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Checking Up on Chinese Small-Caps

BEIJING (TheStreet) -- The Rodman & Renshaw conference comes to Beijing next week and I'm eagerly awaiting the opportunity to meet with some of the small-cap China companies I follow. Many of the stocks have come off by 30% to 40% or more since mid-January so it's a great time to check in with management teams to get an idea if there are any good buying opportunities.

The conference lineup is impressive with more than 100 companies listed on the Rodman & Renshaw Web site

I'm eager to see China Agritech (CAGC) which uplisted last September at a $6 (adjusted for a 2-for-1 stock split) and now trades at more than $25.

Every time I want to get into the stock I hesitate , it then rockets up again, and I end up kicking myself for not getting in. So now is a good time to see if $25 is still a good entry point or if it's too late. Chine Agritech is scheduled to make a presentation at the conference on Tuesday.

While China Agritech is up 80% year to date, its direct competitor China Green Agriculture (CGA) is basically flat for the year. China Green Agriculture boasts net margins of more than 30% and had more than $60 million of cash at year end with no long-term debt.

China Green Agriculture presents on Monday, so the real question I might be asking is "why buy Agritech" if I'm too late to the party and when CGA still looks very cheap at $15.

My biggest focus will be on Duoyuan Printing (DYP). The company priced its initial public offering on the New York Stock Exchange last year at $8, the low end of the range, and has traded up about 20% to 30% since then. But it still looks very cheap.

The company is run by Chairman Wenhua Guo, who is also chairman of NYSE-listed Duoyuan Global Water (DGW). Both companies have gross margins of around 50% and net margins of 25% to 30%, but DYP trades at a massive discount to DGW.

Because the companies have the same management, a similar financial profile and double-digit growth rates, I think DYP is a bargain which has about 50% upside to it. Piper Jaffray just reiterated its outperform rating on DYP with a $13 target vs. a current price just over $9.

Stock quotes in this article: CAGC, CGA, DYP 

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