The aircraft bound for Shanghai with 245 people on board took off last week apparently after being told to stay on the runway and then to abort take off at Osaka airport, the BBC reported.

According to Kyodo news agency, air traffic controllers instructed the aircraft’s pilots to halt on the runway instead the Airbus A330 took to the skies and further ignored instructions to abort.

Despite the misunderstanding the plane took off without incident and later landed safely in Shanghai.

Japan’s Transport Minister said that even though the aircraft had sufficient room from any other nearby aircraft, the pilot may have broken the country’s aviation rules and regulations.

An employee at China Civil Aviation Administration apparently told China Daily “We’ve written to our Japanese counterparts asking for materials to help us look into the case.”

On the airlines certified Sina Weibo page the Airline said it will “operate according to laws and regulations, and further regulate our flight crews English communications”, to guarantee flight safety.

Under the International Civil Aviation Organisation pilots and air traffic controllers have to meet a certain standard and understanding of the English language.

EastBridge Investment Group Corp (OTC:EBIG) assists Asian companies with the auditing, legal and investor relations processes to become public companies and achieve listings on U.S. stock exchanges, while also making valuable introductions to investment bankers and accredited investors. In exchange, they receive cash and equity fees that often amount to a 10 to 20 percent equity interest.

The company’s clients are involved in industries as diverse as education, energy and retail distribution, and all are experiencing rapid growth in China’s emerging economy. With a slowdown in the U.S., E.U. and other developed economies, demand for high growth Asian equities remains very strong. As a result, EastBridge offers investors a unique way to capitalize on Asia’s high growth equity markets.

By acquiring equity in these clients at pre-IPO multiples, EastBridge shareholders could see some significant capital gains down the road.

China’s Economy Rapidly Expanding

After overtaking Japan as the world’s second largest economy, China continues to drive forward with 10.3% expansion over the past year alone. Put into prospective, U.S. GDP growth over the same period is estimated to be just 3.2%, and that figure is still being revised lower following what some economists are predicting could become a double-dip recession.

While China still relies on exports to drive its economy, the world’s most populous country is also starting to look domestically for growth. Per capita income for its citizens grew from $350 in 1990 to more than $3,000 by the end of 2008. Assuming a similar growth rate, average national income could reach $8,500 by 2020 and $20,000 by 2030, which could lead to strong domestic consumer spending.

EastBridge Capitalizes on China’s Growth

Companies are the driving force behind growing economies and they require sufficient working capital in order to expand. Since China’s capital markets are just burgeoning, many companies look towards foreign capital markets for fundraising. And the United States stock markets currently represent the largest, most liquid, and most transparent source of capital in the world.

EastBridge Investment Group Corp. helps high-growth Chinese companies access these markets by listing their securities onto U.S. exchanges, forming joint ventures with U.S. companies, and/or accessing traditional merchant banking services. By collecting a 10 to 20 percent equity interest alongside cash fees, shareholders have a unique ability to participate in strong upside potential at pre-IPO valuations.

A Look into EastBridge’s Portfolio

As of August 13, 2010, EastBridge is helping eight clients with the auditing and legal processes involved in becoming a public company in the U.S. Its diverse portfolio of clients across multiple industries minimizes risk for investors while providing unparalleled exposure to one of the fastest growing economies in the world.

These clients include:

• Wonder International Education – A professional and vocational education provider to post junior high and high school students to improve their skills for higher paying jobs.
• Tsingda Education Company – A tutoring and education services provider to elementary, junior high and high school students in China.
• Jinkuizi Science and Technology Company – A manufacturer of environmentally safe fertilizers in China and Southeast Asia.
• Alpha Green Energy Company – A renewable biomass company focused on China’s agricultural industry as a source for raw input.
• Long Whole Enterprises, Ltd. – A precious metal mining company focused on properties in the Democratic Republic of Congo.
• AREM Pacific Corporation – A company that is undergoing a restructuring to enter a new line of business that is currently undisclosed.
• StrayArrow International Limited – A luxury lifestyle and hospitality company located in China.
• Heyuan Dafeng Animal Husbandry Company Limited – An integrated “Green Farming” business specializing in premium hogs, feeds and organic fertilizers production.

EastBridge Prepares to Unlock Value

While none of its clients have yet gone public, EastBridge is rapidly progressing to the point of unlocking value for its own shareholders. Once the clients go public, the company’s equity interests will be salable and shareholders will have a clear glimpse at the profitability and scalability of its business model.

As noted above, EastBridge is in the process of establishing an “Asian Pipeline” which will deliver high growth companies to the U.S. markets. Investors should review the stock now, ahead of any of its’ clients public offerings.

The New York Times today published a story titled “China Tightens Grip on Rare Minerals.” It is a little known, but increasingly important fact, that China produces “more than 93 percent of so-called rare earth elements,” and specifically more than 99 percent of two particular elements, dysprosium and terbium, that are key components in hybrid cars.

Despite increasing demand, China appears to be ready to tighten worldwide supply in a move to get manufacturers into China as well as ease the incredible environmental burden China has so far allowed its mining practices to take:

China’s Ministry of Industry and Information Technology has drafted a six-year plan for rare earth production and submitted it to the State Council, the equivalent of the cabinet, according to four mining industry officials who have discussed the plan with Chinese officials. A few, often contradictory, details of the plan have leaked out, but it appears to suggest tighter restrictions on exports, and strict curbs on environmentally damaging mines.

Beijing officials are forcing global manufacturers to move factories to China by limiting the availability of rare earths outside China. “Rare earth usage in China will be increasingly greater than exports,” said Zhang Peichen, the deputy director of the government-linked Baotou Rare Earth Research Institute.

The move to tighten control of rare earth metals, is also, according to some, born of sheer necessity:

“Sometime in 2011 to 2012, Chinese domestic demand will surpass Chinese domestic production,” says Jack Lifton, an analyst and consultant who specializes in what he calls the “technology metals” and advises mining industry clients developing rare earth projects in North America. “This means no more Chinese exports of rare earths, other than in finished goods made in China that they allow to be exported.”

A Toyota Prius requires between 2 and 4 pounds of rare earth metals for its electric motor – a requirement that may become increasingly difficult if not impossible to meet. Concern about a crippling shortage may seem overly dramatic, but the United Kingdom’s Times notes that about 20% of Japan’s imports of rare earth metals are already believed to enter through the black market because supply is so scarce.

The New York Times ran a frontpage article today titled “China Racing Ahead of U.S. in the Drive to Go Solar.”

The article’s takeaway is that despite President Obama’s ambition to make the United States “the world’s leading exporter of renewable energy,” China is actually walking the walk rather than just talking the talk:

“I don’t see Europe or the United States becoming major producers of solar products — they’ll be consumers,” said Thomas M. Zarrella, the chief executive of GT Solar International, a company in Merrimack, N.H., that sells specialized factory equipment to solar panel makers around the world.

Since March, Chinese governments at the national, provincial and even local level have been competing with one another to offer solar companies ever more generous subsidies, including free land, and cash for research and development. State-owned banks are flooding the industry with loans at considerably lower interest rates than available in Europe or the United States.

Tellingly, Chinese-based Suntech Power Holdings [[STP]] will become the second-largest supplier of photovoltaic (PV) cells in the world this year behind Arizona-based First Solar, Inc. [[FSLR]].

But there is a darkside to China’s impressive growth for those looking to capitalize on the rise of Chinese solar companies:

Chinese companies have already played a leading role in pushing down the price of solar panels by almost half over the last year.

Indeed, less than two years ago the average U.S. retail price of a 200-watt module was $1500 while now it is less than $650.

From an investment-perspective, the real story here is that, thanks in part to China’s aggressive strategy for growing its solar industry, the solar market is flooded with products for which there is no demand. Demand for solar panels is largely dependent on government subsidies because solar energy is still more expensive to produce than using fossil fuels or even wind power (even with the drop in the price of solar panels), and these government subsidies worldwide are being scaled back due to tax revenue concerns. The decrease in subsidies is only compounded by dampened demand due to the worldwide economic downturn. Basically, the economic downturn is a double-whammy for solar demand: it hurts demand the way a recession hurts demands for all kinds of products while also decreasing government revenue on which solar subsidies (and much solar demand) depend. Global demand for solar panels is expected to drop nearly 20% this year.

Even worse, this decrease in demand is being met not with a decrease or even flat supply, but with an increase in supply – total solar cell manufacturing capacity will be up more than 50% this year, and is projected to grow at an astonishing annual rate of about 50% for the next 5 years.

This sobering mismatch – increased supply and decreased demand – is taking its toll on Chinese solar companies’ stock prices over the last month:

• Suntech Power Holdings [[STP]] is down 29%.

• Trina Solar Ltd. [[TSL]] is down 16%.

• Yingli Green Energy Holdings [[YGE]] is down 29%.

• JA Solar Holdings [[JASO]] is down 29%.

• LDK Solar Co. [[LDK]] is down 25%.

• China Sunergy Co. [[CSUN]] is down 17%.

This terrible performance is during the same period that the S&P 500 gained 5%. American solar companies are not immune, given the global nature of the solar market:

• First Solar, Inc. [[FSLR]] is down 24%.

• Evergreen Solar, Inc. [[ESLR]] is down 27%.

Looking back 12-months leads to an even less flattering profile for most of these stocks, with many losses far greater than 50%.

The simple fact is the blood-letting is probably only going to continue. Save for First Solar and Trina Solar none of these companies are profitable – and with the very bad economics of the market right now there is no reason to think any of them are going to become profitable or get more profitable any time soon.

China Petroleum & Chemical Corp. [[SNP]] is down about 1% in midday trading yesterday after opening higher despite impressive mid-year results, fellow Chinese energy company PetroChina Co. [[PTR]] being up and the energy sector as a whole gaining. What is wrong with this picture?

China Petroleum & Chemical, better known as Sinopec, exceeded analysts’ expectations by more than 20%, posting about $4.9 billion in profit for the first six months of the year largely thanks to China’s easing of strict control of domestic fuel prices.

Unfortunately, China’s government has since lowered the price of petroleum and diesel – which is especially bad for Sinopec given that other operating revenue and income fell by 30% from a year ago. In other words, refining fuel for domestic use was the bright spot for Sinopec thanks to higher prices, but those prices are at the whim of the government, leaving concerns about the second half of 2009.

Sinopec is optimistic however: “Looking into the second half of this year, the state will continue applying proactive fiscal policy and relatively easy monetary policy…increasing domestic demand [for fuel].” Also, the company notes crude oil prices are expected to rise internationally in the second half of the year.

The market seems skeptical though.

Analysts are expecting earnings of $0.17 per share on revenues of $35.89 million, compared to earnings of $0.13 last quarter and sales of $30.66 million a year ago. Meanwhile, two analysts hold a BUY rating on the stock with a target price of around $10 per share.

As China’s leading manufacturer and distributor of automotive air brake valves, SORL Auto Parts, Inc. ranks first in market share in the segment for commercial vehicles weighing more than three tons, such as trucks and buses. The Company distributes products both within China and internationally under the SORL trademark. SORL ranks among the top 100 auto component suppliers in China, with a product range that includes 40 types of air brake valves and over 1000 different specifications.

AsiaInfo Holdings Inc. [[ASIA]] total revenues for the second quarter of 2009 were US$58.6 million, an increase of 39.3% year-over-year and 14.9% sequentially. The year-over-year and sequential increases were primarily driven by strong performance among all three major customers in the telecom business.

AsiaInfo recorded net income attributable to AsiaInfo Holdings, Inc. of US$7.2 million, or US$0.16 per basic share, compared to US$5.2 million, or US$0.12 per basic share, in the year-ago period and US$5.8 million, or US$0.13 per basic share in the previous quarter.

During the quarter, gross margin was 49.0%, compared to 45.0% in the year-ago period and 54.0% in the previous quarter. The year-over-year increase in gross margin was primarily due to a strong contribution from higher-margin software solutions and services and a decrease in lower-margin, third-party hardware sales, while the sequential decrease was largely due to increased share-based compensation expenses related to the performance stock unit awards granted to key employees on March 16, 2009.

China Security & Surveillance Technology, Inc. [[CSR]] is a manufacturer, distributer and servicer of surveillance and safety systems in China to both government and the private sector. The stock burst on to a lot of investors’ radar today with the company’s announcement of impressive results, but setting that aside for the moment, there is a lot to like about the company.

China Security & Surveillance By the Numbers

P/E: 15
Forward P/E (December 2010): 3.9
P/E-to-Growth Ratio (5-year): 0.14
Current Ratio: 2.6

Surveillance: A Growing Industry

It is probably not surprising that surveillance technology is a growth industry in China given its political regime.

China Security & Surveillance’s bread and butter is video surveillance, which is in high demand due to Chinese ordinances that require its installation in more than 650 Chinese cities. Also, the coming 2010 World’s Fair in Shanghai has China spending north of $6 billion on surveillance and safety equipment for the event.

The private sector in China also offers opportunities as video surveillance is becoming standard in places ranging from shopping centers to factories – and with unexpectedly high GDP growth in the most recent quarter, the global economic downturn is probably less relevant in China right now than any other country. On the earnings conference call today, the company noted:

“Our corporate sector has always been a strong performer. Our projects on the second quarter include banks, airports, gasoline stations, community centers, shopping malls, business centers and entertainment venues. Corporate revenues as a percentage of our total revenues totaled roughly 58% for the quarter.”

Impressive Second Quarter Results

Shares in the company jumped a giant 16.3% after China Security & Surveillance beats analysts’ EPS estimates by $0.01, as earnings came in at $0.39 per share, while revenues demolished expectations, rising 53% year-over-year to $141.9 million versus expectations of only $116 million. Even better, China Security and Surveillance also issued full-year guidance for EPS well above analysts’ expectations – $2.16 to $2.26.

A Stock Worth Watching with a Caveat

On the heels of a strong quarter and strong guidance, China Security & Surveillance is certainly worth watching. Its valuation relative to growth is fairly attractive right now – largely because the stock is down nearly 27%, even after today’s jump, over the past twelve months. Basically, the stock is still on sale right now.

A possible concern for the company’s future was mentioned in its conference call today:

“Gross margin for the second quarter was 21.9% as compared to 32.8% for the same period of 2008 due to a higher price competition in the corporate sector and lower margin from small scale projects. Gross margins for the installation segment, manufacturing segment, and distribution segment were approximately 21.5%, 27.8%, and 15.4% respectively compared to 34%, 35%, and 21.6% for the same period last year.”

Margins were maintained in the government sector, but with government contracts accounting for less than half of the company’s business, continued “price competition” could give future earnings’ estimates a real haircut. Hopefully, this is a temporary decline. On the conference call, the discussion of gross margins is closed with the company saying:

“Generally, we expect larger government contracts in our total revenue mix from third and fourth quarters. And as such, we anticipate the total gross margin will rebound in the second half of 2009. We are also confident that the gross margins can improve in each of our revenue segments in the second half of 2009.”

Government margins buoying the corporate sector margins is only a temporary solution, but if margins indeed improve in all revenue seconds in the third and fourth quarters of 2009, China Security & Surveillance shareholders could stand to profit handsomely.

New York-based China Labor Watch (CLW), has released a report on its investigation of Wal-Mart Stores, Inc. [[WMT]] Chinese supply chain’s labor practices.

The report notes that due to consumer scrutiny, Wal-Mart established corporate responsibility standards for its Chinese supply chain that are enforced through factory audits. However, CLW reports that factories exploit and cheat on their commitments.

CLW investigations from April to June 2009 of Walmart suppliers Huasheng Packaging Factory and Hantai Shoe Factory found alleged violations including:

• Some workers make only $0.51/hour, 60% of the minimum wage.
• Poor working conditions: workers inhale large amounts of paper particles and other debris.
• Twelve workers live together in cramped dorms.
• Workers not paid overtime wages.
• During busy season, workday is 11 hours or 77 hours per week, and overtime is mandatory.

Clearly these violations raise ethics concerns among many, but even callously setting aside such concerns (or arguing, as some do, that even if these allegations are true, the workers are still better-off than they otherwise would be) Wal-Mart should be concerned about continued attention to its labor practices given its history of mixed public relations management.

The company has made great strides recently overcoming villinization by union groups. It would be a serious business mistake to ignore the treatment of workers overseas and allow it to become a new cause that competitors, such as Target Corporation [[TGT]] – with its more friendly corporate facade, could exploit.

The exercise of the over-allotment option brings the total number of shares sold by China Green Agriculture in the follow-on offering to 4,025,000 and the aggregate net proceeds received by China Green Agriculture to approximately $27.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

The Company intends to use all of the net proceeds to expand its existing research and development through the construction of new green-house facilities. The Company estimates that these new facilities will require an aggregate investment of approximately $38.6 million over the course of two years. The Company anticipates using existing cash reserves, operating profits and bank loans to provide the difference between the total required investment of the new green-house facilities and the net proceeds from this offering.

AsiaInfo Holdings, Inc. [[ASIA]], a provider of telecom software security products in China, announced that it has signed a contract with China Unicom [[CHU]] to build out a the system that will allow China Unicom to remotely diagnose and manage mobile devices.

The size of the deal has not yet been disclosed.

From the press release:

‘‘As China’s telecom operators look for ways to compete more effectively in a 3G environment, improving the customer experience is a top priority,” said Mr. Steve Zhang, AsiaInfo’s president and chief executive officer. ”AsiaInfo’s device management system will improve China Unicom’s customer service efficiency by allowing the company’s support team to remotely carry out processes such as parameter resets, patch downloads and application installation. By enabling users to download firmware updates, software upgrades and applications over the air, the system will also help promote new services and applications. We are confident that our leading software will continue to reduce workload and the cost of customer service as well as play a leading role as carriers expand from 2G standard to 3G standard, which enables image, audio and video content.

The system can be used to configure mobile devices to match network parameters and settings, provide diagnostics and automated resolution and enable subscribers to install new applications over-the-air. By centralizing data pertaining to mobile device capabilities, the system can match mobile devices with appropriate content platforms such as WAP gateways, MMS centers, streaming media and others. China Unicom will also be able to gather, organize and analyze static and dynamic information from mobile devices, thus supporting the advanced decision-making and targeted marketing capabilities that are essential in a complicated and competitive 3G environment.”

Changzhou Asian Endergonic Electronic Technology Co. filed a lawsuit against numerous U.S. retailers, including Best Buy Co. [[BBY]], Wal-Mart Stores Inc. [[WMT]], Target Corp. [[TGT]], and Staples Inc. [[SPLS]] alleging infringement on its patented design on dashboard mounts for GPS units.

Changzhou claims that the retailers are selling products made by a competitor that violate its intellectual property rights. The company is also suing the Chinese manufacturer of the product that the U.S. retailers are stocking.

The case, the firt of its kind where a Chinese company has filed a suit in U.S. court over a patent developed in China, may mark a whatershed moment for China’s place on the international economic stage. Long recongized and the world’s most important up-and-coming player, China has still been seen only as a limited force in business: offering incredibly cheap manufacturing and a burgeoning consumer class to sell to but little else.

This suit may turn attention to the innovation happening in China while also spurring more of it.

Ubiquitous Internet giant Google Inc. [[GOOG]] announces it second quarter earnings Thursday, and with its stock price climbing nearly 4% over the last four days the market seems to be optimistic. The optimism is shared by analysts who expect sales growth of 4.3% year-over-year and earnings-per-share growth of nearly 10%.

More interesting for Google’s long-term prospects is not its earnings report but rather a “strange but true” story from more than a week ago – Google’s search engine and other services were briefly blocked nationwide in China for offering pornographic websites in its search results. Sex is taboo in China and most experts argue it was simply grandstanding by China’s regime, but more important than the particular logic of the temporary block was the rise in Baidu Inc. [[BIDU]], China’s largest search provider, shares.

The bump in Baidu’s prices was unjustified because the block was not permanent nor should it become a trend (which would be an obvious benefit to Baidu); counterintuitively, following the logic of there is no such thing as bad press, the blocking of Google – which was trumpeted on state-owned television in the country – actually led to an increase in Google China traffic once the ban was lifted.

Baidu is certainly the Chinese search engine to beat, commanding 64% of its search market compared to Google’s 30%, in other words the Google of China is Baidu. But Baidu is only a buy if its valuation is attractive and it can maintain is dominance against Google in China.

By the Numbers
Baidu:
Market capitalization $10.3 billion
P/E 65.61
Forward P/E 36.47
PEG (5-year) 1.44

Google:
Market capitalization $134.1 billion
P/E 31.06
Forward P/E 17.59
PEG (5-year) 1.08

Though a simplistic comparison, Google is more attractively priced than Baidu right now, even when accounting for projected growth over the next five years. Much of this is a reflection of the respective performance of Google and Baidu shares over the last 12 months: Baidu shares have managed to gain more than 2% while Google is down nearly 20%. Google has gotten cheaper.

Will Google Become the Google of China?
One of the fundamental reasons Google trails Baidu in China is Baidu simply has a better search product. As a Chinese-language search engine, Baidu.com is considered to be the leader with a more advanced algorithm that even allows users to search by phonetics – seemingly an arbitrary feature but actually quite important due to the difficulties of written Mandarin. This is an advantaged it is unlikely for Google to overcome any time soon – but surprisingly shifting demographics may make it unnecessary.

Google is the go-to search engine in China for English-language searches, given its expertise in that area, and unfortunately for Baidu the focus on English-language education in China combined with wealth of information in English on the Internet are driving the English-language search market in China to be a bigger slice of the pie. Worse for Baidu, the average Chinese user doing English-language searches is upper-class and urban – a superior profile from advertisers’ points of view.

Baidu also drives a substantial portion of its traffic from a music search services that allows users to search and easily download songs from third party websites – a feature with nothing comparable to it in Google. No longer, Google now offers music search in China – and its search allows direct downloads of free, licensed songs – improving on Baidu (yes, be jealous, in China you can download free, legal music from the libraries of companies like EMI Group, Warner Music, Sony and others).

Lastly, Google is now the exclusive search provider for the country’s largest wireless carrier, China Mobile [[CHL]]. Right now it is not a big deal, but with 488 million subscribers, more than the entire U.S. population and more than the total number of people currently accessing the Internet in China. When cellular users begin accessing the web through their phones – and they will eventually – Google may be handed market share on a silver platter.

Bottom-line
Certainly Baidu does plan on rolling-over for Google. Baidu is planning on releasing a peer-to-peer search, possible a very popular product in a country with almost non-existent copyright enforcement, and a rural encyclopedia which would contain thousands of entries geared towards China’s gigantic and largely untapped rural population that is increasing its Internet use by the day.

Nonetheless, Baidu seems to be on the defensive recently despite its large lead in market share. When Baidu’s CFO Jennifer Li’s commented late last month that Baidu is considering acquisitions because the “Internet is at an early stage of its development…and [Baidu needs] to stay ahead” – the cynical takeaway isn’t that Baidu is on the prowl but rather that the company thinks it can’t “stay ahead” through internal product development.

The simple fact is there are a lot of reasons to be optimistic on Google’s chances in this fight. This, combined with superior valuation, makes Google the buy right now, not Baidu.

China Life Insurance Company Ltd. [[LFC]], the largest life insurance provider in China, may have already risen more than 20 percent so far in 2009, but many investors remain bullish on the company. The Chinese life insurance industry is still growing steadily, while the company’s reasonable multiple and strong growth rates make it a compelling value in today’s market.

The life insurance industry is attractive to many investors, including Warren Buffett, thanks to its strong cash flow generation. In fact, net cash provided from operating activities at China Life Insurance amounted to $12.4 billion – or 63.9 percent of its net income. Recently, this cash has been used to purchase underperforming securities, but a turnaround could be on the way.

Meanwhile, more normalized interest rates going forward should help grow profitability at China Life Insurance. After all, interest rates affect returns on safe investment assets; declining rates expose them to reinvestment risks, while rising rates can generate unrealized capital losses for debt securities designated as trading. The earlier happens to be true in today’s environment.

China Life Insurance saw its revenues jump from $7.1 billion in 2004 to more than $43.6 billion in 2007, but fell to $19.4 billion in 2008. However, the company’s balance sheet remains robust with a current ratio of 1.21 with approximately $5 billion in cash and cash equivalents on its books. These levels suggest that the company will be able to weather the economic storm.

In the end, China Life Insurance faced a temporary setback thanks to the global economic crisis and lower interest rates in China. However, these problems should be solved as interest rates normalize and the economy recovers. Investors willing to wait out the storm may find this stock quite profitable over the long-term.

China Natural Gas, Inc. [[CHNG]], the first China-based natural gas company publicly traded in the U.S., may be trading at a premium to some of its U.S. peers, but it remains sharply undervalued given its growth rates and future prospects. In fact, a simple price-earnings to growth analysis suggests that the stock should be trading closer to $25 per share.

During the first quarter, China Natural Gas reported revenues that grew 31.9% to $14.96 million and net income that grew 49.6% to $4.2 million. Meanwhile, the company’s balance sheet is extremely robust with total assets of $123.18 million compared to just $5 million in liabilities. The company also reported cash of over $9 million, or $0.62 per share.

China Natural Gas’ true value lies in its cash flows from operations, which increased 78.1% to $6.23 million. After approximately $3 million in property and equipment expenses, this led to a $3.2 million net increase in cash and cash equivalents. Strong cash flows lead to increase cash on the books and negate the need to raise future funding from debt or especially equity.

Assuming no growth in earnings through the remainder of this year, China Natural Gas would be trading at approximately 3.5x projected earnings. And assuming growth rates of 10% going forward, this would equate to a price-earnings to growth ratio of under 0.4, which indicates that the stock is sharply undervalued. Based on this metric, a fair price would be closer to $25 per share.

In the end, China Natural Gas was only recently listed on the Nasdaq after moving up from the OTC-BB exchanges. As a result, many institutional investors have yet to discover this stock. Prudent investors may want to take a look at this stock if looking for a Chinese company that is profitable, growing and undervalued on a price-earnings to growth basis.

The automotive industry may not be popular in the United States, but China’s automotive industry is still growing strong. Behind the boom are parts suppliers like China Automotive Systems, Inc. [[CAAS]], which manufactures power steering systems and other component parts for automobiles through its majority owned subsidiary Great Genesis Holdings Limited.

China’s automotive industry has rapidly expanded since the year 2000. In 2008, 9.34 million motor vehicles were manufactured in China, surpassing the United States as the second largest automobile maker after Japan. Meanwhile, China is now the largest car market in the world given its growing population and increasing wealth as the country matures.

During the first quarter, sales increased 7.7% to $44.69 million, but net income fell by nearly half to $2.25 million. However, a closer look at the loss shows that the majority of the fall could be attributed to losses on derivative securities and financial expenses. Given that these derivatives are now marked to fair value, there could be some upside in future quarters.

During the second quarter, China Automotive Systems expects to earn $52 million in sales with earnings per share between $0.18 and $0.22. The company attributed the improved results to strong cash flows from operations and renewed contracts with several key customers. As a result, it appears that the first quarter’s dip was a one-time event that shouldn’t sway opinion.

However, China Automotive Systems’ real value is largely derived from the large amount of cash on its books. As of March 31, 2009, the company reported cash of over $45.42 million, or $1.68 per share, which represents over 30% of its market capitalization. Subtracting out this cash, the stock trades at a price-earnings multiple of just 9.7x compared to its current 14.41x.

In the end, China Automotive Systems is a strong company operating in an industry that isn’t getting much attention. Investors looking for a profitable and undervalued Chinese stock may want to take a look at this under-followed company that appears to be turning itself around after a rough first quarter, and could be poised for success down the road.

China Mobile Ltd. [[CHL]], a leading Chinese telecom provider, is trading with a price-earnings multiple of just 12.42x despite posting net income growth of approximately 29.5%. This compares to 16.4% growth at its closest U.S.-based competitor Verizon Communications [[VZ]], which trades at a higher price-earnings multiple of 13.74x.

Using the price-earnings to growth ratio (PEG ratio), China Mobile trades at just 0.42 compared to 0.83, which suggests that it could be dramatically undervalued. In fact, a market-standard PEG ratio of 1.0 would yield a stock price of more than double its current price of $50.22. And if it were to trade at Verizon’s PEG ratio, its share price would be around $98.91.

China’s economy is also expected to grow much faster than the U.S. economy over the next several years. The Organization for Economic Cooperation and Development raised its forecast for China’s economic growth to 7.7% amid its stimulus measures in place. Meanwhile, domestic spending is expected to ramp up heavily as the country becomes richer.

As in the United States, telecom growth in China will likely come from value-added services like data. Revenue from these businesses jumped 23.8%, from 2007 to $16.6 billion, at China Mobile and represents one of its fastest growing segments. Meanwhile, SMS and video remain two other key areas that will drive growth over the next several years.

In the end, China Mobile remains an undervalued growth play by many measures. The stock trades at a valuation below that of comparable U.S. corporations and has strong growth prospects with over 488 million subscribers and counting. As a result, U.S. investors in more traditional telecoms may want to take a look at this strong Chinese play to diversify their portfolio.

Changyou.com Limited [[CYOU]], a China-based online game developer and operator, is up nearly 90 percent from its initial public offering. However, shares continue to trade at just 7.14x with explosive historical growth rates and strong projection for the 2009. As a result, investors may want to take a second look at this young company as a strong play on China.

During the first quarter, Changyou.com reported net income of $33.5 million on total revenues of $61.6 million. This represented a 15% increase quarter-over-quarter and a 120% increase year-over-year, suggesting that this stock may be substantially undervalued at these levels. Meanwhile, active paying accounts also increased to 2.27 million – up 50% year-over-year.

“I’m pleased to have delivered another quarter of record results as we report for the first time as a standalone public company,” said Mr. Tao Wang, Changyou’s chief executive officer. “Online games, which provide low-cost entertainment, continue to be a very popular leisure time activity in China, even in an economic downturn, making the industry a strong defensive play.

“Our peak concurrent users and active paying accounts reached record highs during the quarter, demonstrating the efficacy of our strategy of focusing on the user experience. We continued to leverage synergies with our parent company Sohu.com Inc. (Sohu) and our expanded offline marketing efforts to reach gamers in new cities and increase our penetration in existing cities.

“With our strong execution capabilities, I’m confident that we can successfully extend the lifespan of our existing games and release new titles that capture the imagination and mindshare of China’s growing population of online gamers.”

In the end, Changyou.com trades with a conservative historical P/E to growth ratio of around 0.1 and a future ratio of 0.5. These numbers suggest that the stock is greatly undervalued at these levels given its potential growth rates, and may therefore represent a compelling opportunity for investors interested in adding a Chinese element to their portfolio.

Baidu, Inc. [[BIDU]] has replaced Google Inc. [[GOOG]] as the world’s most popular country-specific search engine, according to data from ComScore. Unfortunately, Google still operates in the richest country on earth, where advertisers are willing to pay top dollar to reach consumers. However, a crisis in America and continuing growth in China could eventually change that story.

According to the China Internet Network Information Center, internet penetration in China reached 22.6% with 298 million internet users and 279 million broadband users. The report also predicts that wireless Internet will also display a trend of explosive growth. Meanwhile, the commercial value of China’s market has more than doubled over the past year.

Baidu is also looking to enter some key growth areas, including e-commerce. Since over 40% of e-commerce purchases start with a search engine query, there is big opportunity in the country with the largest number of internet users in the world. In fact, more than 40,000 businesses signed up for the beta testing of their e-commerce platform.

In the end, China represents a quickly growing market in terms of both internet users and economic growth. Meanwhile, the country is slowly transitioning from an exporting economy to a domestic consumption economy. As this transition materializes, advertising will become a critical concern and Baidu may become the new Google.

Worldwide Energy’s Chief Executive Officer Jimmy Wang stated: “This order validates our solar market research and proves there is a good demand for ‘AmeriSolar’ panels in the United States. With our approved UL Mark and technologically advanced solar modules, we expect this will be the first of many orders for us in the U.S. market. Based on our market analysis, we expect to generate millions of dollars in sales in the U.S. this year.”

Worldwide’s mono and polycrystalline modules feature a two-bus bar cell design which maximizes the cell’s light-absorbing surface area giving the modules more consistent performance. Their solar modules also have a weather-resistant frame constructed of aluminum alloy for endurance in rugged weather conditions and are given a double oxidation coating for additional protection against the elements, providing for longer-lasting, more durable modules.

Worldwide currently sells its advanced solar modules under the brand name, “AmeriSolar,” in eight countries, including Germany, Italy, Switzerland, Portugal, France, Spain, Australia and South Korea.

“We continue to focus our sales and marketing efforts on increasing our customer base for our solar modules in Europe and other parts of the world, including North America. Our solar brand ‘AmeriSolar,’ continues to gain recognition and widespread acceptance in the market place,” added Mr. Wang.

About Worldwide Energy and Manufacturing USA, Inc.

Worldwide Energy and Manufacturing USA, Inc. (“Worldwide”), headquartered in South San Francisco, California, is a 15-year-old engineering-oriented firm specializing in photovoltaic (PV) panel, mechanical, electronics and fiber optic products manufacturing. The company’s worldwide customer base includes the industries of solar energy, wireless telecommunications, aerospace, automobiles and medical equipment. Subsidiaries include: Worldwide Energy and Manufacturing Ningbo (Solar factory) Co., Ltd, Shanghai Intech Electro Mechanical Products Co. Ltd., Shanghai Intech Electronics Manufacturing Co. Ltd., Shanghai Intech Precision Mechanical Products Manufacturing Co. Ltd. And Shanghai Intech Electric and Electronics Co., Ltd., located in Shanghai and Ningbo, China.

For further information on Worldwide Energy and Manufacturing USA, Inc., please visit http://www.wwmusa.com. You may register to receive Worldwide Energy and Manufacturing USA, Inc.’s future press releases or request to be added to the Company’s distribution list by contacting John Ballard.

Forward-looking statements:

The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as “anticipate,” “appear,” “believe,” “could,” “estimate,” “expect,” “hope,” “indicate,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “project,” “seek,” “should,” “will,” “would,” and other variations or negative expressions of these terms, including statements related to expected market trends and the Company’s performance, are all “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company’s expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.

From automobiles to real estate, China’s economic stimulus package appears to be improving many areas of its economy. While first quarter gross domestic product growth grew just 6.1%, the slowest in almost a decade, many analysts are decidedly bullish. In fact, the Shanghai stock market is up 35% so far this year, signaling a positive future outlook by investors.

One of the fastest growing industries in China, as in the Western world, is the internet sector. While China now has the world’s largest internet population, having taken over the U.S. for the title in early 2008, it still has a lot of ground to make up in terms of market maturity. Regardless, there is room for opportunity with online ad spending expected to reach $3.5 billion by 2012.

Sohu.com Inc. [[SOHU]], an online Chinese news and entertainment provider, has continued to succeed with first quarter net income more than doubling over the same period a year ago. The company was also able to effectively capitalize the value of its former subsidiary by spinning off ChangYou [[CYOU]] and retaining a 68.5% stake in its combined Class A and Class B shares.

Baidu Inc. [[BIDU]], the leading Chinese online search provider, has also seen strong growth with net income increasing by 23.5% from the corresponding period in 2008. Meanwhile, revenues jumped 41.1% and operating profit increased 34.7%. Many investors are confident that this performance will substantially increase upon any economic recovery in China.

In the end, these two Chinese internet companies continue to outperform and should be able to take advantage of the so-far-successful Chinese economic recovery.