HMIN looked cheap these days, should we jump in and buy it? I have both MR and HMIN, and as a matter of fact, I bought some more HMIN after its disappointing earning report. My mistake. You may think because HMIN has been to $49, and now it’s trading $29.50, isn’t a big discount? Yes or No. I hope HMIN won’t go much lower because it is my largest holding now (I’m looking for opportunities to exit).

I based “buy or sell” decision solely on fundamentals. The problem with HMIN is its fundamental is not getting better. As I said in my previous post, cost went up, room rate is flat, and occupancy rate went down because hotels opening in 2nd tier cities. Although the revenue grew 65%, the profit did not. Since stock is about future, we should ask quetion whether any of those are going to change? I doubt it. The real estate in 2nd tier cities are going up, so as the labor cost, on the other hand, you can not charge customer more because they will go to competitors.

On the other hand, MR grew revenue about 35%, but its profit and earning grew much more. This means their profit margin improved, a very good thing. Looking forward, the China domestic market should stablize after last year’s “crack down” policy, because the hospitals will purchase or lease the medical devices every year; the US market is taking off. They also are expanding in R&D which will help the future growth.

Note HMIN and MR are trading at PE of 184 and 52, respectively.