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Strategies & Market Trends : Greater China Stocks
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To: Elroy who wrote (7393)2/1/2011 4:26:55 PM
From: peter michaelson  Read Replies (4) of 8334
 
It is more than the issue of SG&A with CCME. I have always been skeptical of CCME, and several other China stocks, because I do not understand how such high profit margins are possible or sustainable.

CCME sports a 40% operating profit margin. Nothing complicated about the business, so in the world that I understand competitors should come into the market forcing the pricing down. The business should not be sustainable or expandable, yet I have been saying that for two years and they have grown like a wildfire.

Ditto other China stocks.

I am reading a book called Mr. China about the experiences of a guy who invested on the ground there in the 1990's. Highly recommended. What I have learned so far is that there is much to understand about China, primarily that we don't understand China.
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