As a reader recently commented in another article., China 3C Group (CHCG), a retailer and wholesaler of a diverse range of electronics products, trades at a discount to its liquidation value. The company trades for $33 million, but has a cash balance and receivables of $25 million each, along with another $9 million of inventory, against total liabilities of just $5 million. Furthermore, the company has remained profitable through this downturn, and has likely added to its profits with the recent acquisition of a company that earned $2 million in its last fiscal year.
There are some signs, however, that all is not well with its business. Year-over-year sales were down 35% in the most recent quarter, and the company expects this quarter's sales to drop by over 40%. In addition to the economic malaise plaguing the industry, the company is having trouble with new competition: 3C has had to lower prices to remain competitive. Furthermore, the company has also had to extend its credit terms to customers. As a result, even though sequential quarterly sales were down 30+%, accounts receivable are actually higher now than they were last quarter - this is usually a bad sign!
Quelle + Volltext: forexhound.com/article/Stocks/Stocks/...g_Liquid_Assets/156434
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