“The Traveller” also lists three RedChip stocks in his portfolio of picks: LPH, LTUS, and ZSTN.  Interestingly enough, he uses some of RedChip’s past conference clients from several years ago to paint a misleading picture of RedChip’s performance.

Strangely, Traveller has a complete list of his “China Tracker-Covered Stocks” with scores representing his return predictions vs. the market. A score of 8 or higher indicates the belief that the stock should outperform the market or the Chinese Small-cap space. While he denigrates RedChip’s choice of stocks in the past, it appears that Traveler agrees with RedChip’s opinion about our clients and believes that they are viable investment opportunities, unless the scoring system displayed is misrepresented.

On that list, one can find 9 stocks  that are or have been RedChip clients, including (with China Tracker scores in parentheses): ALN (12); AMCF (12); BEST (9); CEU (12); CMDI (13); CTXIF (11); LLEN (9); and ZSTN (10). Traveller also lists several stocks that are under RedChip Research Independent Coverage: BFAR (7); CBEH (12); and NIV (8).

Unfortunately, the negative picture he paints is not an accurate one. Multiple high-performing stocks RedChip represents were disregarded, leaving readers to wonder why he does not list any of RedChip’s stars, which investors have made significant profits from investing in over the last two years. Traveller instead lists a handful of companies out of hundreds that have participated in RedChip conferences over the years, many of which RedChip did not represent in any long-term capacity.

This is not to say that RedChip has not conducted Investor Relations operations for companies whose stocks have ultimately suffered, which is the case with any rating agency, research publication or investor relations firm with a track record of any length. The point is that there is a plethora of stocks that have witnessed long-term success, which for some reason the author neglected to include in his list of past RedChip clients. The author points out apparent inaccuracies and deception on RedChip’s “Top Performer” list, when in fact it clearly states that the percentage gains displayed represent each individual stock’s peak appreciation while under RedChip coverage.

Moreover, one must question the integrity and the agenda of a blogger who fails to mention any of the dozens of stocks RedChip currently represents and has represented over the last two and a half years.  Plainly, the data is manipulated and inaccurate simply based on the fact that many companies with strong performances are omitted. Many of the companies that are overlooked have been clients of RedChip for 12-month terms or longer.

For example, he shows RedChip representing PUDA at $21.00 in 2006.  Actually, RedChip represented PUDA around $3.00 in 2006. We represented LPH at $0.25; LPH closed on Friday 2/11/11 at $2.49 and reached a new high of $3.95 in late November of 2010.  When DHRM became a RedChip client midway through 2010, the stock traded in the $3.50-$3.70 range; it reached $7.50 in November. When LLEN became a client the stock was trading in the $0.70-$0.90-range and reached a high of $14.75 in March of 2010. Today LLEN trades just under $8.00, still representing a huge upside from when RedChip initiated coverage. Here is a brief list which includes only RedChip’s China Stocks under coverage from when RedChip initiated coverage to the peak price appreciation under coverage:

CHGS:  $0.80- $4.35

CTXIF: $0.40-$1.99

CELM: $4.60-$9.88

CECX: $3.00-$5.06

BEST: $0.92-$1.69

The list of RedChip winners goes on and on.  Also check out:

DHRM, LLEN, LPH, LTUS, WKBT, CWS, AMCF, NIV

American Lorain is the leading producer and distributor of chestnut products in China. The worldwide chestnut market is an estimated $2.1 billion, and China accounts for approximately 60% of sales. With rising operation costs causing chestnut production to decline in South Korea and Japan, Chinese companies such as American Lorain are positioned to gain a larger share of the international chestnut market.

Lorain-branded products are carried by 4,980 retail stores across 26 provinces and administrative regions in China. Data collected on March 23, 2010 indicated that American Lorain added 1,312 stores to its retail network over the previous month, a 36.7% increase in a one-month period and an approximate 144% increase over the number of stores that carried Company products in the middle of 2009. Two agreements signed in the first quarter promise to expand the company’s reach even further. The Company signed an agreement in March with Jinluo Group to distribute Lorain Candied Bean and Bean Paste through Jinluo’s network of approximately 3,000 retail food stores in China. Also in March, 7-Eleven agreed to sell American Lorain’s ready-to-heat-and-eat “Lunch Box” products in 550 7-Eleven stores located in Guangzhou. American Lorain’s strategy of diversification appears to be paying off, as convenience foods sales were up 586% year-over-year in the first quarter of 2010, reaching $7.1 million.

In May, the Company announced that it had begun promoting sales of open-bottom frozen chestnuts at Lorain-branded retail food counters in 40 locations in Beijing and Chongqing, which it plans to expand to 70. The promotion, designed to counter the seasonality of chestnut sales, is expected to generate approximately $3.6 million in revenues for the fiscal year.

Based on current growth, the Company expects to meet its full year 2010 goal of having 5,000 stores selling American Lorain products sometime in the second quarter of 2010. The Company projects sales growth of 24.1% to 29.5% and net income growth of 23.6% to 31.9% for the year.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

4Q09 revenue was up 11% year-over-year to $62.9 million on growth driven by sales of Lorain(R)-branded convenient foods, which accounted for 26.2% of total revenues compared to 16.5% in 4Q08. 4Q09 EPS was $0.24.

In their earnings release, American Lorain also provided 2010 guidance: $182.0 to $190.0 million in revenues, or 24.1% to 29.5% organic growth for the year. The Company also provided net income guidance of $17.8 to $19.0 million, or 23.6% to 31.9% earnings growth year-over-year.

ALN is the largest producer and distributor of chestnuts in China. In addition to a variety of chestnut products, ALN develops, manufactures, and sells convenience foods, and frozen, canned and bulk food (FCB food). The company sells its food products through supermarket chains and wholesalers in China, Japan and South Korea and exports to more than 40 other countries. ALN has five state-of-art manufacturing facilities located at Junan, Luotian, Miyun and Dongguan with 21 production lines in total, capable of producing out between 10-50 products.

The company’s convenience food product line, which features ready-to-eat (RTE) and ready-to-cook (RTC) foods, generated revenues of $34.6 million, a 34.5% increase year-over-year.

ALN announced on March 30th that the total number of stores in China where Lorain(R)-branded products are sold reached 4,890–up 36.7% in a one-month period from the 3,578 retail stores reported in February 2010 and up from 2,000 stores in mid-2009. American Lorain plans to increase retail locations in 2010 into 8,000 locations. 

ALN’s has maintained its steady growth despite the economic slowdown. The company plans to leverage the gains in its retail footprint to continue expanding awareness of the Lorain brand and capitalizing on the burgeoning opportunities in the convenience food market.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

American Lorain is the largest manufacturer of processed chestnut products in China. The Company launched its chestnut business in 1995 and currently produces about 50 high value-added processed chestnut products. ALN’s food products are sold in 26 provinces and administrative regions in China, as well as in 42 countries.

Chestnut products are the Company’s highest margin products, but its sales are seasonal. In an effort to reduce the impact of seasonality on its operations, the Company has steadily increased production of frozen, canned and bulk foods, as well as convenience foods such as meals ready-to-eat. Non-chestnut foods are expected to contribute an increasing portion of ALN’s total sales as Chinese consumers shift consumption toward branded, modern food products.

American Lorain has enhanced its cooperation with supermarkets and restaurant chains to help boost domestic market share. ALN products have successfully entered 115 Wal-Marts, 84 Carrefours and 2,700 other markets and convenience stores. Additionally, a new agreement with two popular restaurant chains in China provides ALN with an opportunity to strengthen its domestic sales.

Company management projects sales and earnings gains of 25-30% in 2010 based on three compelling factors:

• ALN’s strategy of strengthening domestic sales channels through shifting sales to agents will provide a wider distribution for its food products with access to more supermarkets and convenience stores.
• New agreements with popular chain restaurants in China, such as KUNGFU Catering Management Co. and CSC Catering Management Co., will begin adding significant revenue in 2010.
• A nationwide marketing campaign, funded by a recent private placement transaction which raised $12 million, will boost sales, particularly in the convenience food segment.

Disclosure: American Lorain Corporation is a client of RedChip Companies, Inc.  RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Chairman and CEO Si Chen commented in their news release: 

“Moving from the OTC BB to NYSE Amex is a major milestone for American Lorain, as we strive to improve liquidity and transparency for our shareholders. Trading on NYSE Amex is also an important endorsement of the Company as a major player in the food processing industry in China and helps us build credibility with our customers worldwide.”

American Lorain Corporation, a leading processed foods company that sells chestnuts, convenience foods, and canned, frozen and bulk food products both domestically and internationally through its subsidiaries, is also gaining momentum with its marketing strategies and innovation based on marketing tests, particulary for  its convenience food products: Ready-to-Cook (RTC), Ready-to-Eat (RTE), and Meals Ready-to-Eat (MRE). This MRE product recently saw a boost to sales and product placement through ALN’s strategic alliance with leading convenience store chain, Beijing K.P.I. Hi-24 Convenience Stores Co., Ltd. 

ALN, who produces approximately 50 varieties of chestnut products including aerated open-bottom chestnuts and sweetheart chestnuts, is also attending the world’s largest food and trade show, Anuga, being held in Cologne, Germany, October 10th through 14th. Beijing Lorain, a Lorain Group Company, will be exhibiting at the trade show event, which attracts over 160,000 industry visitors and is considered by many to be the most important food and beverage trading hub.

Chestnuts:  A $2.1 billion market

It is estimated that chestnuts have been cultivated in China for at least 2,000 years. A versatile nut, the chestnut is the only nut to contain Vitamin C,  as well as significant protein and more fiber than an apple. The chestnut can be used to make flour for bread, or can be candied, boiled, steamed, grilled, roasted or fried (as fritters), or used as a stuffing for vegetables or poultry. As chestnuts are a seasonal product, ALN leases or owns a total of 23,700 metric tons of storage, and plans to expand capacity in 2009 by adding an additional 6,000 tons of storage. The market for chestnuts is currently estimated to be about $2.1 billion, worldwide. China accounts for approximately 60% of the world’s chestnut output.

With well-established domestic sales distribution channels that cover 26 provinces and administrative regions in China (including large supermarket chains and wholesalers) as well as international sales channels that reach 42 countries, ALN is poised for growth, particulaly as it moves to capitalize on higher-margin convenience foods.

The Company has $29.1 million in working capital (as of June 30, 2009) and is trading at 5x P/E (ttm) while its competitors trade at 10-12x P/E (ttm). ALN is also under strong leadership as Mr. Si Chen, the company’s founder, Chairman and CEO, is an expert in the food sector with over 20 years industry experience.

American Lorain is definitely a stock to watch.

Disclosure:  American Lorain Corp. is a client of RedChip Companies, Inc.  RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.