Yonge International Inc. (Nasdaq: YONG) and Gulf Resources Inc. (Nasdaq: GFRE) are poised to report improving financials in the near-term.

Chinese chemical manufacturers are seeing an uptick in demand this year. China’s booming economy has led to surging industrial and agricultural activity, boosting the need for specialty chemicals. The Bedford Report examines the Chemical Manufacturing Industry and provides research reports on Yongye International, Inc. (NASDAQ: YONG) and Gulf Resources, Inc. (NASDAQ: GFRE). Access to the full company reports can be found at:

www.bedfordreport.com/YONG

www.bedfordreport.com/GFRE

Companies in the Chemical Manufacturing Industry provide a wide range of products for use in a variety of applications. After the recession battered many companies in the sector, several firms are focusing on reducing their product portfolio and improving their financials.

Gulf Resources manufactures and trades bromine, crude salt and specialty chemical products for manufacturing industries and in agriculture in China. Bromine prices are on the upswing this year. China is currently the world’s third largest bromine producer after the United States and Israel. The production of bromine is presently over 150,000 metric tons/year in China, but bromine demand continues to outpace supply.

The Bedford Report releases investment research on the Chemical Manufacturing Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.bedfordreport.com and get exclusive access to our numerous analyst reports and industry newsletters.

Yongye International produces and markets two lines of organic nutrient products: a liquid nutrient product which is sprayed on plants and a powder nutrient product which is added to animal feed. Shares of Yongye have been on the upswing following Morgan Stanley’s Asian private equity arm’s $50 million investment in the chemical manufacturer.

“We believe this transaction will not only provide us with the financial resources to expand our operations to meet the growing demand for our Shengmingsu agricultural nutrient products but also will further enhance our corporate governance,” Yongye’s Chairman and CEO Zishen Wu said in a statement.

The Bedford Report provides Market Research focused on equities that offer growth opportunities, value, and strong potential return. We strive to provide the most up-to-date market activities. We constantly create research reports and newsletters for our members. The Bedford Report has not been compensated by any of the above-mentioned publicly traded companies. The Bedford Report is compensated by other third party organizations for advertising services. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at http://www.bedfordreport.com/disclaimer

EastBridge Investment Group, Inc. (OTCBB: EBIG), a provider of financial services to emerging public companies in Asia, with clients similar to companies like Chinacast Education Corporation (Nasdaq: CAST) and China Education Alliance, Inc. (NYSE: CEU), has added several new clients in recent months and continues to progress towards its initial public offerings for Wonder and Tsingda Education.

EastBridge Investment Group, Inc. (OTCBB: EBIG), a provider of financial services to emerging public companies in Asia, has added several new clients in recent months and continues to progress towards its initial public offerings for Wonder and Tsingda Education. Combined, these two developments could generate significant value for shareholders over the coming years.

New Clients Bolster Future Pipeline

EastBridge has entered into numerous listing agreements over the past few months, which generate both short-term consulting revenues and long-term equity value. Earlier this month, the company entered into listing agreements with three new clients in Jiangsu Province, China. And last month, the firm entered into a consulting agreement with Cambrium Learning Group, from Dallas, Texas.

New clients Jiangsu Shengan Metal Products Co., Ltd., Jiangsu JinLi Copper Co., Ltd. and Jiangsu Huiyu Hardware Manufacturing Co., Ltd. are very established copper rods and tubes, brass faucets and hardware accessories manufacturers in China. Combined, these firms produce net income of approximately $5 million for 2010 and are growing at a steady pace.

Meanwhile, Cambrium Learning Group, a Nasdaq-listed company based in Dallas, Texas, is a great company with a rich suite of products for online applications. With many of its K-12 products capable of being adapted to students in China, the company is seeking joint ventures to drive their top and bottom line moving forward.

Existing Clients Progress Towards IPOs

EastBridge is also diligently working to complete the delayed IPO work for Tsingda and Wonder Education, which could unlock significant value for shareholders. Using a combination of SEC filings and reasonable estimates, these initial public offerings could be worth north of $35 million for the company’s shareholders over the coming years.

According to the S-1 filing with the SEC, the company owns 3,400,000 shares of Wonder Education that represents about 17.0% of its outstanding shares.  EastBridge has already distributed 899,875 dividend shares to its shareholders on a pro-rata basis as required by the S-1.  The initial public offering of Wonder could result in significant value being unlocked for shareholders.

Meanwhile, similar SEC filings also show that EastBridge owns 2,079,740 shares of Tsingda Education that represents about 6.2% of its total outstanding shares.  EastBridge will also distribute dividend shares to its shareholders for Tsingda on a pro-rata basis during the summer months.  EastBridge will assist both companies (Wonder and Tsingda) in creating a market price for its stock via the IPO process.

Conclusions

EastBridge Investment Group (OTCBB: EBIG) is on the tipping point of unlocking significant value, with several new clients added in recent months and steady progress being made towards the IPOs of Wonder and Tsingda Education.

I believe we’ll look back at Thursday as the Tipping Point for China Small Cap stocks. It’s happening a little faster than I thought it would, and that’s great for us believers who want to be opportunistic.

If you were following this tome during the February/March bloodbath, you will recall I predicted the demise of all things smaller and China if China Media Express (CCME) turned out to be fraudulent. While the jury is still out on that one, it’s obvious there’s Trouble in River City.

Post CCME any blogger who could publish a fabricated report could knock 40% off a stock overnight. You could see the shorts piling on in advance of the “to be released” Cyber Smear. The legitimate researchers made a fortune identifying the fraud, but there have clearly been some abuses on that side of the ledger.

The market assumed every China based small cap was fabricating all its numbers, and priced accordingly. I believe about 1/3 of the China small caps are publishing numbers with some level of inaccuracy, so there are still problems to deal with.

Here’s the chart of the stock that I believe is turning the tide:

China Biotics is looking like the hero we have needed. This stock has remained on my buy list through the blood bath as I had cautious faith. CHBT has rebounded beautifully, and has recaptured nearly all the loss from Feb/March.

On Thursday morning, Citron Research accused them of fabricating their numbers, and the stock swooned. I sold my position as I watched it drop, did some research, watched it trade, and bought it back.

Citron references a research report, complete with pictures and all sorts of accusations of fraud. This report had already been released in early March, and they were just bringing it back up.

I read the report, but then I looked a little further. No author claims to have written the report, and there’s a claim the report is associated with the China Economic Review.

So, I went to www.chinaeconomicreview.com, and found a rather robust web site that appears to be a very legitimate source of information.

Yet, when I searched the site using the words “China Biotics”, there were no search results. I also perused a few of the articles, and learned everyone one of them has an identified author.

If this wasn’t enough, the stock’s behavior told me all I wanted to know. On Thursday, the stock traded a whopping 1.742 million shares, dropped 20% briefly, then rebounded in a big way to close nearly where it started.

Friday in a down market, CHBT made a new 2 month high of $12, and appears to be right back on track to move even higher. If you had the courage, you could have bought this one at $8 less than a month ago.

Now, if you’re long, this looks great. However, if you’re short this stock, you do not like Thursday’s action one bit, and you might be moved to close out your short position as it’s not worth the risk of holding.

Thursday’s action in CHBT is, in my view, the likely Tipping Point for the short sellers in the China Small Cap space. The smear simply didn’t work.

I bought CHBT back a little higher than where I sold it. Traders use the term “Whipsawed” by the market, but I think I made the right move.

I still believe this one is going to $20. But, let’s move on to my new #1 China small cap pick for 2011:

For my #1 China small cap stock for 2011, sign up for a trial subscription by visiting www.emergingchinastocks.com.

Warmest Regards,

Larry Isen

EastBridge Investment Group Inc. (OTCBB: EBIG), a leading provider of diversified financial services designed to help emerging public companies list on U.S. exchanges, with clients similar to companies like China Automotive Systems Inc. (Nasdaq: CAAS) and Sorl Auto Parts Inc. (Nasdaq: SORL), could benefit from one of its clients’ exposure to China’s burgeoning automotive industry.

EastBridge Investment Group Inc. (OTCBB: EBIG), a leading provider of diversified financial services designed to help emerging public companies list on U.S. exchanges, could benefit from one of its clients’ exposure to China’s burgeoning automotive industry. As the largest automotive dealership in China’s southeast Delta region, Golden Eagle could see significant upside when listed on a U.S. exchange.

China Becomes the Largest Automotive Market in the World

The world automotive industry’s future doesn’t look too bright. Demand in the United States is only expected to rise marginally, while sales in Europe and Japan are expected to dip lower. However, China’s insatiable demand for cars and trucks will propel it to become the largest automotive market in the world, according to a recent article published in The Economist.

Source: The Economist – December 27, 2010

Overall, automobile production in China is expected to reach 16 million units by 2012, hitting a CAGR of around 17% between 2009 and 2012, according to RNCOS. Meanwhile, the country’s automotive aftermarket is also expected to rapidly grow. Analysts at Freedonia Group project that the industry will grow 18.3% annually through 2014, driven by its expanding and aging stock of light vehicles.

Golden Eagle is Poised to Capitalize on the Growth

Golden Eagle Auto Sales Company is one of the largest dealers for LiFan Automobiles in China. With a historical growth rate of more than 35% per year since its mass production seven years ago, the company is well-positioned to capitalize on China’s growing automotive industry. The company also provides aftermarket accessories to LiFan for distribution to other dealers in China.

In April of 2011, the company signed an agreement with EastBridge to ultimately list on a U.S. exchange. EastBridge will provide consulting services to prepare it for an SEC audit, help it obtain U.S. SEC approvals, and provide public relations and capital raising functions as well. With the additional capital raised through a public offering, Golden Eagle could see significantly higher growth rates ahead.

While few details of the agreement have not yet been released, EastBridge has traditionally received a combination of cash and equity for assisting clients in the IPO process. Once the clients successfully go public, EastBridge has then offered its own shareholders equity in the client through a share dividend, while keeping a significant stake of its own to build up its balance sheet.

Conclusions

In the end, investors may want to take a closer look at EastBridge Investment Group (OTCBB: EBIG) given its stake in Golden Eagle – a premier play on China’s rapidly growing automotive industry. Combined with its other plays in the country’s education, entertainment and energy industries, investors could realize significant upside potential over the long-term.