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4 Chinese Stocks That Are Cheaper Than You Think

Rick Aristotle Munarriz
January 11, 2012

Focus Media (Nasdaq: FMCN  ) has had enough.

Shares of the Chinese advertising giant rose nearly 10% yesterday, after the company agreed to return 25% of its adjusted earnings to its shareholders the following year in the form of quarterly dividends. Based on the $1.83 a share that analysts see Focus Media earning in 2011, we're looking at a yield of 2.2%. The good news is that if we go by the $2.24 a share that Wall Street is targeting, adjusted profits out of Focus Media this year the yield would pop up to 2.7%, based on yesterday's close.

Focus Media isn't doing this to be generous. After going a few rounds of refuting bearish claims in a scorching Muddy Waters report -- accusing the company of overstating the size of its advertising network among other things -- Focus Media feels that it's best response now is to simply show its investors the money.

It's a smart move. It may not silence the knocks entirely, but it's hard to knock a company for its accounting practices if it's returning a good chunk of its earnings to its shareowners.

China gets cheap
There's no denying that 2011 was a bad year for Chinese equities. A few stocks imploded under the sharp attacks of diligent worrywarts, but even the clean stocks felt the brunt of global investors moving on from the Chinese miracle.

I'm going to dive into a few of my favorite Chinese growth stocks that are a lot cheaper now than they were a year ago. The combination of three things -- growing earnings in 2011, falling share prices in 2011, and healthy expectations for growth in 2012 -- make these stocks that should be going off on your radar if you're willing to take on the risk.

Let's get to it.

  Stock 2011 EPS Growth 2011 EPS Growth 2012 P/E 2012
Focus Media (11%) 51% 22% 9 (Nasdaq: SOHU  ) (21%) 27% 18% 10
51job (Nasdaq: JOBS  ) (15%) 59% 29% 16
Giant Interactive (NYSE: GA&nb