Friday, February 19, 2010

“Stock Pick” Update

China Infrastructure Construction

(BB: CHNC)

www.chinaiccorp.com

CHNC rallies .40 per share to close at $6.00 on first trading day following new Green Baron “Stock Pick” report

Huge Move Up Expected Over Next Few Weeks!

The Green Baron Report typically identifies stock ideas that trade much lower, but we stick to our guns that we have pinpointed a winner here.  If you don’t have the money to get into this stock, then hold off until our next pick.  However, if you can afford to grab shares near this price then we feel you are going to do quite well (and soon!).

Institutions bought stock recently in a private placement at nearly $4.00 per share; earnings appear ready to explode even higher now that a new production facility is coming on line; and estimates going out to next year and the year after grow substantially.  Again, based on estimated year-end earnings for 2010 that ends May 31, it is expected that CHNC will book $1.21 per share excluding a one-time non-cash charge.  That means we are currently trading at less than 5 times earnings.  It would be conservative for CHNC to trade at 10 times earnings, and that would still put the stock at $12.10 per share.

We understand that a small float and a short trading history does not provide great liquidity or volume, but as more investors become aware of this story we believe the stock will continue to rally.  This is the type of stock that all of a sudden could be $15 in a heartbeat.  It would only need a mention by one key analyst at a brokerage firm to send this through the roof.  Get ready to see this stock much higher soon!

Our report can be viewed at TheGreenBaron.com by clicking the Profile icon just below the CHNC stock symbol on the home page.  We have provided our favorite 10 reasons to own CHNC again below:

Government Stimulus - The global financial crisis prompted the PRC central government to implement its stimulus packages and invest USD $586 billion, plus provincial governments will invest an additional USD $1.5 trillion in the next five years. More than half of China’s total investment will be in the infrastructure construction sector. 

Government mandate to stop on-site mixing – Regulations prohibit the use of on-site concrete in major cities by July 2009.  Also, new permitting of ready-mixed concrete producers in Beijing has ceased since July 2008.

“Green Concrete” – Highly skilled engineers are helping set a national standard for its “green concrete”.  Demand is increasing and compliant companies are exempt from income taxes and VAT.

China Growth – Ready-mix concrete sales are up 42.5% in February 2009 vs. 2008 according to the China Global Times.  China’s cement consumption accounted for approximately 44% of global demand in 2008 and is greater than both India and U.S combined consumption in 2009.

Proven Profits and Strong Book Value – Earnings for the year ended May 2010 are expected to come in at $14 million or over $1.21 per share (excluding one-time non-cash charges).  At $6.00 per share that is less than 5 times earnings.  Based on its latest quarterly report, stockholder’s equity was $34,170,803 or $2.96 per share.

Huge Projected Growth – Pro-forma top and bottom lines are projected to increase more than 28% for 2010 and 2011.  Projected profits in FY2010 and 2011 are $14 million and $18 million.  If CHNC were to trade at 28 times earnings for the next few years, it would be a crazy number; you do the math.

10-year Strategic Agreement with China Railway Construction Group – In early January, 2010, CHNC announced it entered into a 10-year strategic agreement with one of its major clients.  The two parties will join to produce and sell concrete in north central Xi’an region, and CHNC has already built and will open a new manufacturing facility there that will open this month.

Technology Agreement with Institute of Building Materials – A three year agreement was announced last month that will provide CHNC technical research, development, and support. 

$10 million Equity Raise in October 2009 – This money that was recently raised at about $3.90 per share did not dilute shares much and will allow CHNC to aggressively expand its operations to meet demand. 

Experienced Management – This team has extensive expertise and key industry, client, engineering and government relationships. Their list of previous accomplishments and projects completed are impressive.