China Tracker - Details for China Gengsheng Minerals (CHGS)


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 China Gengsheng Minerals
Shares Outstanding (MRQ): 26.63 mill
New Shares / Dilution (TTM): 2.52 mill10.45% 
New Shares / Dilution (since Dec 31, 2008): 2.59 mill10.77% 
Cash (MRQ): 11.47 mill0.00%
Account Receivables (MRQ): 39.89 mill0.00%
Account Receivables (Q/Q): -3.35 mill  
Long-Term Debt (MRQ): NO DEBT
Revenue Growth (Q/Q): -12.96% 
Revenue Growth (Y/Y): 36.44%
Net Income Growth (Q/Q): N/A (LOSS) 
Net Income Growth (Y/Y): -187.77%
EPS Growth (Y/Y): -179.47%
Net Margin (Q/Q): -2.1% (-8.7%)6.60% 
Net Margin (Y/Y): -2.1% (3.3%)-5.40% 
EPS | P/E (2 MRQ Projection): -$0.150.00 
CFPS | P/CF (2 MRQ Projection): -$0.570.00 
Price/Sales (2 MRQ Projection): 0.00
Price/Book (MRQ): 0.00 
Auditor: PKF 
 
 Forward Projections (Fiscal Year)
EPS | P/E (Estimates updated 2011-05-16): $0.100.00 
 Basic Facts and History (show more)
Reporting Type: U.S. Company (10-K Filings) 
Going Public: Reverse Merger on 2007-04-25 
Uplisting to Senior Exchange: on 2010-03-04 at $2.67 (-100.00% since Uplisting)

 Business Outlook

During the first half of the year, we launched several strategic growth initiatives to address the large and growing fracture proppant market, including capacity expansion, and a joint development agreement with a North American fracture proppant distributor to address the U.S. and Canadian markets. We believe these initiatives will position GengSheng to capture additional market share as we build brand recognition, both domestically and internationally and continue to leverage the strong, rapidly growing demand from oil and gas producers.

(Source: PR Newswire, 2011-08-15)

Although we have faced challenges in the last several quarters, we believe our business is on the right track and are optimistic with regard to the future. We have two important catalysts in fine precision abrasives and the international expansion of fracture proppants. We expect our full-year blended gross margin to improve to 27% to 30%, and to achieve profitability as we are improving production efficiency, to ramp production volume and improve our raw materials sourcing capabilities, while continuing our efforts to better manage accounts receivable and collections.

(Source: PR Newswire, 2011-05-16)

China GengSheng Minerals today announced that it has signed an agreement to acquire 24.5% ownership in the Yili Yiqiang Silicon Company for RMB 15 million (approximately US$2.3 million). Yili Yiqiang is a manufacturer of green silicon carbide (SiC), which is the primary material used in the production of GengSheng's fine precision abrasive products. The Company funded this investment through a combination of cash from operations and domestic commercial bank loans. It is expected to close by April 10th, 2011. Yili Yiqiang has green SiC reserves of approximately six million metric tons, and current annual production capacity of approximately 16,000 metric tons. Yili Yiqiang expects 2011 revenue of approximately $24 million, based on current production capacity and an average green SiC price of $1,500 per metric ton.

"Acquiring a minority stake in Yili Yiqiang enhances our emerging fine precision abrasives products and furthers our strategy to increase our sales and margins in this segments of our business. With raw material costs high and continuing to rise as a result of tight capacity, our ability to improve the sourcing of high-quality, cost-effective green SiC was crucial to our success in this market. In addition to cost savings, we believe this investment will allow us greater control over the raw material production process, further improving the quality of the green SiC that Yili Yiqiang manufactures."

(Source: PR Newswire, 2011-04-07)

    see all Business Outlook notes

 Analyst Coverage (show less)
2011-08-15Rodman & RenshawReiterationMarket Performn/a
 

Watching the expenses In light of China's increasingly inflationary environment, the company's slightly below-expectation gross margin in Q2 did not strike us as a major surprise. The moderately higher than expected operating expenses were also not necessarily alarming, in our view. Our major concern resides in the significant increase of finance costs, and more specifically, increase in bills discounting charges, in the quarter. Based on our understanding, this bills discounting charge is effectively another form of interest expenses associated with bank acceptance that some Chinese corporate borrowers need to pay in order to receive funding. While we acknowledge Gengsheng's capital need for its capacity expansion efforts, as illustrated by the company's $8.3 million net cash outflow from investing activities during the quarter, the magnitude of these finance costs really was the difference between a profitable quarter and an unprofitable one. Thus we would certainly like to see the company better manage this expense item going forward.

2011-05-18Rodman & RenshawReiterationMarket Performn/a
 

For the fifth consecutive quarter, China Gengsheng Minerals delivered its quarterly earnings results that missed our expectations. Revenue in 1Q11 came in at $16.2 million, while up 36.4% YoY, did miss our estimate of $17.6 million. Gross profit increased 7.9% YoY to $4.3 million, but missed our estimate of $4.7 million. Gross margin in the quarter was 26.5%, more or less in-line with our estimate of 27.0%. Operating expenses of $3.6 million were a touch lighter than our estimate of $3.9 million. On the bottom line, Gengsheng incurred a net loss of $79,934 for the quarter, translating to an approximate $0.00 EPS, below our respective estimates of a net income of $0.5 million or $0.02 EPS.

2011-03-22Roth CapitalDowngradeSuspendedn/a
2011-02-01Rodman & RenshawReiterationOutperform$2.80
 

We are maintaining our Market Outperform rating and $2.80 price target on the shares of Gengsheng. The $2.80 price target is based on the shares trading at 8.5x our 2011 diluted EPS estimate of $0.33. Major risks to our rating and price target include the company's heavy dependence on the steel industry, refractory market demand risk, intense industry competition, capital raising uncertainty, business execution risk, fluctuation of raw material prices, environmental liability risk, as well as political and regulatory risks related to operating in China.

2011-01-03Roth CapitalDowngradeSell$2.60
 

Downgrade to Sell based on valuation – We increase our price target to $2.60 from $1.80 driven by broader market multiple expansion. Our PT is based on a 13x multiple to our CY:11 EPS of $0.20. However, we downgrade to Sell from Neutral given the recent upward move in the stock is not fundamentally driven. While we understand the company's proppant sales have gained significant improvement, upside is limited given the current capacity constraint. We are also conservative on our assumed abrasives product ramp until visibility improves and sales ramp.

CHGS is currently followed by 2 analysts. 1 give the stock a positive rating, 1 rate it neutral and 0 give it a negative rating.


    see all Analyst Ratings

 Recent Financings
2011-01-05Priced$10.00 mill2.50 mill shares$4.00
2010-03-15Filing$20.00 mill--

 Investor Presentations
2011-07-18 (HTML)   VIEW
2010-03-15 (HTML)   VIEW
CHGS
Steel
SCORE
0
READ: Score Cards Explained
SAFETY/RISK SCORE
MODERATE RISK
DETAILS: Safety/Risk Model for CHGS
Current Price:  n/a
F10k Day (2007-10-17): -100.00%$3.75
2009 Close: -100.00%$2.25
2010 Close: -100.00%$5.15
2011 Close: -100.00%$0.69
High (2012-02-03): -100.00%$1.18
Low (2012-08-20): -100.00%$0.34
Exchange:
Market Capitalization: n/a
Total Shares: 26.63 mill
Float: n/a
Avg Volume: 306.70 k
Short Interest: 883.50 k
Short Ratio: 0.03%2.9 d
Last Quarter: 2011-03-31
Revenue (MRQ): 16.18 mill
Net Income (MRQ): -0.34 mill
Op. Cash Flow (MRQ): -0.46 mill
all financial data provided without warranty