Zhejiang Goldensea Hi-Tech Co (SHSE:603311) Predictability Rank

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What is Zhejiang Goldensea Hi-Tech Co Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Zhejiang Goldensea Hi-Tech Co Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

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Zhejiang Goldensea Hi-Tech Co (SHSE:603311) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Zhejiang Goldensea Hi-Tech Co Ltd (SHSE:603311) » Definitions » Predictability Rank

Traded in Other Exchanges

N/A

Address

No. 899 fly Chau International Building, 16th Floor, Block A, Lingling Road, Xuhui District, Shanghai, CHN

Website

http://www.goldensea.cn

Zhejiang Goldensea Environment Technology Co Ltd is a manufacturer of environmental protection filtration materials. Its products are environmentally friendly filtration new materials, filter screens, air purification filters, air filters for cars/trains/aviation/ships, air total heat exchangers, vacuum cleaners/ventilation fan filters, crossflow/axial flow/centrifugal fans. It has established sales networks in Sichuan, Shandong, Jiangsu, and Korea, Hong Kong, the United States, Malaysia, Israel, the United Kingdom, Belgium, and the Czech Republic.

Executives

Han Yi Gang	Supervisors
Zhang Shu Lan	Director
Yang Jie	senior management
Ding Bo Ying	Director
Liu Chao Jun	Director
Guo Qiu Yan	Supervisors
Chen Xue Fen	Supervisors
Ding Yi Ke	Director
Hong Xian Liang	senior management
Lu Jia	Director
Ding Hong Guang	Director
Yu Yue Wen	Director
Jin Min Qiang	Director

Zhejiang Goldensea Hi-Tech Co (SHSE:603311) Headlines

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