Background

One of the PRC-based companies listed on our exchange has done quite well in the past few weeks. That stock is Xingquan International Sports Holdings Ltd ('Xinquan'), which is involved in the manufacture of shoe soles; outdoor & indoor sports & leisure shoes; outdoor & indoor sports & leisure apparels & accessories. I had posted on Xinquan earlier. Go here.


Chart 1: Xinquan's daily chart as at July 14, 2010 (Source: Quickchart)

Another PRC-based company which seems to be attracting some attention lately is XIDELANG Holdings Ltd ('XDL'). XDL is involved in the design, manufacture, and marketing of sports shoes, sports apparel, accessories, and equipment. It reported an EPS of 4.5 sen for QE31/3/2010. Based on this, XDL's annualized EPS is about 18 sen. XDL, which closed at RM0.43, is now trading at a PER of only 2.4 times.


Table: XDL's last 3 quarters' financial results

Yesterday XDL broke above its strong horizontal resistance at RM0.40-41. This bullish breakout could be the start of an upleg for the stock. Its immediate resistance is at RM0.49-50, while its immediate support is at RM0.40-41.


Chart 2: XDL's daily chart as at July 14, 2010 (Source: Quickchart)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, XDL could be a good stock for medium-term investment.
(Warning: Despite the above positive comments, we must be cautious taking long position in PRC stocks due to the high incidence of accounting irregularities.)

Note: There is one more PRC company that did very well in the past 4 weeks and that company is K-Star Sports Limited ('KStar'), which is also involved in the design, manufacture, and distribution of sports footwear under the Dixing and K-Star brand names in the People?s Republic of China (PRC). KStar rose from an intra-day low of RM1.81 on June 16 to an intra-day high of RM2.62 yesterday.