As an example, the company has been active in supplying cement for China’s national rail network, which is scheduled to consume approximately 120 million tons of cement by 2020. CADC has a market cap of about $69 MM. CADC currently is ttrading under one times sales and about 1.8 times their book value. Revenue is about $69 MM with quarterly revenue growth of 142% and quarterly earnings growth at a whopping 200% yoy! The company just had a record second quarter with net revenue increasing 142% yoy to a $26.2 MM, a gross profit increase of over 32%, and net income available to common shareholders increased 227%! More info here- http://finance.yahoo.com/news/China-ACM-Reports-Record-prnews-3397422612.html?x=0&.v=1 Under the recent share offering the company could have about $16 MM in cash and virtually NO DEBT! This would imply an enterprise value of only $85.5 MM! With China's infrastructure growth and now that CADC will have the cash to get involved with more projects we could see CADC become another winner for our club! It looks like institutions may finally start taking notice!

 

China Linen Textile Industry, Ltd. (CTXIF.OB) - $1.80

 

CTXIF is principally engaged in the production and sale of linen yarn and various types of linen fabric. The Company is also involved in consultation and R&D related to linen technology and linen products. The Company carries on all of its business activities through its subsidiary, Heilongjiang Lanxi Sunrise Linen Textile Industry Co., Ltd. ("Sunrise Linen"), established in June 2002 and located in Lanxi County, the "Homeland of Flax in China," near Harbin City in China. Sunrise Linen has one yarn-spinning factory and two fabric weaving factories in its 28,000 square meters of building area with a staff of 1,500 and 310 sets of world-class, advanced producing machinery. Annual production capacity totals approximately 1,600 tons with 50 different types of yarn and 8 million meters of fabric with 110 types. Approximately 60 percent of its products are exported to more than 10 countries.

 

Demand for linen fiber fabrics has increased rapidly exhibiting an annual growth rate of 15% - 20%. CTXIF’s cost of production is 15% lower than that of competitors in other developed countries or newly industrializing economies. Long-term loyal customers represent more than 70% of total sales. End users of the Company’s product include Hugo Boss, Marks & Spencer, MercAorel, Perego, and one of my personal favorites Zara, among others.

 

2010 guidance for the Company's estimated revenue, gross profit, net income and fully diluted earnings per share in the amounts of $38.1 million, $12.7 million, $9.3 million and $0.46, respectively. At the end of 2009, the Company's revenue grew 31.2 percent to $30.1 million, up from $22.95 million in 2008; and comprehensive net income grew 35.6 percent to $6.06 million, up from $4.47 million. In the past five years, the Company has maintained high growth, achieving a compound annual growth rate of 39 percent in revenue, 45 percent in gross profit and 42 percent in net income. They continue to expect double-digit growth in 2010!

 

The Company’s export volume grew at a compound annual growth rate (CAGR) of 38.6% in 2008, reaching $12.8 million in sales. CTXIF currently trades at a P/E (ttm) of around 10, while industry peers trade at 25x. CTXIF has a market cap of only $36 MM at the current pps. CTXIF's technicals also look solid. The future for CTXIF looks very bullish and we think it will become a nice winner for us over the long-term.

 

Asia Cork Inc. (AKRK.OB) - $0.38

AKRK is a Chinese company that is a leader in the development, manufacturing and marketing of quality cork-based building materials. The products are sold under the Xi’an Hanxin brand to customers in China, India, Japan, Germany and the United States. Approximately 70% of its products sold in 2009 were to customers outside China.

 

Cork has a number of highly compelling properties. Its durable and slip-resistant surface outperforms hardwood, linoleum and vinyl floor covering. Due to its honeycomb cellular structure, cork provides excellent insulation and reduces the transmission of sound, vibration, heat and cold. Bugs, mold, mites and termites are repelled by cork due to a naturally occurring substance in cork called Suberin. Suberin also makes cork a natural fire inhibitor. When burned, cork does not ignite.

Cork is also a "green" renewable resource that is harvested in nine-year cycles from cork trees. As an environmentally-friendly construction material, cork is increasingly in demand for building and home improvement purposes from China’s rapidly-growing upper and middle class population, even though cork is priced at a 10-15% premium over hardwood floorboards.

In this relatively new cork processing industry in China, Asia Cork currently capitalizes on six technological patents, to which the company has exclusive rights. The company reported revenue of $16 million in 2007 and produced a compound annual revenue growth rate of 49.1% from 2002 to 2007. Asia Cork employs a staff of approximately 280 people.

 

China trails Portugal with an annual production of approximately 100,000 tons of Chinese cork oak, which is abundant in the Shaanxi, Gansu, Henan, Hubei and Sichuan provinces. Portugal is the world’s leading cork producer with an annual production of 185,000 tons amounting to $1.3 billion of sales.

 

Q3 '09 revenue was $10.1M, a 13% increase from $8.9M in Q3 '08. AKRK has a market cap of about $13.5 MM and a P/E of only about 5! We believe AKRK is in a unique business in China where they are already capturing over 10% of the total business. The total housing area in urban areas of China is expected to reach 36 billion square feet by 2010. In rural areas, total housing is targeted to increase to 54 billion square feet by 2010. This enormous projected growth in residential real estate is likely to boost demand for environmental-friendly and safe housing materials such as cork floorboards and cork wallboards which in turn should be very positive for AKRK's shareholders. Keep an eye out for some upward momentum and news.

 

 

China BAK Battery, Inc. (Nasdaq: CBAK) - $2.59

 

As many of our club members know LITHIUM is H-O-T! We have already seen small-cap lithium companies make moves of over 800% within the past year! Even though CBAK's fundamentals aren't the strongest we feel they are positioned to capitalize on a booming sector that could blow up over the next year in turn sending WSG members who diversify into CBAK a whole lot of profits. CBAK is speculative but we do believe it has tremendous upside potential. Please do your own research.

 

The alternative fuel automobiles use electric motors for propulsion, instead of the internal combustion engine. All the major car companies have been jumping on the hybrid and electric car bandwagon, including Ford, General Motors, and Toyota. Electric cars are far less expensive than gasoline powered cars, many with a cost advantage of four to one! Obviously, the key to the production of electric cars is the battery, and lithium ion batteries are currently the most widely used in electric cars.

CBAK is one of the largest lithium-ion battery cell manufacturers in the world! CBAK engages in the manufacture, commercialization, and distribution of various standard and customized lithium ion rechargeable batteries. The batteries are used in light electric vehicles, and hybrid electric vehicles, along with cellular phones, notebook computers and portable consumer electronics.

CBAK's 3.0-million-square-foot facilities are located in Shenzhen and Tianjin, PRC, and have been recently expanded to produce new products. CBAK at $2.59 has a market cap of $163 MM and is currently under book value and trading under one times sales! CBAK has revenue of over $193 MM but does have an ugly balance sheet with around $200 MM in Debt with only $18 MM in cash. Once again CBAK's fundamentals aren't as strong as many of our other China picks but we feel that it is in the perfect industry at the perfect time which is set to grow exponentially. What really caught our eye on CBAK was the fact that it announced its Tianjin Facility has begun to execute a contract with Jilin Hi-tech Electric Vehicle Co., Ltd, an affiliated company of First Automobile Group Co., Ltd, one of the largest automobile manufacturers in China, for providing high-power batteries used in its Electric Bus Project (20 Electric Buses!). I am really interested to see what CBAK's next big order looks like. The Chinese Government is in a hurry to fulfil there targets in building electric vehicles according to the 11th Five Year Plan and CBAK could be their go to Company! Read This: http://www.gov.cn/english/special/115y_index.htm 

 

Keep your eye on CBAK and hope we can see it turn to profitability once the Lithium Boom takes place over the next couple years.