China Taisan

China Taisan: Most recently, co turned in its first quarterly loss in over 2 yrs in 1Q12. Co’s current P/E is 10.09x but does not issue dividends. Excluding profitability, its balance sheet does not appear unsound, given a net cash of over Rmb700m ($138.3m). Co’s mkt cap is currently $71.7m. Co currently trades at a P/B of 0.3x A possible reason is that there is simply a lack of buying interest in the counter. Given past cases of S-chip accounting irregularities and some exposed fraudulent balance sheets, investors may have been so spooked that they are completely avoiding the counters. It is also noticeable that many of these are fabric companies with China Sky, China Gaoxian and SinoTechfib Another fabric producer S-chip, Foreland Fabritech trades at a mere 1.17x P/E and even gives a 12-mth trailing div yield of 9.9%, trading at P/B of 0.24x. It appears that the issue is not about valuations. Both China Taisan and Foreland have warned of a slowdown in prospects and expect the business environment for textiles to be under pressure. There has been no adverse news on either company recently.