Not all China stocks are red hot. Some are just in red, but that doesn’t mean they cannot make profits for traders. China Architectural Engineering, Inc. (NASDAQ:CAEI) swung to a new 52-week low in the last trading session, aiming for the all-time price depths and providing a possibility for a bounce play.
Volumes were not impressive for the last few days, showing no conviction and thus giving even more hope to counter trend traders.
With drastically decreased revenues, due to the absence of international projects, the whole business has obviously lost a lot of value, and no serious cost cutting measures have yet been taken to protect CAEI from further loss. Future operations don’t look too promising as well – management is committing to domestic market in China and will have to grow revenues slowly.[BANNER]
The current trading price is below $1, which has raised the issue of possible Nasdaq delisting. This can be viewed as a good thing if you trust the company. A previously successful business with experienced management team is not going to get CAEI delisted because of minimum price noncompliance. But that is just a speculative theory.
If the company doesn’t take a path of reverse split or dilutive fund raising, it is around 30% to be gained on the current price if it goes up to the minimum requirement of $1 per share. This is a gamble, as the current financial situation is questionable. Cash resources were low in the last quarterly report and collection of receivables is unsure, as some amounts are already outstanding for more than a year.
