This morning I spent the proceeds from the sale of my shares in Hutchison Whampoa (13) on shares in China Zhongwang (1333), paying an average of $7.22 per share.
China Zhongwang was listed earlier this year. It's business is the development, manufacture and distribution of aluminium products. It's products have a number of uses - transportation and infrastructure being the main ones but also industrial machinery. As such the company is a proxy for both government spending on infrastructure and car manufacturing.
The latest interim report showed a clean balance sheet with cash on hand exceeding the aggregate of long and short term liabilities. It is audited by a big four audit firm.
The company's share price suffered a set back when a local publication alleged that the company's prospectus contained a misrepresentation (falling from a high of $11.30 to a low of $6.51). The person making the allegation has since retracted. The company has also appointed an independent firm (Ernst & Young) to review the basis of the allegation and report to shareholders. That report is outstanding.
Brokers have mixed views on the stock. Morgan Stanley has an overweight rating with a price target of $12.39 which leave considerable scope for further upside once investor confidence returns. Morgan Stanley was not one of the joint global co-ordinators in the IPO.