CTRP and FMCN are two china names that we covered at FilthyRich China names. CTRP and FMCN have been on fire. CTRP is the single best idea for 07 and in matter of 10 months, the stock is generating nearly 90% return for our group. FMCN has been a stellar performer. I initiated this stock in last Nov as an additional China name that will have a great return in 07. Guess what? In just over two months, it has racked up 37% gain. I am in the process of revising the TP for FMCN at a higher level. However, I believe that both names have risen too much too fast ahead of their earning in Feb.
In my investment thesis, I told you guys, CTRP will be able to rack up 40% YOY for next two to three years.
(see http://www.investorhive.com...)
I said the stock could see $70 level sometime in late 07 as the stock will anticipate earning in 08. Here I have assumed that CTRP will generate near $2 EPS in 08 which is aggressive 50% YOY EPS growth rate. Guess what? We are still in Jan of 07 and the stock has already surpassed my target price for 07. I will write before the earning why CTRP may see slightly more challenging business climate in early part of 07. But the bottom line is the stock appears to be run ahead of its fundmamentals.
Same goes for the FMCN. I have initiated the stock with TP of $80. Now that the stock is at $85, the stock price is starting to account for the great growth that we will see in 08.
(see http://www.investorhive.com...)
I do believe that FMCN will trade much higher from the current level ultimately as 09 earning will show tremendous growth over 08 and the valuation is not as stretched as CTRP case. However, due to its recent rise, the stock clearly needs to consolidate. I will highlight more about FMCN ahead of the earning too in the near future.
I would be a little cautious about the Chinese stock market short term. I believe that the rise in Chinese market last 6 months has been nothing but fireworks. It needs a period of consolidation, which will set up nicely for additional gain in 07. I do believe that we can take certain portion off the table as the gains in both names have been impressive.
(see 5 year chart for Shanghai index, a little scary isn't it?) (http://finance.yahoo.com...)
I would look to buy back CTRP in mid 60's range. I would buy back FMCN in high 70's range. It is time to lock in some profit (suggest 30 to 40%) and we will buy back at cheaper levels. You let the remaining shares fly. This way you may be happy whether the stock moves up or down.
The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)
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$35.35 (02/01/07)
