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Summary: Asia Cork (OTC: AKRK) is a rapidly growing leader in the development, manufacturing and marketing of cork-based building materials. Asia Cork is currently valued at $4.64M, even though it has a book value of $17.1M and pulled down $2.54M of profit in the first 3 Quarters of 2008. In my conversations with flooring experts, Cork seems to be trending back into fashion as a “green” alternative. Another set of great headlines: Asia Cork Q3 ’08 Revenue Up 117% to $8.96M; Net Income Up 220% to $1.40M. The issue here is the daily volumes are low and Asia Cork isn’t off it’s 52-week high as much as I’d like it to be.
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Address and Phone
Asia Cork, Inc.
3rd Floor
A Tower of Chuang Xin
Information Bldg., # 72 Second Keji Rd.
Xi'an, Shaanxi 710075
China
* Phone: (011)86-13301996766
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| Investor Relations | ||
| Contact: | Frank Hawkins | |
| Phone: | 305-451-1888 | |
| Email: |
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Industry Classifications
Sector: Industrial Goods
Industry: Materials & Construction
CIK: 0001104040
NAICS: Prefabricated Wood Building Manufacturing (321992)
QM ID: Manufactured Housing(631)
SIC: Prefabricated Wood Buildings And Components (2452)
Employees: 260
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About Asia Cork Inc.:
Located in Xi'an, China, Asia Cork, Inc. is a rapidly growing leader in the development, manufacturing and marketing of cork-based building materials. Cork is a 'green' renewable resource harvested only from the bark of the cork oak tree, thus leaving forests generally undamaged. The company's product lines include raw cork materials, semi-finished cork and finished cork products such as cork floorboards and cork wallboards. Approximately 75% of the company's products are sold within China and the rest are sold overseas to customers in the United States, Germany, Japan and India. The company currently capitalizes on six technological patents, to which the company has exclusive rights. The company operates in China under the Xi'an Hanxin brand. More information may be found at http://www.hxrm.com.
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Company Outlook:
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.
The estimated current size of various wood floorboards market in China is approximately 3.2 billion square feet a year. The company believes 12.9 million square feet are currently being met by cork floorboards. Asia Cork believes a 3% to 5% penetration of cork floorboard into the wood floorboard market is obtainable. This implies 96 million to 160 million square feet of annual demand, of which Asia Cork expects to capture a sizable portion.
Asia Cork’s strategy is to become the largest cork board producer in Asia with a strong influence on pricing and costs. Asia Cork has formed a strategic distribution alliance with SHUTA Cork Co., with the goal of gaining control of its product distribution in an upscale retail environment. SHUTA has its own showrooms and has relationships with hundreds of stores in China. Asia Cork is also looking at strategic acquisition opportunities. The company currently has captured about 10-15% of the Chinese cork market.
Asia Cork management is adjusting its product mix into higher margin products. Asia Cork recently introduced a new inter-locking cork floorboard, and demand is already well in excess of Asia Cork's production capacity. To increase production capacity, the company has completed the structure of a new factory, which is ready for equipment installation.
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Competitive Strengths:
China is the world’s second largest producer of cork –
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.
Substantially Lower Raw Material and Production Costs –
Raw cork material in China costs one seventh the cost of cork from Portugal and other countries. In addition, Chinese cork production costs are approximately one third of those in overseas markets, which gives Asia Cork an enormous pricing advantage.
“Green” Building Products –
Between now and 2020, China is expected to account for 50% of the world’s building construction activities. Chinese consumers are gradually adopting a more proactive environmental stance. During the harvesting process of cork, the cork oak tree is not felled. Only the bark is harvested once every nine years, leaving the forest undamaged.
Strategic alliance with top research institutions –
Asia Cork has been striving to improve the quality of its products through research and development (R&D) collaboration with educational institutions such as the Northwest Sci-Tech University of Agriculture & Forestry. Senior professors from this institution serve as technical consultants to equip Asia Cork with the latest technical advancements.
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Management:
Founder and Chairman- Mr. Fangshe Zhang
CEO- Mr. Pengcheng Chen
CFO- Mr. Yi Tong
VP of Operations- Mr. Shengli Liu
VP of Sales and Marketing- Mr. Yi Zhang
VP of Research and Development (R&D)- Mr. Pingjun Zhang
Senior Technical Advisor- Professor. Yinquan Su
Senior Technical Advisor- Professor Shibin Hu
Chairman of Supervisory Board- Mr. Genhu Yang
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Outstanding shares:
35,663,850 as of Aug 15, 2008
AI
