A Chinese Train Transport Investment


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An eternal optimist, Liu-Yue built two social enterprises to help make the world a better place. Liu-Yue co-founded Oxstones Investment Club a searchable content platform and business tools for knowledge sharing and financial education. Oxstones.com also provides investors with direct access to U.S. commercial real estate opportunities and other alternative investments. In addition, Liu-Yue also co-founded Cute Brands a cause-oriented character brand management and brand licensing company that creates social awareness on global issues and societal challenges through character creations. Prior to his entrepreneurial endeavors, Liu-Yue worked as an Executive Associate at M&T Bank in the Structured Real Estate Finance Group where he worked with senior management on multiple bank-wide risk management projects. He also had a dual role as a commercial banker advising UHNWIs and family offices on investments, credit, and banking needs while focused on residential CRE, infrastructure development, and affordable housing projects. Prior to M&T, he held a number of positions in Latin American equities and bonds investment groups at SBC Warburg Dillon Read (Swiss Bank), OFFITBANK (the wealth management division of Wachovia Bank), and in small cap equities at Steinberg Priest Capital Management (family office). Liu-Yue has an MBA specializing in investment management and strategy from Georgetown University and a Bachelor of Science in Finance and Marketing from Stern School of Business at NYU. He also completed graduate studies in international management at the University of Oxford, Trinity College.

GSH, Guangshen Railway Co – CHINA, $20.15, 11/23/2010

By Liu-Yue (Louie) Lam, Co-Founder, CEO, Oxstone Capital Management,

One of my investment heroes is Warren Buffett.  I closely analyze his investment picks and the sectors that he decides to invest in as hunting grounds for finding Oxstones.  Lately, one of his favorite areas for investment is the transportation network, especially trains.   That gave me an idea to look for a comparable train investment in China.  Guangshen Railway Company provides passenger and freight transportation services along the heavily used Shenzhen-Guangzhou-Pingshi railway in China.  The company was founded in 1996 and is based in Shenzhen, China.

This is a nice Chinese infrastructure play.  If you believe in the continue China growth story, then this is a safe way to play it.  With rising inflation (4.4%) in China and the continue rise in oil/energy prices, train transportation will be an efficient means of mass transportation as well as an economical way for companies to transport goods.

Guangshen has a reasonable P/E at only 11.8x and currently trading at only 81% of book value – a nice discount.  GSH also has very little debt on its balance sheet.  It operates a very profitable business model with profit margins at 12%.  Quarterly revenues grew at 12.9% and quarterly earnings at 32%.  GSH also pays a nice 2.8% dividend while you wait for the market to recognize the real value in Guangshen Railway share price.  Current technical trends are positive and in its favor.

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