlebird,

Do you have any particular reasons why you think QXM's book or management cannot be trusted? Or, it's just like me (kind of) speculating? Thanks.

**zhang242463** Tue Mar 18, 2008 11:50 am

Re: Any reasons to suspect?
buzz520, my opinion is if something is unknown, don't touch it. there are plenty of known things to work on. Warren Buffet doesn't invest in Financial stock such as Citibank b/c he doesn't understand the book. Blast used to invest in H&B and he quits too.

The question is the other way around, why you think QXM book can be trusted.

buzz520 wrote: Blast/littlebird,

Do you have any particular reasons why you think QXM's book or management cannot be trusted? Or, it's just like me (kind of) speculating? Thanks.

**blast_investor** Tue Mar 18, 2008 12:48 pm

Re: Any reasons to suspect?
zhang242463 wrote: buzz520, my opinion is if something is unknown, don't touch it. there are plenty of known things to work on. Warren Buffet doesn't invest in Financial stock such as Citibank b/c he doesn't understand the book. Blast used to invest in H&B and he quits too.

The question is the other way around, why you think QXM book can be trusted.

Yes, that is my take.

QXM is basically "unknown" stock. To invest into an "unknown" stock is pretty dangerous to do.

Learning from Warren Buffett, investors with value method should make huge amount profit year in year out in "known" value stocks only.

But when we face "unknown" stocks, it is purely on "luck", it could be pretty profitable, but most likely it is a mess with future loss.

HRB - H&Block is tax company with huge subprime mortgage business. Back in 2004 I sold HRB at loss due to "uknown" factor in Mortgage:

http://www.blastinvest.com/value-investing-newsletter/11_30_2004.htm
HRB - fear of financial stock

That HRB mortgage division is in trouble and it is worth basically zero in recent asset sale.

Again in 2005, I wrote another article on financial companies:

http://www.blastinvest.com/article/03_28_2005.htm
Derivative Risks of Financial Stocks

The similar logic can be aplied on this stock, it is fear of "unknown".

Invest only into "known" value stocks, and avoid "unknown".

Move on if it is "unknown". BTW, CEO and management word in conference calls, or TV shows can not trusted as "risk assessment". The main tool should be SEC filings, earning statement, balance sheet, etc, detailed audited document. This company does not provide any audited financial statement.

Bear Stearn CEO said everything was fine 2 days before trouble. Faking financial document is also quite rampant in Chinese market.

**littlebird** Tue Mar 18, 2008 4:40 pm

Re: Any reasons to suspect?
buzz520 wrote: Blast/littlebird,

Do you have any particular reasons why you think QXM's book or management cannot be trusted? Or, it's just like me (kind of) speculating? Thanks.

As a Chinese, it is very sad for me to have to badmouth my folks, and I used to be very tolerant on corporate cheating. But I have to tell you that profitability is only a minor concern in investing Chinese corporations. :cry:
Believe me, you don't want to take the lesson the hard way. If you still want it so much, limit your exposure and investing time frame, by all means.

**shu_wd** Sun Apr 06, 2008 1:58 pm

Re: Any reasons to suspect?
xing/qxm certainly not "value" stock, but xing use to be a great momo play. both of them are now in very interesting position..
littlebird wrote: buzz520 wrote: Blast/littlebird,

Do you have any particular reasons why you think QXM's book or management cannot be trusted? Or, it's just like me (kind of) speculating? Thanks.

As a Chinese, it is very sad for me to have to badmouth my folks, and I used to be very tolerant on corporate cheating. But I have to tell you that profitability is only a minor concern in investing Chinese corporations. :cry:
Believe me, you don't want to take the lesson the hard way. If you still want it so much, limit your exposure and investing time frame, by all means.

**zhang242463** Sun Apr 20, 2008 1:21 am

Re: Any reasons to suspect?
take another look today. For QXM, it earns about 1.5$ but price is 7.6$ today with 3$ cash. It looks like there is a huge trust issue with Chinese small cap companies. I recall there is a trust issue with PTR when it is first listed as no one believe a communist state owned company. it's PE was 1 when it was initially traded.

don't know how to do these types of investments.

shu_wd wrote: xing/qxm certainly not "value" stock, but xing use to be a great momo play. both of them are now in very interesting position..