On December 4 2007 I wrote a piece called Roll with Landstar, Short CHRW, saying:

“Based solely on sales or operating margins, Landstar (LSTR - Annual Report) is about 35% the size of CH Robinson (CHRW - Annual Report). If it had the same relative valuation, it would trade at $52 per share.

CH Robinson’s forward price-to-earnings multiple is 24.6, compared with 19.3 for Landstar. At 24.6 times estimated 2008 earnings, Landstar would be trading north of $54. Assigning CHRW’s 1.67 PEG ratio (P/E ratio related to its growth rate) to Landstar would give it a $49 value.

CH Robinson has a lofty 16.1 times EV/EBITDA ratio. If Landstar got that multiple, its stock would be $60.”

The day I wrote the article, Landstar closed at $43.02 and CH Robinson was $53.03. Today, they are in a dead heat price-wise, with LSTR at $55.59 and CH Robinson at

After amazing growth in 2007 Chinese stock market has been among the biggest decliners in 2008. Chinese index SSE Composite is down around 50% since the beginning of the year.

Based on P/E valuation China seems to be cheap. P/E ratio has gone down from threatening 50 (a year ago) to current 20. Average earnings growth for Chinese companies remains strong and is on average 30%. Quotient of P/E and earnings makes interesting valuation (PEG ratio is 0,67).

Chinese economy isn’t so much dependent on export as others. Share of export on total GDP is only 38%. It makes relatively safe peer in case of global slowdown.

Next factor is Chinese currency which is undervalued against USD and in future we can expect more and more tension for bigger liberalization.

The point to be considered are interest rates. Endless rates hiking doesn’t pull rates for deposits which are artificially kept low. That’s why there …