China Carbon Graphite CHGI is on our top watch list at Examiner and at www.greenbackers.com . CHGI is in a rapidly growing graphite metals market in China and worldwide.
Last Trade:1.06Trade Time:10:41AM EDTChange: 0.05 (4.95%)
P/E (ttm):7.8EPS (ttm):0.13
(pe based on pps @ $1)
First, we want to highlight a very strong recent earnings report from 8/15:
China Carbon Graphite Group Releases Second Quarter 2011 ResultsGlobeNewswire(Mon 8:00AM EDT)
Second Quarter 2011 Financial Highlights:
- Revenue increased 274%, from $3.2 million in Q2 2010 to $12.1 million in Q2 2011
- EBIDTA improved 11%, from $1.8 million in Q2 2010 to $2.0 million in Q2 2011
- Gross profit rose 1,070%, from $0.2 million in Q2 2010 to $2.7 million in Q2 2011
- Gross profit rate increased 214%, from 7% in Q2 2010 to 22% in Q2 2011
- Net income grew 22%, from $0.7 million in Q2 2010 to $0.9 million in Q2 2011
- Adjusted net income rose 279%, from $0.68 million adjusted net loss in Q2 2010 to $1.2 million in Q2 2011
“We are very pleased with our second quarter results,” said China Carbon’s CEO Donghai Yu. “Solid growth in our core businesses, fine and high purity graphite products, along with our capacity expansion drove 274 percent revenue growth
Due to these conditions, we continued our strategy of adjusting our product mix to meet current market demand. By boosting our supply of fine and high purity graphite products, and raising the price of our high purity graphite, we were able to realize considerable growth in our higher margin business. Our sales of high purity graphite alone reached approximately $9.4 million in the second quarter of 2011, which is a $9 million or 231 percent increase when compared to our sales of these products during the same period in 2010. We are very confident about our future as we expect the heightened demand for our higher margin products to extend through 2011, and we intend to continue to invest aggressively in our higher margin businesses in upcoming quarters to further improve profits
Now onto our rpt prior to recent earnings:
We’ve beentracking CHGI alot closer, due in part very bullish upcoming events.
Among the more recent news with CHGI was the very bullish tone at a recent conference latter July:
What colleague Tobin Smith had to say regarding the conference:
They made a great presentation at the Global Hunter mining presentation last week…100%+ mining and material funds heard the story…
One key part is the planned acquisition of a graphite mine in lower Mongolia…they have many potential deals and they have 100% bank financing lined up as well…
Becoming #1 fully integrated carbon graphite manufacturer with a few key solar and nuclear grade graphite mfg acquisitions takes them to double than triple the EBITDA from 2010 results over the next few years
And they will sell 80%+ of their raw carbon graphite from their mining operation to OTHER carbon graphite manufacturers…
All of which sets them up for additional acquisitions.
Finally, the severe accounting decisions by the change to. BDO Seidman last year will now start to REALLY pump up earnings.
In order to be as conservative as possible on receivables, CHGI has been discounting 60 day receivables to ZERO even though their collection rate for 60+ day AR has been 100%
AS that AR is collected, it will add over $5M+ of additional earnings power to CHGI’s Q2-Q4 for 2011.
All in all, NBT’s $2.50 target for 2011 is under review for upgrade…
2012 target will need to move to 10x .75 a share EPS or $7.50
CHGI also released very strong earnings the prior qtr.
China Carbon Graphite Group Releases First Quarter 2011 ResultsGlobeNewswire(Tue, May 17)
- Revenue increased 137%, from $4.85 million in Q1 2010 to $11.46 million in Q1 2011
- EBITDA improved 155% from $0.99 million in Q1 2010 to $2.52 million in Q1 2011
- Net income grew 139%, from ($0.86 million) in Q1 2010 to $0.33 million in Q1 2011
- Adjusted net income rose 91%, from $0.33 million in Q1 2010 to $0.63 million in Q1 2011
Donghai Yu, China Carbon’s CEO, said, “As we expected, our first quarter results were excellent. In particular, we are very pleased with the significant improvement in our EBITDA, which increased 154 percent. We successfully adjusted our product mix in the first quarter of 2011 to capitalize on market demand….Notably, our sales benefited from the increasing applications for our higher margin products…
Another related story on earnings that shared additional, especially on the upcoming plant opening this summer.
China Carbon Graphite Group, Inc. Expects to Report Strong Sales Momentum for the First Quarter of 2011GlobeNewswire(Thu, May 5)
Excerpts: the Company anticipates reporting a considerable increase in revenue for the first quarter of 2011 as compared with the same quarter of 2010….China Carbon’s preliminary, unaudited revenue during the first quarter of 2011 was approximately $11.6 million USD, reflecting an increase of approximately $6.7 million USD or 138%…….This substantial improvement in revenue is due to its doubled capacity and the significant increase in the sales of its high margin products…..The notable rise in the commodity prices associated with carbon graphite is being driven in large part by the mounting demand for carbon graphite, which is in turn being driven by increased manufacturing associated with global economic growth. At this time, China Carbon plans to accommodate by expanding its current operations and the Company estimates that the construction of its new baking plant–which is expected to boost its annual production capacity from 30,000 tons to 60,000 tons–will be completed by June 2011 and fully operational by August 2011
Last spring, NBT Equity Research came out with very bullish report on the stock worth reviewing
Highlights in the report include:
1) Quarterly Revenue Growth of 78% (year-over-year)
2) $9.1M in revenue Q3 2010
3) Discover macro trends on the nuclear power sector
4) New facts and figures from CHGI and sources such as the WORLD NUCLEAR ASSOCIATION
On Feb 15th the stock issued another press release where upon the company will increase their mining capacities in Inner Mongolia.
China Carbon Graphite Group, Inc. to Integrate Natural Graphite MinesGlobeNewswire(Tue 10:00AM EST)
In light of China’s increasingly restrictive posture on rare earth and other important resources, as well as world dependency on China for graphite supply (it has been reported that China exports over 70% of world’s graphite every year), graphite is on course to become a very important strategic resource. As one of the few listed companies in the graphite industry,the Company has the state-of-art technology in quality control and environment protection, and expects to enjoy sustained and rapid growth in the near future, since the new restrictions are expected to eliminate those less efficient competitors in this industry.
Going back further, the stock also came out with some very bullish new plant related news, related to doubling capacity with the new plant and the fact it will be the mo
st technologically advanced in China.
China Carbon Graphite Group, Inc. Completes Construction of Its New 30,000-Ton Production Facility Jan 24, 2011
Excerpts: According to the Company, this new plant will have the largest and the most technologically advanced equipment in China capable of producing ultra-high electrodes with a diameter as large as 800 mm, and rounded fine grain electrodes with a diameter as large as 600 mm. The demand of these two types of graphite products is currently overwhelming
….our production capacity will be doubled from our current level,” said Donghai Yu, China Carbon’s CEO. ….will solidify its status as one of the most significant manufacturers of graphite and related products in China.”
Other bullish articles on CHGI at joltleft.com:
Graphite: Next Play in China at TheStreet.com(Wed, Jan 12)
The best strength we’re covering today and recently. Namely CHGI. More news – Denver Stock Market | joltleft.com http://joltleft.com/stock-market-in-denver/the-best-strength-we-re-covering-today-and-recently-namely-chgi-more-news#ixzz1CiC5mPKu
Graphite: A Diamond in the Rough for Investors?at Seeking Alpha(Thu, Dec 30
Currently, the iron and steel industries are the largest consumers of graphite. But demand for graphite has been rising for other applications — researchers in the field of material science continue to find new uses for this durable, heat-resistant, electricity-conducting substance. Graphite will be used in the construction of next-generation nuclear reactors, which are expected to reach temperatures as high as 1,000 degrees Celsius in their cores — triple the temperature of today’s reactors.
Graphite is one of the few substances that can resist such heat.
Emerging fuel cell technologies also rely heavily on graphite.
Perhaps the single greatest testimony to graphite’s importance is the concern that governmental bodies have shown about its important role in security. A 2010 European Commission study regarding the criticality of 41 different materials to the European economy included graphite among the 14 materials high in both economic importance and supply risk. A recent WikiLeaks posting revealed that a list known as the Critical Foreign Dependencies Initiative developed by the U.S. Department of Homeland Security and the State Department included graphite mines in China among those overseas sites that could damage American interests if terrorists were to disable them. The U.S. military will also increasingly rely on graphite for battery and fuel cell applications, as the armed forces lessen their dependence on petroleum.
Technically, intermediate term, the stock ran from .80 to 2.50 earlier in 2011…..It pulled all the way back to .90, but has been experiencing a turnaround lately and could garner momentum as it establishes traction.
Bottom Line: Outlook increasingly bullish with the latest earnings rpt as well as the upcoming plant opening. Highly debate this beaten down moving foward as we’ve been stating in recent newsletters at www.greenbackers.com . Target dips at/below 1 initially for entry….buy/hold for doubling into 2011
Disclosure: long CHGI