2 Undervalued Chinese Dividend Stocks – Cninsure and Sinopec

By Robert Hauver

We’re continuing our quest for international dividend stocks this week with 2 Chinese dividend paying stocks that all have low PEG/ high EPS growth forecasts, low debt, strong management metrics, and options trading available.  These 2 stocks trade in the US.

This group includes an oil & gas firm and an insurance company.  These two firms were added this week to our Covered Call Table and Cash Secured Puts Table.

Although CISG doesn’t have an impressive dividend yield, it does have very attractive option yields.  We added both CISG and SNP to our Covered Call Table this week.  Based on Friday’s prices, the annualized Jan. 2011 covered call yield for CISG is 23.99%, while Jan. 2011 SNP covered calls are yielding 17.5%.

We also added CISG and SNP to our Cash Secured Put Table, where CISG Jan 2011 put options are yielding over 24%, and SNP Jan 2011 puts are yielding over 12% annualized.

Dividend Schedules:

SNP pays semi-annually, in July (paid $1.61), and October

CISG paid an annual dividend of $.26 in June*

*Note: Many of the financial websites have incorrectly listed CISG as paying $1.04/year, with a 4.45% dividend yield.  The sites incorrectly multiplied CISG’s annual payment by 4.

Here are profiles for each firm, taken from their websites:

Cninsure (CISG): Distributes a wide variety of property and casualty insurance products and life insurance products underwritten by both domestic and foreign insurance companies operating in China, and offers insurance claims adjusting services, such as assessment, survey, authentication and loss estimation, as well as other insurance-related services to individuals and institutions. As an insurance intermediary, the Company is not exposed to any underwriting risks.

Over the past 11 years, CNinsure has established a distribution and service network across China, with 57 affiliated insurance intermediary companies operating in the PRC, of which 50 are insurance agencies, three are insurance brokerages and four are insurance adjusting companies. With 45,039 sales professionals, 1,421 claims adjustors and 554 sales and service outlets, its distribution network reaches 23 provinces, including some of China’s most economically developed regions and affluent cities in China, such as Beijing, Shanghai, Guangzhou and Shenzhen. (Source: Cninsure website)

Sinopec (SNP): One of the largest integrated energy and chemical companies in China, with integrated upstream, midstream and downstream operations, strong oil & petrochemical core businesses and a complete marketing network. SNP was incorporated on 25th February, 2000, and is China’s largest producer and supplier of refined oil products (including gasoline, diesel and jet fuel, etc.) and major petrochemical products (including synthetic resin, synthetic fiber monomers and polymers, synthetic fiber, synthetic rubber, chemical fertilizer and petrochemical intermediates). It is also China’s second largest crude oil producer.  (Source: Sinopec website)

Here’s how these 2 firms stack up vs. S&P 500 Valuation averages:

Here’s a comparison of Financial Metrics:

CISG’s Q1 2010 revenues grew 31% and their net income rose 58% vs. last year same period. They’re expecting 35% earnings growth for Q2 2010. They expect the next three to five

years to be the “golden period for the development of China’s insurance and financial services

industries, in the wake of China’s widening economic recovery, the rapid accumulation of

personal wealth by Chinese people and the PRC government’s stimulus incentives on domestic

consumption.” (Source: CISG website)

SNP’s Q1 2010 net profit rose 40% vs. a year ago. They also raised $2.9 billion in China’s biggest bond offering to date this year.

Disclosure: No positions at this time. (Note: We removed TPI from this article, due to their discontinuing their dividends).

Disclaimer: This article is written for informational purposes only.

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