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10 China Stocks With Upside: Analysts

Karvy Global
02/15/11 - 12:15 PM EST

NEW YORK (TheStreet) -- ChinaCast Education (CAST), Solarfun Power Holdings(SOLF), CNinsure Inc(CISG), Home
Inns & Hotels Management (HMIN), JA Solar Holdings(JASO), Zhongpin(HOGS), Longtop(LFT), Trina Solar(TSL),
Ctrip.com International(CTRP) LDK Solar(LDK) have upsides in the range of 20%-73%, based on analysts' consensus
estimates of 12-month price targets.

Last week, for the third time in the last four months, the People's Bank of China raised key policy rates. It increased one-year
deposit and lending rates by 25 basis points each, taking the rates to 3% and 6.06%, respectively. These are part of the central
bank's efforts to combat spiraling inflation. Analysts believe that the present rate hike was not unexpected, and expect further
rate hikes over the next six months.

Even though the present rate hike did not spook the market, it does not take away the fact that Chinese stocks underperformed
its developed market peers. The Shanghai Stock Exchange lost 7% in the last one year, while Dow Jones Industrial Average
and FTSE 100 surged 15-16% in the same period.

We have identified 10 Chinese stocks that investors can consider for long-term. The selected stocks have potential to deliver 20%
to 73% returns over the next one year with an average analyst buy ratings of 69%.

10. LDK Solar(LDK) is a

leading manufacturer of
multi-crystalline solar
wafers and PV products.

Net revenue for 2010

third quarter was $676
million, compared to
$282 million for the third
quarter of fiscal 2009.
Gross profit increased to
$150 million, compared
to $56.8 million for the
third quarter of fiscal
2009.

Gross margin for the third quarter came in at 22.2%, compared to 18% in the previous quarter and 20.1% in fiscal 2009 third
quarter. Operating margin stood at 17.7%, compared to 13.2% in the third quarter of fiscal 2009.

Net income for 2010 third quarter was reported at $93.4 million, compared to $29.4 million for the third quarter of fiscal 2009.

The company's CEO, Xiaofeng Peng said in a press statement, "We are benefiting from our diversification strategy as we see
increasing contributions from our poly-silicon, module and cell businesses. As we gain further traction in these areas, we expect
to experience enhanced top line and earnings growth."

9. Ctrip.com
International(CTRP) is
China's leading travel

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service provider for hotel

accommodation, airline
tickets and tour
manager.

Net revenue for 2010

third quarter grew 49%
year-over-year, while
net income rose 70%
year-over-year,
compared to the same
period, last year.

Gross margin was up marginally to 78% for the third quarter, compared to 77% in the year-ago quarter. Operating margin
stood at 38%, rising 1% from the earlier year period.

For 2010 fourth quarter, the company expects to continue net revenue growth of around 30%-35%. Among the 20 analysts
covering Ctrip.com stock, 65% maintain a buy-rating. The stock increased 30% during the last one year and is likely to gain
around 27% over the next one year, according to analysts polled by Bloomberg. Currently, the stock is trading at 27 times its
estimated 2011 earnings.

8. Trina Solar(TSL) is a
China-based
manufacturer of solar
power products. The
company has global
distribution panning
Europe, Asia and North
America.

During 2010 third

quarter, net revenue
surged over 100%
year-over-year to $510
million. Solar module
shipments stood at
291MW for the quarter, surpassing the company's guidance of 250-260MW and jumping 130% year-on-year. Lower interest
costs and foreign currency exchange losses boosted net income to more than double to $83 million during the September
quarter, compared to the same period last year.

Following the cutback in silicon costs and non-silicon manufacturing expenses, gross margins expanded 300 basis points to
31.4%, compared to the same period last year.

Until August, the company's PV cell and module capacities stood at around 950MW. The company expects to touch a production
target of 1.1GW by 2010 end. The stock is trading at 7.4 times its estimated 2011 earnings.

7. Longtop(LFT) is a
leading software
development and
solutions provider,
targeting the rapidly
growing financial
services industry in
China.

During the third

quarter, total revenue
increased 40%
year-over-year to $77
million. Net income rose
40% in the third
quarter. Besides, the company's performance during the nine months has been respectable. Weizhou Lian, CEO of Longtop,
commented, "The momentum has accelerated during fiscal 2011 with our organic growth rate for software development revenue
of approximately 40% in the first nine months significantly higher than the 30% guidance we gave at the outset of the year
while maintaining a relatively stable organic operating margin." For the first nine months of 2010, cash flows from operations
were up 50% year-over-year.

The stock gained 9% in the last one year, and is likely to advance 31% over the next one year, according to analysts surveyed

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by Bloomberg. The scrip is trading at 16.5 times its estimated 2011 earnings.

6. Zhongpin(HOGS) is
a China-based meat and
food processing
company.

During the September

quarter, the company
launched operations at a
pre-cooling facility and
expansion of its Anyang
plant. The capacity
addition has increased
processed meat
production by 35% to
85,000 metric tonnes
(MT).

Net revenue rose 24% year-over-year during the September quarter to $240 million, while net income grew 11% to $14.7
million.

After the third-quarter results, the management maintained its earlier guidance for 2010. Warren Wang, Zhongpin's CFO, said,
"For 2010, we continue to believe that Zhongpin's sales revenue should be within a range of $900 million to $940 million, with
gross profit within the range of $106 million to $115 million and net income within the range of $52 million to $57 million."

The company's Jilin Province facility with production capacity of 70,000 MT will receive $61 million in investment and completion
is scheduled for end-2012.

The stock is trading at 9.3 times its estimated 2011 earnings.

5. JA Solar
Holdings(JASO) is one
the largest
manufacturers of solar
cells and solar products
in China. The company
has a diversified global
customer base with 53%
customers being
international.

JASO registered a fifth

consecutive quarter of
record shipments.
During September,
shipments were up 34% to 418MW, compared to an initial guidance of 375MW. Revenues were up 52% year-on-year to $541
million.

After the company achieved the 1 gigawatt (GW) shipment milestone, Dr. Peng Fang, the company's CEO said, "JA Solar has
achieved the 1GW shipment milestone in the first three quarters of 2010 and will strive to meet the global demand for clean
energy in the future." The company increased its annual cell manufacturing capacity to 1.8GW at the end of September and
reached 1.9GW of solar cell capacity, ahead of its capacity expansion schedule.

Based on strong demand, the management expects shipments to surpass 1.45GW in 2011, pegging the December quarter
shipments at 450MW. Analysts' estimates indicate a potential upside of 45% over the next one year.

4. Home Inns &

Hotels
Management(HMIN) is
a leading economy hotel
chain in China.

Total revenue for 2010

third quarter rose 21%
year-over-year to $131.5
million. The hotel chain
opened 55 new hotels,

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including 15 new
leased-and-operated
hotels and 40 new
franchised-and-managed hotels during the third quarter. Occupancy rate for the company's hotels was 96.7% during the third
quarter, compared with 97% in the same period in 2009 and 96.4% in the previous quarter.

Further, David Sun, Home Inns' CEO, adds, "We are on track to open 65 to 70 leased-and-operated hotels and 130 to 135
franchise-and-managed hotels in 2010. Further, we are accelerating our development pace and targeting to open no less than
250 new hotels in 2011. While we open our 1,000th hotel in 2011, we will also add 3 to 4 midscale hotels under the "Yitel" brand,
our newly launched midscale market product." The stock is currently trading at 23.3 times its estimated 2011 earnings and
analysts expect 48% return in the next one year.

3. CNinsure Inc(CISG)
is China's leading
independent insurance
intermediary company.

For 2010 third quarter,

net revenue increased
30% year-over-year,
while net income
increased 43% during
the same period last
year.

Commenting on the
financial results, Yinan
Hu, the company's chairman and CEO, stated, "Robust growth of our three existing business lines continued into the third
quarter with the life insurance business and claims adjusting business growing 109.1% and 34.3% year-over-year, respectively.
The overall commission rate from the property and casualty insurance business increased over the previous quarter, which led to
a year-over-year growth of 6.7% in our property and casualty insurance business in the third quarter as compared to
year-over-year decline of that in the second quarter. We believe there is still room for further improvement in our property and
casualty insurance commission rate."

Analysts expect the stock to deliver 56% gains over the next one year.

2. Solarfun Power
Holdings(SOLF) is a
vertically integrated
manufacturer of silicon
ingots, photovoltaic (PV)
cells and PV modules in
China. The company
also provides PV cell
processing and module
processing services.

Total net revenue for

the third quarter
increased 120%
year-over-year to $326.7
million, attributable to higher shipments and improved average selling price, reflecting strong market demand.

PV module shipments, including module processing services, reached 224MW from 103MW in the third quarter of 2009. While
average selling prices, excluding module processing services, declined 15.5% compared to 2009 third quarter.

Gross margin expanded 200 basis points year-over-year to 22.7%. Operating margin improved 4.8% year-over-year to 17.9% in
the third quarter. Net income increased 300% year-over-year during the third quarter. The stock delivered 17% gains in the last
one year, and analysts foresee a further upside of 57% over the next one year.

1. ChinaCast
Education(CAST) is a
China-based
post-secondary and
e-learning services
provider.

ChinaCast observed

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robust student
enrollments in the third
quarter, Ron Chan,
chairman and CEO said
in a press statement,
"During the third
quarter we completed the purchase of Hubei Industrial University Business College, which expands our on-campus enrollments
by approximately 10,000 students. We are now providing accredited degree programs to approximately 32,700 traditional
university students and 143,000 e-learning students throughout China."

Net revenue for the three-month and nine-month period ended September 2010 amounted to $18.7 million and $51.4 million,
increasing 52% and 47% over the corresponding periods in 2009, respectively. The increase is attributable to revenue
consolidation following the acquisition of East Achieve and Wintown in 2010. Net income grew 59% during 2010 third quarter.

Gross profit margin stood at 49% and 52%, respectively for three months and nine months ended September 2010, respectively.

Analysts expect the stock to deliver 73% within a year. The stock is currently trading at 12 times its estimated 2011 earnings.

>To see these stocks in action, visit the 10 China Stocks With Upside portfolio on Stockpickr.

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