A China Stock

[BadBoyBenny]

I haven't bought into the whole buy China thing because I don't trust their bank or government, but one stock came up on a screen and I thought it looked worth some investigation.

CYD - CHINA YUCHAI INTERNATIONAL... a maker of diesel engines, generators and related parts. Seemingly low valuation, strong growth, and the type of business I think will do well in the Chinese economy over the next 5 years. I haven't done any real research that took more than 5 minutes, maybe someone else has or wants to.

Any opinions are welcome.

[Non_Comformist]

I have been looking at this one for a week now. The financials look strong and it recently started paying a dividend. IN 5 years it went from 5 million in revenues to over 50 million. However it's payout ratio at last year end was 94% which is extremely high. This would tend to mean that management does not believe future growth will be as strong and perhaps future ROE will be unable to match other investment opportunties. This is the my main problem with Chinesse companies, I have recently started listening to anaylst meetings and annuals, which has helped me get a feel for where management wants to go and whether they admit to mistakes. Note I fully expect all companies to have problems for things to not go as planned, I think a sign of a strong CEO is one who admits where things went wrong and takes responsibility for it.

Two companies I am currently purchasing on a going forward basis.

China Mobile CHL
PetroCHina PTR

Both have very attractive PE's and strong financials. I would however consider them more risky than the my average value play.

Any opinions welcome