Indian markets traded amidst volatility today but managed to end marginally in the positive. It largely toed the line of corporate India, which outlined some mixed performance today. Stocks from the banking and FMCG sectors were the best performers today. Those from the oil & gas and pharma sectors fared amongst the worst. On the broader BSE, one stock declined for one that closed in the positive.
The BSE Sensex and NSE Nifty closed with gains of around 35 points (0.2%) and 15 points (0.3%) respectively. Midcap cap stocks followed suit, as the BSE Midcap index closed up by around 0.2%. The BSE Smallcap index closed marginally weak.
Radient Pharmaceuticals Corporation (AMEX: RPC) announced a new plan to sell its China subsidiary, Jade Pharmaceuticals Inc. Jade has signed a letter of intent to merge with Shanxi BaoTai Pharmaceutical Co., a privately owned company located in Taiyuan China. When the transaction is closed, Jade plans to merge the combined entity with an unnamed public company, and the public company will move its listing to the NYSE Amex.
Both Jade and BaoTai produce drugs for the cancer market. At one point, Radient placed a $20 million value on Jade, though no financial details of the transaction were disclosed. Radient said it would offer bridge financing to facilitate the merger of Jade-BaoTai with the public company.
Gulf Resources (GFRE) will be reporting second quarter results in a little less than two weeks and the consensus analyst estimate of $36.97 million in revenues does not take into consideration Gulf's seasonal sales trends and bromine price increases. By my estimate, revenues could be $46.0 million in the quarter. Gulf's revenues are broken down into bromine, crude salt, and specialty chemical sales. Bromine reserves are found mainly in the U.S., in the Dead Sea and in China, which account for 96% of the world's total bromine production. Gulf Resources is the largest bromine producer in China and one of a few companies with a bromine exploration license in China. The bromine demand in China is larger than the domestic supply, which has led to significant price increases. The Company has $56 million in cash ($1.60 per share in cash) and no debt.
Bromine Sales
As we've been writing for the last month, the Chinese economy and hence the local markets continue to rule the world. See China Market Rules the World on June 30th. Wednesday night, the Shanghai market surged over 2% and made a very impressive jump off the 50EMA showing signs of more gains coming in August.
Copper has also been surging and met coal prices remain steady so the commodity stocks such as Massey Energy (MEE), Alpha Natural Resources (ANR) and Freeport-McMoran (FCX) continue to be our favorite domestic stocks to play this theme.
At the end of my previous article (3 Chinese Growth Stocks in Value Territory), I asked readers if they would like me to cover a specific company mentioned in further detail. Suffice to say, there was a large audience that were curious about one company in particular: Universal Travel Group (UTA).
Universal Travel Group appears to be a bargain on the surface, however, its long-term future is dependent on things out of its control (or at least recently out of its control). Here's a quick look at what the company does and where its priced:
Two quick follow-ups pulled from the news, which reinforce the points I made yesterday, before moving on to the topic of structural reform in Chinese banks:
With markets making further inroads into the negative territory, the indices closed the day significantly in the red. The BSE Sensex lost in the region of 120 points today (down 0.7%) whereas NSE Nifty shed around 30 points (down 0.6%). BSE Midcap and Small cap indices also ended lower however the selling was not as intense as in their larger counterparts. The advance to decline ratio stood at 2:3 on the overall Sensex as 3 stocks declined for every two that gained. Among heavyweights, Reliance Industries proved to be the wrecker in chief as more than 60% of the decline in Sensex could be attributed to the energy major. While the company did post decent results, perhaps the expectations from the market were quite high given the heavy selling pressure the stock came under.
India was the only major Asian index that closed in the red today as all the others witnessed good amount of buying interest. Europe though is trading largely in the negative currently. The rupee was trading at Rs 46.7 to the dollar at the time of writing.