THE DOW HAS DROPPED 581 POINT SINCE JULY 21ST BECAUSE OF OUR ENDLESS APPETITE TO SPEND & FADING ECONOMIC BAROMETERS

THE OILS HAVE HELD UP EXTREMELY WELL AND WE CONTINUE TO FAVOR THE GROUP.
CHINA STOCKS HAVE BEEN HAMMERED RECENTLY AND IN OUR OPINION DESERVE SOME EXPOSURE.

AS YOU KNOW WE AT WWW.SAADVISORY.COM THRIVE WHEN GLOOM AND DOOM IS EVERYWHERE. THE PESSIMISTIC CLOUDS CREATE OPPORTUNITY FOR THE NIBBLE.

Many of the listed Chinese stocks have been slaughtered recently because of questionable financial reporting by SOME! The brush paints an unfair picture because this area of growth cannot be matched anywhere else in the world today. For a "smart" investor it is hard to avoid when most if not all of the risk has been twisted and rung out with little risk droplets left!

With a potential debt ceiling breach on August 2nd of 2011 and a credit rating reduction because Washington cannot stop spending~ we have decided to look at China opportunities.

We do believe that sooner or later that some sort of compromise will be struck, but not sure that even that will stop a credit rating drop! With such anemic growth, high jobless rate (9.2%), looming new taxes ( Obamacare starts to kick in Jan 1 2013), limited incentive for business to hire and a business community, whether Main Street or Wall Street, that out of real spite will not change their direction until Obama is removed from office.

As you know, Jeffrey Immelt is the Chairman & CEO of GE and the "job czar" within the Obama Administration. Our supreme leader Obama wants us to share more, pay more taxes and put more Americans to work! Mr. Immelt recently announced the moving of the headquarters of its X-ray business from Wisconsin to Beijing, China. GE also intends to invest $2 billion in China. Mr Immelt is currently employing 36,000 more people abroad than are in the US and has cut 34,000 American jobs since become CEO. Finally, GE paid no taxes during 2010- $14.2 Billion in worldwide profits including more than $5 billion from US operations!

DOWN RIGHT SCANDALOUS !

Do you get the picture?

If I was a business I might do the same thing because under the current administration there is little incentive to create jobs in America. I don't actually fault Immelt for "skirting" taxes and moving divisions, but fault him & Obama for hypocrisy!!

*3 CHINESE OPPORTUNITIES*

China Gerui Advanced Materials Group, ltd. (CHOP~$4.06)

website: www.geruigroup.com

52 Week range- $2.82-$6.46

The company produces high-end precision, ultra thin, high strength, cold-rolled steel. The company sells its products to domestic Chinese customers in a diverse range of industries, including the food packaging, telecommunication, electrical appliance and construction material industries.

Revenue estimates for 2011- $331 million and net income/sh $1.10

Revenue estimates for 2012- $411 million and net income/sh $1.42

First Q 2011- $62.7 vs $61.8 million

.08 net vs .20--(1Q 2011 had an non-cash warrant expense of .20)- reality .28 vs .20

End of March 31st 2011- total unrestricted cash of $210 million and total restricted cash of $83 million- total cash $293 million

According to 1Q balance sheet- $240 million in equity and 49 million fully diluted shares outstanding--$4.90 stated book value

Revenue growth around 30%- $411 million (2012 est.), $311 million (2011 est) and $254 million ( 2010 actual).

June 21st- Management announces $10 million dollar share buyback program.

Management anticipates increased capacity during second half.

New production- 2 cold-rolled, wide-strip production lines with 150k tons of total capacity starting June 2011 and 1 new chromium plating line capable of 200k tons. The 3rd phase- cold-rolled wide strip steel production line with 100k capacity by the end of 2011.

At present CHOP has 200 domestic Chinese customers which yields a 12.5% market share for specialty steel.

During early August CHOP will be attending 2 financial conferences~ Canaccord & Jefferies (Aug 9-11, 2011)~ earning due August 29th 2011.

Overview: CHOP is trading @ 3.7X PE est. for 2011, trading @ a 21% discount for stated bk, PSR of .59, growth rate 30%,$6.00 in total cash/sh, $10 million buyback program and trading near 52 week low~~~ALL FOR $4.06! LOOKS VERY CHEAP & SHOULD BE BOUGHT AT CURRENT LEVELS FOR VERY ATTRACTIVE SHORT AND LONG TERM CAPITAL APPRECIATION POTENTIAL WITH VERY LIMITED DOWNSIDE RISK. OUR 9-12 MONTH PRICE TARGET OF $10.00 SHOULD BE A NO-BRAINER & COULD EVEN BE A TAKEOVER CANDIDATE.

SINOTECH ENERGY LIMITED- CTE-$4.05
The company is a provider of enhanced oil recovery services in China. The company provides innovative EOR services to major oil companies in China using leading technologies, including certain patented lateral hydraulic drilling technologies which the Company has exclusive rights to use in China.

website:http://ir.sinotechenergy.com

60 million shares outstanding

book value- $3.97

52 week range- $3.60-$9.00

$20 million dollar share buyback program in place

Anticipates having 20 lateral hydraulic drilling systems in place by the end of 2011. The company just announced that 16 will be in place by the end of their fiscal year.

Revenue and earnings est. for year ending Sept 2011~$101 million and .67 net income/sh. For 2012 rev est. of $166 million and $1.04 net income/sh.

Shareholders equity- $240 million

No long term debt.

Ernst & Young (China) - auditor

For the first 6 months of fiscal 2011 CTE earned .39 non-GAAP- 3rd Q out on August 4th 2011.

Current est. PE for 2011 equals 6X - PE est. for 2012 based upon $1.04 equals 3.9X

Great picture and great story~ China is very hungry for Oil, very attractive balance sheet with ZERO DEBT,trading near 52 week low, revenue growth rate exploding with earnings shooting up like a "bottle rocket", aggressive buyback program in place and management guidance remains firm!

We at www.saadvisory.com think that you have to own it at current levels~ either short or long capital appreciation with very little downside risk exists at current depressed levels!


*ZST DIGITAL NETWORK, INC.*~~current share price $2.98

www.zstdigital.com

The company supplies digital and optical network equipment to cable system operators in the Henan Province of China and provides GPS location & tracking services in the Henan Province. There are 118 counties within Henan and ZSTN only services 33.

August 3rd 2011- 2nd Q earnings release.

52 week range- $2.28- $8.48

11.8 million shares outstanding

$40 million in cash

$77 million in shareholders equity

No debt

First Q $33.8 million and .45 net income/sh

Management has stated that 1st Q is the weakest, while their 4th Q is always peak season.

Actual year end results for 2010- $135 million and $1.90 net income/sh~ Estimated rev and earnings for 2011 equals- $173 million and $2.27 net income/sh

Some other numbers to consider: PE est. for 2011 calculates 1.3X, book value equals $6.67 and PSR equals only .20

Again, considering the stated fundamentals and the current depressed share price one must consider ZSTN as an interesting short and long investment vehicle. The numbers are stated within their filings and management has discussed their estimated numbers with certainty. Does it sound too good to be true? The share price indicates uncertainty, but as you know the "street" is not always correct! A few bad apples is not an indication of the crop! We like and own it and believe the risk is very small considering the upside potential.

FAVORITE: CHOP, CTE AND ZSTN in that order~ A small position in all plus last months ZOOM speculation gives us some broad exposure to China. As you know our favorite Asian stock still is APWC.


Portfolio of Oil Stocks
symbol**price recom**current**status

spe.to**5.95**bought out 6.25

skw.v****.70********.46**Strong Buy

melef.pk***4.65****4.73** Buy

bllxf.pk****5.60 ****5.19**Buy

ssn**.59 sold 1/2@ 3.83**2.82**Hold

sd*5.23* sold 1/[email protected]*11.52*Hold

cenjf.pk**5.64**10.41**Strong Buy

mauxf.pk**.70**.56**Hold

sdcjf.pk**.17***.86***Buy

qep***32.96***43.83****Buy

axas***.96***4.59***Strong Buy

ureyf.pk**.25***.20** Strong Buy

cmt.to***.72****.12** Sold

bexp***3.45***31.80***Strong Buy

useg** 2.75***4.23***Strong Buy

kog***1.28***6.79***Strong Buy

aez**6.44**bought out 14% profit

bp**40.00****45.44**Buy**

wres**3.33***4.07***Strong Buy**

dej**.30 ***.31***Hold**

gmxr**5.37****4.85**Hold

etkef.pk**.15**.18** Hold

pbkef.pk**13.10**14.77** Strong Buy

mhr**6.86****7.18***Strong Buy



THE THRILL OF THE LIST HAS TO BE COASTAL ENERGY CORP. (CEN.TO OR CENJF.PK). RECOMMENDED A FEW MONTHS AGO @ $5.64- CURRENTLY $10.41! RECENTLY THERE HAS BEEN HEAVY INSIDER BUYING- AROUND 250K SHARES - MOST @ MARKET. THE RECENT PRESS RELEASE DATED JULY 28, 2011 IS A MIND-BLOWING RELEASE- FROM 3 OF THEIR WELLS OFFSHORE IN THAILAND INITIAL BOPD IS 5000!!! GO AND READ THEIR JULY 2011 PRESENTATION! IN OUR OPINION, THIS STOCK EITHER GETS BOUGHT OUT SOONER THAN LATER AND/OR IS HEADED TOWARD $20 WITHIN 6-9 MONTHS. WE RATE CENJF.PK WITH THE STRONGEST OF BUY RATINGS!!

2. Other favorites @ the top of the list skw.v and pbkef.pk


Other Stocks
Hess Corp. (HES)- Integrated Oil company with holdings world-wide. Company missed 2nd Q earning est. by .19 primarily due to lower production. HES has exposure to Libya, lower gas prices and very wet Winter and Spring in ND Bakken. Temporary production shortfall creates attractive entry point in high quality E & P and Refiner. The company controls over 900k acres in the Bakken. Developmental capex is aimed at the enhancement of Bakken, Valhall and the GoM projects. A ramp-up in activities at Bakken, Eagle Ford and Marcellus in the US and the Paris Basin in France, accompanied by offshore drilling opportunities in the GoM, Brazil, West Africa and Egypt, will strengthen the company's future production, its earnings, cash flow and valuation. We would not be surprised if HES grabbed BEXP! At present they have 18 rigs in the Bakken. Review their June 2nd 2011 presentation. Of course HES is a high cost investment, but the current price offers strong upside potential from current levels ( $68.74). Rev est. for 2011 equals $37.5 Billion & $7.20 net income/sh- Estimate for 2012 equals $43.3 Billion & $8.00 net income/sh. Libya exposure has hurt the stock & even Algeria & Egypt adds to the nervousness to own HES.

Recent range- May 12, 2008- share price $128.00---Dec 1, 2008- share price $38.49-- March 28, 2011- share price $86.74

19 brokerage firms rate this stock & the average price target is around $94.00 a far cry from current levels. We like it & own it & will monitor HES in our active Oil Stock Portfolio.

2. ALJJ.PK-- recommended many times & have profited handsomely every time we reload. The last time we purchased aljj.pk was during the market melt down @ .25. A small steel producer that buys scrap steel and converts it into various products. Continues to pay down debt rapidly & every year gets its balance sheet stronger. For the 9 months ending rev zoomed to $116 million vs $80 million- the rev adjustment was due to 2/3 increase in sales volume and 1/3 increase in pricing. Complete financial doc's should be out any day now!--Current share price .68- we still rate aljj.pk with a strong buy rating!

3. IMSC.PK- bomb sniffing devices- initially recommended @ .48- recently migrated up to $1.13, but collapsed back to recent .58 level.- they have the product, but DHS has yet to "sniff" with a huge order- instead many other countries have bought small volumes of their patented products. IMSC.PK's balance sheet is terrible, they lost .40 on $4.8 million for the 9 based on 27 million shares) & on a fully diluted share count of 93 mil. the dilutive affect is shocking! If the DHS ever pulls the "trigger" IMSC.PK will "explode"!

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