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China Automotive Systems Inc. (CAAS) AT 8.14
Fundamental: 7
Chart: 7
Oct 29, 2006
China Automotive Systems, Inc., through its Sino-foreign
joint ventures, engages in the manufacture and sale of automotive
systems and components primarily in the People’s Republic
of China. Its product offering encompasses various auto parts
that are incorporated into steering systems for passenger
automobiles and commercial vehicles. The company’s products
primarily include rack and pinion, integral, and electronic
power steering products, as well as manual steering products;
steering columns; steering oil pumps; and steering hoses.
Chery Automobile is one of the main customer with CAAS, and
they also formed a joint venture. As I mentioned before in
the market update, Daimler
and Chery of China Planning Subcompact for U.S.
This is a huge news for CAAS as more revenue will grow in
the top line sales for future. From the Q2 2006 earning report,
the growth is double digit in quarter over quarter and year
over year.
- Total net sales for the second quarter of 2006 was $24.7
million, compared with $16.8 million reported in the same
period of 2005 and $ 21.0 million for the first quarter
of 2006, reflecting a 47% year-over-year growth and an 18%
quarter-over-quarter growth respectively.
- Net income for the second quarter of 2006 was $0.75 million,
or $0.03 per diluted share, compared with $0.5 million,
or $0.02 per diluted share in the same period last year
and $1.1 million, or $0.05 per diluted share, for the first
quarter of 2006, reflecting a 50% year-over-year growth
and a 32% quarter-over-quarter decline, respectively.
- Total cash and cash equivalents as of June 30, 2006 totaled
$19.8 million as compared to $12.4 million as of December
31, 2005. Stockholder's equity increased to $44.3 million
as of June 30, 2006 from $36.9 million as of December 31,
2005.
- Total debt is about $31.05 million
The net income was decreased due to a higher charge on the
minority interest during the last quarter. CAAS should report
earning in less than 2 weeks. I expect it to a net profit
inline with last quarter or higher due to the strong demand
in China automotive market.
Below is the one year chart on CAAS. $7 had been a strong
support for CAAS. The first recommendation on CAAS was around
$7.50, and it is now the second support for CAAS. Unless CAAS
gives a horrible quarter earning and guidance, it's unlikely
for it to test $7 again. It's a relatively good long term
investment (6 -12 months). The short term target is $10 in
3 months, and $15 within a year. Use $7.50 as the stop loss.
Fair Disclosure: Do not hold position.
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