A Firsthand Look at China's Economic Recovery: 04-23-09

Robert Hsu, April 23, 2009

Dear Fellow Investor,

Greetings from China!

I've been traveling around China for the past week, visiting the great cities of Beijing and Shanghai. And today, I'm writing to you from Shenzhen.

My tour group consists of some China Strategy subscribers, and we've been doing a little boots-on-the-ground research over the past week. And what we've discovered has been truly eye opening for many of them.

That's because people just don't realize that the economic recovery is already happening in China -- unless they see it firsthand. I can talk until I'm blue in the face about the incredible things happening in China today, but I don't think my readers understood that China was unfazed and recovering quickly from the crisis until they saw it with their own eyes.

Over the past week, we observed the current state of the Chinese economy, and let me tell you, there's no doom and gloom here. Beijing and Shanghai, alike, are buzzing with economic activity.

Good restaurants are filled to the brim with patrons. Traffic on main roads is still congested. And shopping malls are crowded with shoppers.

In addition, we're seeing new roads, buildings and stores popping up all over the place. So, there's no denying that Chinese consumers are spending, and business owners are profiting.

All of which is presenting incredible investment opportunities to the savvy investor. Let me tell you about one right now.

Exciting Developments for E-House

While it's great to experience China's economic strength, I was even more excited for my China Strategy subscribers to visit a number of our recommended companies. That way they could see firsthand how these businesses are run, and why they continue to be profitable investments for us.

On the trip, we visited three of my favorite companies -- China's leading education services company, number-one medical device manufacturer and leading real estate services company. All three visits were highly informative, but I walked away from the real estate company extremely excited about its future.

Here's why:

As I said, E-House (NYSE: EJ) is the leading real estate services company in China, with a large scope of services, good brand recognition and a strong geographical presence. Sure, in the current financial and economic environment, the company was hit hard like everyone else. But since then, E-House shares have recovered nicely. The stock actually is up a whopping 143% since November 20!

What caused this drastic turnaround? The Chinese government's stimulus package. As part of the plan, banks in China have lent out $730 billion in the first quarter of 2009, allowing money to flow like water down a river. And a large portion of this money is flowing into the Chinese real estate industry.

On my visit to E-House yesterday, I wanted to find out how this money flow was affecting the company and what it meant for our investment in it. We met with Michelle Yuan, the director of investor relations for the company. In the three previous meetings with her, she was always honest and forthcoming about the good and bad news of the company. And this time was no different.

We learned four key things about E-House:

Higher Sales Volume—Real estate sales have picked up dramatically since the company's earnings call in March, with March sales up 100% from last year's level.
Fast-Growing Information Service/Consulting Business—The company's proprietary real estate database subscription and consulting business grew by an astounding 400% in 2008, with a 46% profit margin.
Higher Market Share & Pipeline—With E-House profiting from more sales, the company will continue to benefit greatly from developers lowering home prices to speed up sales.
Potential for Earnings Surprise—The Street is expecting only $0.09 for earnings per share in the second quarter, but according to Michelle and other E-House management, the company is on track to post 15 cents per share at the current business pace.

All of these findings were exactly what I was hoping to find on my visit to E-House. This company has a firm grasp on China's real estate industry, and sharply higher business, low analyst expectations and improving fundamentals–all this points to sharply higher prices for E-House shares.

That's why, in today's China Strategy weekly update, I recommended that my subscribers start purchasing E-House shares again. Now is a great time to take advantage of the company's low share price and to bet on much higher prices this year.

Don't Miss Out on this Incredible Opportunity!

Full details of my current visit to E-House as well as my exact buy advice are all included in today's China Strategy dispatch. Join China Strategy today, and don't miss a single piece of advice.

In addition, if you join China Strategy today, you'll also receive the names, complete buy advice and details on the other six companies we visited, including China's number-one medical device manufacturer and China's leading education services provider. Both have gained significantly in the past eight weeks–up 32% and 25%, respectively.

This is just the beginning to the profits that we'll experience this year as China's economy continues to recover. This is your chance to jump on this opportunity and begin profiting from China's recovery before Wall Street wises up to what's really happening in China. Plus, you're fully protected by my 100% money-back guarantee, so you have nothing to lose and a whole lot of profits to gain! So don't delay, get on board with China Strategy today!

Sincerely,

Robert Hsu