It doesnt take a rocket scientist to Portable PTFE welding machine figure out what businesses might
be doing great in China. It would be nice if there were a selection of
domestic growth opportunities, but theres no denying the economic
machine that is China. In that country, the entrepreneurial drive and
the economies of scale make the whole thing work.
One company thats been a great success in China is VanceInfo
Technologies Inc. (NYSE/VIT). This information technology (IT) firm is a
software outsourcing company. We always hear about outsourcing and this
company is one of the best at it, developing software for customers in
China, Japan, North America, and Europe. Corporations employ VanceInfo
to develop enterprise software applications, because they provide a
quality service at a lower price. With lower costs for labor and
expertise, its no surprise that a company like this is growing like
mad. Its the whole economies of scale thing at work and it makes it
tough for domestic software firms to compete.
In the third quarter this year, VanceInfo generated record revenues
of 55.9 million dollars, up a solid 39% from revenues of 40.2 million
dollars generated in the comparable quarter. The company cited an
across-the-board improvement in sales at all its service lines and in
all geographic markets. Revenues from Greater China (which include
mainland China, Hong Kong, and Taiwan) represented about 44% of the
total. The rest came from customers in the U.S., Europe and Japan.
Earnings during the third quarter came in at $7.7 million for a gain
of 34% over last year. The company finished the quarter with 87.0
million dollars in cash and management increased its 2010 full-year
sales guidance to between 208.5 million dollars and 209.5 million
dollars, representing a 41% increase over 2009.
Also not surprising with this kind of growth is VanceInfos stock
price performance. In 2008, this stock didnt do anything, partially due
to a correction in domestic Chinese equities, as well as the financial
crisis in the U.S. But, from a low of under $5.00 a share in early 2009,
this stock has been on fire and is now trading close to a record-high
share price of $41.00. Thats almost a 10-bagger in just under two
years.
Not only this, but the companys been able to sell shares in itself
and the stock still stays strong. VanceInfo just sold 2.53 million
American Depositary Shares to finance its expansion.
Even if you arent a shareholder in VanceInfo, its worth your time
to review the stock and the wealth it has created. When you get close to
a tenfold return on your investment, its a fortune-making opportunity.
It also reiterates in my mind the attractiveness of surveying the
marketplace for stocks trading around their 52-week lows. Among all the
failures, there are always diamonds in the rough.
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