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Watching
Keeping the position I have
Watching but have no news. I'm also tempted to add, but am sitting on my hands for the moment.
Anyone keeping up with this one?
The trend lately makes me want to buy more, but this no news at all scares me a bit.
Anyone out there watching this and have any news?
Just found it and I think you are right, besides pinchers are almost loving each other.. haha.. ready for something here it seems, even on technicals.
Watching this one...
During Friday's trading session, China Electric Motor Inc. (NASDAQ: CELM) established a new all-time low at $4.02, sixteen cents below the previous low. The stock began trading in January of last year around $4.50 and reached a high of $9.88 in April. There appears to be no reason for the sell-off, although it could be linked to the 33.4% drop CCME experienced during the same day due to fraud allegations.
CELM is a China-based company that engages in the design, production, marketing and sale of micro motor products through its subsidiaries, Shenzhen YuePengCheng Motor Co., Ltd. and Ningbo Heng Bang Long Electrical Equipment Co., Ltd. The Company's products are incorporated into consumer electronics, automobiles, power tools, toys and household appliances.
Despite 48.90% year-over-year growth in revenues and continued profitability, CELM is now trading at a P/E of 6.1 (the average for the industry is approximately 28). The company is also undervalued by P/S, PEG, Price/Book and Price/Cash Flow. Currently two analysts cover the stock, one with a "Strong Buy" rating and one with a "Buy" rating. The average of their price targets is $9.50.
As of last report, the company had a very strong balance sheet with $75.9 million in total assets and $9.5 million in total liabilities. The management team has also shown great strength in efficiency, returning 28.1% on equity, 24.1% on assets and 28.1% on capital.
In most recent news, the company announced that through an indirect wholly owned subsidiary it will acquire Shenzhen Guofa Optoelectronics Co., Ltd. Through this acquisition, CELM will gain new production lines and expertise focused on high-end DC micro motors as well as a blue chip customer base. The acquisition is expected to be accretive immediately upon the closing.
Redchip update for acquisition.
http://www.redchip.com/files/redchipreports/CELM_20110128_ResearchNote.pdf?from=elink
CELM...If shares oustanding would stay the same from qtr to qtr then we could see some progress as well..hog
They need to consolidate all these buys and show they can remain as efficient as ever and show the market that the bought wisely.
rich
I'm guessing longs will need to remain patient. Their approach seems to be focused on diversification and market share. PPS appreciation will hopefully come later, but I'm not banking on it anytime soon. I'm still long, and accumulate every now and again.
hogfan -
I am long on CELM, but rarely post here -
What effect do you think this acquisition will have on PPS ?
The following quote from the PR looks very positive to me....!!!
With this acquisition, the Company will acquire new production lines and expertise
Wondering if they can integrate and begin to profit immediately - would be nice for patient longs, huh ?
China Electric Motor, Inc. Announces the Acquisition of Shenzhen Guofa Optoelectronics Co., Ltd.
China Electric Motor (MM) (NASDAQ:CELM)
Intraday Stock Chart
Today : Tuesday 25 January 2011
China Electric Motor, Inc. (Nasdaq: CELM, "China Electric" or the "Company"), a Delaware corporation and China-based company that engages in the design, production, marketing and sale of micro motor products, today announced that Luck Loyal International Investment Limited ("Luck Loyal"), an indirect wholly owned subsidiary of the Company, entered into an Equity Transfer Contract (the "Agreement") with New-Metal (H.K.) Technology Limited (the "Seller") on January 21, 2011. Under the terms of the Agreement, Luck Loyal will purchase 100% of the equity interests of Shenzhen Guofa Optoelectronics Co., Ltd. ("Guofa Optoelectronics" or "Guofa"), a wholly foreign owned enterprise incorporated in China, held by the Seller, for an aggregate purchase price of RMB42.7 million (or approximately US$6.5 million, based on the exchange rate as of January 21, 2011) (the "Transaction").
(Logo: http://photos.prnewswire.com/prnh/20100331/CNW006LOGO )
With this acquisition, the Company will acquire new production lines and expertise focused on high-end DC micro motors used in products like digital cameras, cell phones, electronic door locks, and other similar products. Guofa's products are sold to clients representing high-end OEM companies which include Ricoh, Toshiba, Philips, OMRON, Panasonic, OLYMPUS, and Taiwan Asia Optical. In 2010, Guofa Optoelectronics recognized RMB83.4 million (or approximately US$12.7 million) in revenue and RMB8.7 million (or approximately US$1.3 million) in net income.
The purchase price will be paid by the Company in three installments, subject to certain conditions precedent and adjustments, as described in the Agreement. For the first installment, the Company will pay RMB4 million (or approximately US$607,000) within ten days of the execution of the Agreement. For the second installment, the Company will pay RMB28.7 million (or approximately US$4.4 million) within thirty days of the Agreement after certain conditions precedent have been met. The last payment of RMB10 million (or approximately US$1.5 million) will be withheld as a deposit to secure the settlement of labor issues, if any, as described in the Agreement. The closing of the Transaction is expected to take place within 120 business days from the date of the Agreement, subject to government approvals.
In addition, Dr. Dehe Wang, the General Manager of Guofa Optoelectronics (no relation to the Company's CEO, Mr. Yue Wang, or Chairman, Mr. Fugui Wang), has been hired to replace Mr. Shengping Wang, who resigned due to medical reasons, to become the Company's new Chief Technology Officer, effective as of January 21, 2011. Mr. Dehe Wang has been the General Manager of Guofa Optoelectronics since November 2005 and has over 15 years of management and research experience in the micro motor industry.
Mr. Yue Wang, the Chief Executive Officer of China Electric, stated, "This acquisition further establishes our presence in the high-end DC micro motor category. Guofa has a blue chip customer base and serves markets in which we currently have no presence. Part of our strategy over the past two years has been to diversify our overall product offering beyond home and kitchen appliances. Guofa has an established customer base and a strong product portfolio in niche areas like camera printing machines and automobile door lock motors, which help with our diversification efforts.
"We plan to consolidate Guofa's operations and over 450 skilled employees to our newly acquired Sunna Industry Park after the closing of this transaction. We expect Guofa to be accretive immediately upon the closing of this acquisition and we believe that we can maximize Guofa's sales and profit growth in the coming years through our working capital commitments.
Wang continued, "We greatly appreciate Mr. Shengping Wang's tremendous contribution to China Electric's growth and we are excited to welcome Mr. Dehe Wang to the China Electric team. We believe that his appointment, combined with our acquisition of Guofa Optoelectronics, will significantly help us continue to expand China Electric's micro motors footprint."
About China Electric Motor, Inc.
China Electric Motor, Inc. (Nasdaq: CELM) is a China-based company that engages in the design, production, marketing and sale of micro motor products through its subsidiaries, Shenzhen YuePengCheng Motor Co., Ltd. and Ningbo Heng Bang Long Electrical Equipment Co., Ltd. The Company's products are incorporated into consumer electronics, automobiles, power tools, toys and household appliances, and are sold under its "Sunna" brand name. The Company provides micro motor products that meet the growing demand for efficient, quiet and compact motors from manufacturers of consumer electronics, automobiles, power tools, toys and household appliances. China Electric Motor, Inc. sells its products directly to original equipment manufacturers and to distributors and resellers both domestically in the People's Republic of China and internationally to customers in Korea and Hong Kong. The Company's manufacturing facilities are located in Shenzhen, Guangdong and Ningbo, Zhejiang.
CELM...Impressive Presentation...One of Top 5 domestic players...micro motors....1400 employeed....more diversification...remote control toys and cell phones huge market...very fragmented market...labor costs cheap...demand growing...increase disposable income in china...middle class growing in china...broadening offerings...acquisition strategies....targeting larger customer base or products in sectors not currently serving...November closed deal and 3 more on the books...possible closing another deal in a few weeks... raw materials effect costs...but gross margins are better than competitors...Johnson Electric largest foreign competitor, but winning customers from them...CELM offers more flexibility to compete...5x 2010 earnings for November purchase...36 million in cash...no debt...guiding for 0.74 to 0.75 EPS for year...lots more to the presentation but I could not keep up....hog
Should be direct link to talk:
http://investor.shareholder.com/icr/2011/eventdetail.cfm?eventid=90498
Otherwise this is it:
http://investor.shareholder.com/icr/2011/
CFO speaking hands-down best introduction
Talking at: ICR XChange Conference
- Mention they supply BYD - Buffett's way of playing China automotive market.
Talks about getting the buildings in detail - he thinks they can get 50% of the value as a bank loan and also how some customers look at your balance sheet and if they don't see you own property they don't do business (not heard that before).
Should be direct link to talk:
http://investor.shareholder.com/icr/2011/eventdetail.cfm?eventid=90498
Otherwise this is it:
http://investor.shareholder.com/icr/2011/
rich
Wow - what a prediction -
Hope you are right - since I am long on this one -
What timeframe do you predict for us to hit $9.oo ?
I realize this will just be your best guess and I am not buying or selling based on your prediction - just interested in your take -
Thanks a million - Jim
China Electric Motor, Inc. Announces Agreement to Purchase 'Sunna Industrial Park' Land and Production Facilities
China Electric Motor (MM) (NASDAQ:CELM)
Intraday Stock Chart
Today : Thursday 6 January 2011
China Electric Motor, Inc. (Nasdaq: CELM, "China Electric" or the "Company"), a Delaware corporation and China-based company that engages in the design, production, marketing and sale of micro motor products, today announced that its indirect wholly owned subsidiary, Shenzhen YuePengCheng Motor Co., Ltd. ("YuePengCheng"), entered into a Property Purchase Agreement (the "Agreement") with Shenzhen Jianhuilong Industry Co., Ltd. ("Jianhuilong") pursuant to which YuePengCheng agreed to purchase (the "Transaction") the remainder of the Shenzhen-based "Sunna Industrial Park" it did not previously own, for approximately RMB170.9 million (or approximately US$25.8 million). The total amount is expected to be paid in a series of installments by January 31, 2011. The closing of the Transaction is expected to take place within 30 days following the date of the Agreement, subject to government approvals.
(Logo: http://photos.prnewswire.com/prnh/20100331/CNW006LOGO)
Transaction Details
The Company, through its indirect wholly owned subsidiary, YuePengCheng entered into the Agreement with Jianhuilong to purchase certain property located at Sunna Industrial Park, 2nd Fuyuan Road, Fuyong Hi-Tech Zone, Baoan District, Shenzhen, the People's Republic of China. The gross floor area of the purchased property is approximately 35,530 square meters (or approximately 382,442 square feet) comprised of three production buildings, an office building, a staff dormitory and a power distribution house. The transaction was independently valued by a 3rd party China-licensed valuation agent at RMB170.9 million (or approximately US$25.8 million). The Company has made a down payment and paid a security deposit of RMB18.4 million (or approximately US$2.8 million), in the aggregate, with the remaining RMB152.5 million (or approximately US$23.0 million) to be paid by January 31, 2011, subject to government approvals.
Since September 2009, China Electric Motor has owned one of the four production facilities located in Sunna Industrial Park, a 6,337 square meter production facility. This company-owned facility, not included as part of today's transaction, represents approximately 60% of the Company's current production capacity, while an additional 20% of the Company's production capacity comes from one of the buildings being acquired in this transaction (the remaining 20% of production capacity is from the Company's leased facility in Zhejiang). In total, full ownership of the Sunna Industrial Park will provide the Company with approximately 25,631 square meters of production capacity in four separate buildings, an office building (10,612 square meters), a staff dormitory (5,395 square meters) and a power distribution house (227 square meters).
Mr. Yue Wang, Chief Executive Officer of China Electric, stated, "Our recent purchase of the Sunna Industrial Park facility represents a cost-effective, long-term investment for China Electric that will increase the stability of our operations and allow us to better forecast expenses. We believe the purchase of this facility will also improve overall efficiency as we consolidate existing operations and future acquisitions into this centralized facility. After a review of our 2011 budget, and in light of a proposed rental increase of almost 50% for our Sunna Industrial Park leased facility, we determined that purchasing the entire facility for our current and future production plans was in the best interest of the Company and the most cost-effective alternative. This facility will serve as our core production hub and will provide China Electric with additional production capacity, paving the way for our future expansion plans."
Wang continued, "We expect to fund this transaction through a combination of existing cash on our balance sheet and cash flow generated from operations in 2011. After the purchase, we will be able to collateralize the purchased property if we were to apply for any bank loans to help fund our operations. We look forward to a more stable manufacturing environment for our business and believe this acquisition provides us with a great opportunity to expand our market position and improve the profitability of our business over time."
About China Electric Motor, Inc.
China Electric Motor, Inc. (Nasdaq: CELM) is a China-based company that engages in the design, production, marketing and sale of micro motor products through its subsidiaries, Shenzhen YuePengCheng Motor Co., Ltd. and Ningbo Heng Bang Long Electrical Equipment Co., Ltd. The Company's products are incorporated into consumer electronics, automobiles, power tools, toys and household appliances, and are sold under its "Sunna" brand name. The Company provides micro motor products that meet the growing demand for efficient, quiet and compact motors from manufacturers of consumer electronics, automobiles, power tools, toys and household appliances. China Electric Motor, Inc. sells its products directly to original equipment manufacturers and to distributors and resellers both domestically in the People's Republic of China and internationally to customers in Korea and Hong Kong. The Company's manufacturing facilities are located in Shenzhen, Guangdong and Ningbo, Zhejiang.
Safe Harbor Statement
This press release of China Electric Motor, Inc. ("China Electric," the "Company," "we," "us" or "our") contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks, uncertainties and assumptions. All statements other than statements of historical fact in this press release are forward-looking statements, including but not limited to, our future financial condition or results of operation, the completion and expected benefits of our planned expansion, the ongoing growth in the sales of our products and our product lines, our access to new markets, our ability to recruit and retain high-quality employees, the success of our growth strategies and the continuing growth of the Chinese economy and Chinese exports. These forward-looking statements are based on management's current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates, but involve a number of unknown risks and uncertainties, including, without limitation, our ability to sustain our recent profitability and growth rates, the possibility that we may not meet production demands and standards at a reasonable cost, increased competition in the micro motor product market, our ability to develop and sell new products or penetrate new markets, our ability to timely bring additional production capacity on line, our ability to maintain and fill order backlog, the success of our strategic investments and acquisitions, our ability to timely develop new production equipment, compliance with and changes in the laws and policies of the People's Republic of China that affect our operations, including its economic policies and other risk factors detailed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and in our subsequent reports on Form 10-Q filed with the Securities and Exchange Commission and available at www.sec.gov. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and actual results may differ materially from the anticipated results. You are urged to consider these factors carefully in evaluating the forward-looking statements contained herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements.
Contact Information:
In China:
Dexter Fong, CFO
China Electric Motor, Inc.
Tel: +86-136-6666-1663
Email: dexterfong@gmail.com
ICR, LLC.
Jeremy Peruski
Tel: +86-10-6583-7508
Email: Jeremy.peruski@icrinc.com
SOURCE China Electric Motor, Inc.
Third Quarter 2010 Financial Highlights
Total revenue increased by 48.9% year-over-year to $32.9 million.
Gross profit increased by 44.9% year-over-year to $9.4 million.
Operating income, including the stock-based compensation expense, was $4.2 million, a 3.8% year-over-year increase.
Non-GAAP operating income, which excludes a stock-based compensation expense of $2.4 million, was $6.7 million.
Net income, including the stock-based compensation expense of $2.4 million, was $2.7 million, a 15.6% year-over-year decrease.
Non-GAAP net income, which excludes a stock-based compensation expense of $2.4 million, was $5.1 million, a 61.0% increase.
Basic and diluted earnings per share were $0.13 each, based on 20,908,863 and 20,947,303 weighted average shares outstanding, respectively.
Non-GAAP basic and diluted earnings per share, which excludes a stock-based compensation expense of $2.4 million, were $0.25 each, based on 20,908,863 and 20,947,303 weighted average shares outstanding, respectively. In the third quarter of 2009, basic and diluted earnings per share were $0.25 and $0.24, respectively, based on 12,926,571 and 13,553,465 weighted average shares outstanding, respectively.
Mr. Yue Wang, Chief Executive Officer of China Electric, said, "During the quarter, we granted 1.2 million China Electric shares to key employees, and we believe that this grant will help us to build loyalty among our high-quality employee base, and to assist in our recruiting efforts. This grant resulted in an approximately $2.4 million stock-based compensation expense for the quarter. We are pleased to have exceeded our revenue guidance for the quarter, as we continued our initiative to focus on sales of our higher-priced products. Our average selling price in the quarter increased by 12.6% over the third quarter of 2009. Our focus on higher-margin sales in China and to OEMs was again successful; however, the positive margin implications of these sales on our net income were partially offset by the $2.4 million non-cash stock-based compensation expense. Without this non-cash expense, we would have exceeded our net income and earnings per share guidance for the quarter."
He continued, "We believe that our investments to increase our manufacturing capacity and modernize our factory equipment in a phased manner will play a major role in the successful execution of our strategy to broaden and deepen our market penetration. During the quarter, we made solid headway on our capacity expansion plans. We completed the installation of two new coreless motor and two new AC motor production lines and we now are offering a new product series for consumer electronics and toys to the market. We have received positive and encouraging feedback thus far on our new products. Our new factory in Zhejiang, equipped with two AC motor production lines, was fully up and running in September and two more AC motor lines were added in October. Production of the two new lines will begin in late November.
"As we approach the end of the year, we are tightening our revenue guidance range for 2010, and have updated our net income guidance to include stock-based compensation expenses related to our employee share grant. We continue to believe that market demand for our products is sustainable, and we are implementing our strategy to leverage this demand and build our leadership position in the market," Mr. Wang concluded.
Business Outlook
The Company believes that strong gross domestic product growth in China and recovering export markets, combined with rising disposable income and the Chinese government's stimulus package relating to subsidies for home and kitchen appliances and vehicle purchases will continue to support increased demand for micro motor products. The Company's goal is to become a global leader in the development and manufacture of micro motor products. R&D investments are focused on products that address industry trends to reduce noise, vibration and energy consumption. China Electric continues its initiatives to increase higher-margin direct sales to domestic OEMs as a proportion of total revenue and has devoted resources to increase brand awareness and product recognition and heighten customer loyalty.
Guidance for Fourth Quarter and Fiscal Year 2010
Fourth quarter of 2010
Revenue in the range of $38.0 million to $39.5 million.
Net income in the range of $5.4 million to $5.6 million, including a non-cash stock-based compensation expense of $0.4 millionfor the fourth quarter of 2010.
Basic and diluted earnings per share are expected to be between$0.24 and $0.25, based on 21,942,243 shares outstanding on a fully diluted basis.
Fiscal year 2010
Revenue to be in the range of $117 million to $119 million
Net income for fiscal 2010 to be in the range of $14.9 million and $15.3 million, including the non-cash stock-based compensation expense of $28.7 million for 2010 full year.
Basic and diluted earnings per share for 2010 will be between $0.74 and $0.75, based on 20,467,329 shares outstanding on a fully diluted basis.
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Tuesday, November 9, 2010
Deal Flow
On November 6, 2010, Ningbo Heng Bang Long Electrical Equipment Co., Ltd. (“Ningbo Electrical”), an indirect wholly-owned entity of China Electric Motor, Inc. entered into an Asset and Business Purchase Agreement with Ningbo Bang Shi Da Electrical Equipment Co., Ltd. and Fan Wenda pursuant to which Ningbo Electrical agreed to purchase the assets and business of Seller for an aggregate purchase price of RMB 49,322,100 (or approximately US$7.4 million, based on the exchange rate as of November 6, 2010) (the “Acquisition”). The purchase price will be paid by Ningbo Electrical in a series of installments, and will be subject to certain adjustments, as described in the Agreement. The Agreement contains customary representations, warranties and covenants, and also provides for a sell back option, exercisable by Ningbo Electrical for up to three years following the closing of the Acquisition, upon the occurrence of certain third party claims against the purchased assets or business, or the inability of Ningbo Electrical to operate the purchased business due to Seller’s material violation of the Agreement. The closing of the Acquisition is expected to take place within 15 business days following the signing date, although there can be no assurance that the Acquisition will be completed on the proposed terms or at all. Each party’s obligation to complete the transaction remains subject to the satisfaction or waiver of various conditions. Ningbo Electrical and Seller may terminate the Agreement prior to closing in certain circumstances.
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Monday, August 9, 2010
Comments & Business Outlook
Second Quarter 2010 Financial Highlights
Total revenue increased by 13.3% year-over-year to $25.3 million, compared to $22.3 million in the second quarter of 2009.
Net income was $4.1 million, a 93.2% increase compared to net income of $2.1 million in the second quarter of 2009.
Basic and diluted earnings per share were $0.20 versus basic and diluted earnings per share of $0.18 and $0.17 in the second.
Mr. Yue Wang, Chief Executive Officer of China Electric, said, "Our strong second quarter results, which exceeded our guidance, were fueled by growing demand for our products and for home appliance motors in particular. We were able to convert favorable industry trends and a robust macroeconomic environment into a larger customer base, and I am pleased to report that we are executing sales and attracting new customers in an increasingly efficient manner. Our intention is to build the proportion of higher-margin sales in China and to original equipment manufacturers ("OEMs") in our sales mix. Our second quarter results demonstrate that we have been able to achieve this yet again."
He continued, "We believe that the strength of market demand is sustainable, and that the quality and flexibility of our products give us the opportunity to gain share and build a leadership position in the market. Therefore, we are building capacity in a phased manner in order to continue to expand our product offering and capture favorable trends in new industry verticals.
"Due to a delay in the expected government approval of our application for a tax reduction in 2010, we have updated our net income outlook for the year. We are confirming our full year revenue guidance," Mr. Wang concluded.
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Friday, August 6, 2010
Financials
Second Quarter 2010 Financial Highlights:
-- Total revenue increased by 13.3% year-over-year to $25.3 million,
compared to $22.3 million in the second quarter of 2009.
-- 60.7% of revenue was from sales to original equipment manufacturers
("OEMs").
-- Gross profit increased by 22.9% year-over-year to $7.4 million versus
$6.0 million in the second quarter of 2009.
-- Operating income was $5.3 million, an 81.2% increase over operating
income of $2.9 million in the second quarter of 2009.
-- Net income was $4.1 million, a 93.2% increase compared to net income of
$2.1 million in the second quarter of 2009.
-- Basic and diluted earnings per share were $0.20 based on 20,744,743 and
20,832,957 weighted average shares outstanding, respectively, versus
basic and diluted earnings per share of $0.18 and $0.17 in the second
quarter of 2009, based on 12,125,842 and 12,510,623 weighted average
shares outstanding, respectively.
Mr. Yue Wang, Chief Executive Officer of China Electric, said, "Our strong second quarter results, which exceeded our guidance, were fueled by growing demand for our products and for home appliance motors in particular. We were able to convert favorable industry trends and a robust macroeconomic environment into a larger customer base, and I am pleased to report that we are executing sales and attracting new customers in an increasingly efficient manner. Our intention is to build the proportion of higher-margin sales in China and to original equipment manufacturers ("OEMs") in our sales mix. Our second quarter results demonstrate that we have been able to achieve this yet again."
He continued, "We believe that the strength of market demand is sustainable, and that the quality and flexibility of our products give us the opportunity to gain share and build a leadership position in the market. Therefore, we are building capacity in a phased manner in order to continue to expand our product offering and capture favorable trends in new industry verticals."
Third Quarter Guidance:
Revenue will be in the range of $30.0 million to $31.5 million. Management expects
Net income to be in the range of $4.3 million to $4.725 million. Management estimates that
Basic and diluted earnings per share will be between $0.20 and $0.22, based on 21,409,960 shares outstanding on a fully diluted basis.
2010 Year End Guidance: ("Due to a delay in the expected government approval of our application for a tax reduction in 2010, we have updated our net income outlook for the year. We are confirming our full year revenue guidance.")
Revenue to be in the range of $110 million to $120 million.
Net income to be in the range of $17.2 million and $18.5 million, primarily due to a delay in the government approval of the Company's tax reduction application in 2010.
Note that the company did not issued full year EPS guidance.
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Wednesday, July 28, 2010
Comments & Business Outlook
The Company estimates that for the second quarter of 2010
Revenue will be in the range of $22.1 million to $24.0 million.
Net income for the second quarter of 2010 to be in the range of $3.4 million to $3.7 million.
Basic and diluted earnings per share for the second quarter of 2010 will be between $0.16 and $0.18, based on 20,832,957 shares outstanding (on a fully diluted basis).
Management had previously estimated
Revenue in the range of $20.0 million to $23.3 million
Net income for the second quarter of 2010 would be in the range of $3.0 million to $3.5 million.
Basic and diluted earnings per share for the second quarter of 2010 to be between $0.141 and $0.165, based on 21,244,743 shares outstanding (on a fully diluted basis).
The Company is constructing new production equipment, which management believes should be capable of producing up to approximately 24 million units annually at full capacity. The testing process for the new production equipment construction is underway. Management expects the first phase of the construction to be completed by the end of July 2010; the delay of roughly one month is the result of strong micro motor demand, which created backlog with equipment providers. Management expects the second phase of construction to be completed before the end of October 2010, and the new production equipment should be fully operational by March 2011.
Mr. Yue Wang, Chief Executive Officer of China Electric, said, "Our revised estimates for the second quarter reflect sustained strong demand for home appliance motors, as well as successful execution of our plan to grow our customer base. We also benefited from an increase in the average selling price during the quarter, particularly in motors used in home appliances. While we expect the strength in the market for home appliance motors to be sustainable, the second quarter is typically one of the strongest for our company and the industry from a demand perspective."
Source: PR Newswire (July 28, 2010)
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Friday, May 14, 2010
Comments & Business Outlook
Mr. Yue Wang, Chief Executive Officer of China Electric, said, "Our first quarter results were in line with guidance and demonstrate progress on our strategy to grow revenue and income by focusing on higher margin sales and initiatives to grow our customer base. While we did sell a higher volume of our lower-priced products in the quarter, the average selling price increased compared to last year. Sales to OEMs continued to grow as a percentage of sales, contributing to margin expansion. This quarter, G&A expenses were exceptionally high due to expenses related to our IPO, and we expect this line item to decrease as the year continues.
"We are confirming our full year guidance as we are confident in our ability to produce micro-motor products that continue to meet growing customer demand in China and internationally."
Management estimates for second quarter 2010:
Revenue: Range $20.0 million to $23.3 million.
Net income: Range of $3.0 million to $3.5 million.
Basic and diluted earnings per share: Between $0.141 and $0.165, based on 21,244,743 shares outstanding (on a fully diluted basis).
Management estimates for 2010:
Revenue: Range of $110 million to $120 million
Net income: Range of $17.1 million and $19.8 million.
The Company believes that strong gross domestic product growth in China and recovering export markets, combined with rising disposable income and the extension of the Chinese government's stimulus package relating to subsidies for home appliance and vehicle purchases will continue to support increased demand for micro-motor products. The Company's goal is to become a global leader in the development and manufacture of micro-motor products. R&D investments are focused on products that address industry trends to reduce noise, vibration and energy consumption. China Electric continues its initiatives to increase higher-margin direct sales to domestic OEMs as a proportion of total revenue and has devoted resources to increase brand awareness and product recognition and heighten customer loyalty.
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Friday, March 5, 2010
Share Structure
Post IPO Share structure as a result of a reverse merger transaction on March 3, 2009, private placement transactions and subsequent IPO on February 3, 2010.
4,612,662: Pre reverse merger outstanding shares
4,612,662: Pre reverse merger warrants outstanding shares
3,260,659: Shares cancelled as part of the Share Exchange
3,985,768: Warrants cancelled as part of the Share Exchange (626,894 remain issued)
500,000: Warrants issued to underwriter
288,000: Conversion of debt by director into common stock
10,679,260: Newly issued revese merger shares of Common Stock
2,051,767: Private placement shares
5,000,000; Newly issued shares of common stock in IPO
750,000: Underwriter over allotment option
GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions: 21,247,924
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CELM (4.71) commentary from Global Hunter - projects EPS of $1.05 for 2011 for a forward PE of 4.5 -
CELM: Initiating coverage of CELM with a Buy rating and $9 price target. Summary: China Electric Motor, Inc. (CELM) is a fast growing micro-motor manufacturer in China primarily serving consumer-related end markets such as home appliances and automotive applications. The company has grown revenue at a 75% CAGR in the last three years, with strong demand driven by overall industrial growth and increasing consumer spending in China. With competitive advantages in low cost manufacturing, R&D capability, production flexibility and quick turnaround, CELM has been taking market share from its international and domestic competitors. We believe CELM has proved its strong execution capability in the last few years with sustained margins, strong operating cash flow and healthy balance sheet. We expect continued growth, driven by capacity expansion and consolidation in a highly fragmented market. Shares are trading at just 4.3x our FY11 EPS estimate, thus we believe the valuation is attractive. We are initiating coverage with a Buy rating and $9 price target, which is 8.6x our FY11 EPS estimate.
Highlights
Strong end-market demand. Both of the CELM’s primary end markets - household appliances and automotive - have been experiencing strong demand and rapid growth, driven by economic growth and rising consumer spending in China. China’s micro-motor industry is expected to produce 10B units in annual output in 2010 and grow at a CAGR of 8%+ for the next five years.
Unique competitive advantages. While the micro motor sector is highly fragmented and competitive, CELM has been able to establish and expand its market share in the last few years. Compared to foreign competitors, CELM has the advantage of low cost manufacturing, production flexibility (to handle large and small orders), quick turnaround time and close customer relationships. Compared to domestic competitors, CELM has large scale production, R&D capability, high product quality and reliability, and strong financial resources.
Strong operating results and financial condition. Despite a global slowdown, CELM achieved strong top line growth with a CAGR of 75% during 2007-2009, driven by strong domestic demand and successful penetration into the automotive market. It has maintained gross margins of 27%-29% and net margins of 14%-15%, thanks to its margin-focused development strategies. With sustained profitability and short DSOs, the company has been generating relatively strong operating cash flow and maintaining a healthy balance sheet, which helped support the company’s continued growth.
Well positioned for further expansion. With capital raised from its IPO and internal cash flow, CELM has been in the process of increasing its production capacity from 24MM units of micro motors at the end of 2009 to a total capacity of 46MM units of AC/DC motors and 43MM units of coreless motors by the end of 2010. Operating in a highly fragmented industry, we believe CELM is also evaluating different acquisition opportunities to increase its product offering and expand market share. We expect the increased capacity and new acquisitions to drive the company’s growth in the next two years.
Risks. Raw materials (mainly copper and steel) are subject to frequent price fluctuation, which could cause volatility in gross margins. Other risks include competition, customer concentration, potential dilution from equity financings, and business execution.
Attractive valuation. We expect the company to generate revenues of $165MM (40% YoY) and $200MM (21% YoY), and EPS of $1.05 and $1.22 in FY11 and FY12, respectively. Shares are trading at just 4.3x our FY11 EPS estimate, a significant discount to the peer group average of 20x.
Initiating coverage with a Buy rating and $9 price target. We like the fundamentals of the company based on its R&D capability, economies of scale, and strong market demand. We expect the company to continue growing, driven by capacity expansion and acquisitions. Shares are attractively valued at just 4.3x forward P/E, at significant discount to peer group P/E of 20x. Thus, we are initiating coverage of CELM with a Buy rating and $9 price target, which is 8.6x our FY11 EPS estimate.
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CELM Video Chart 1/3/11
http://www.qualitystocks.net/videocharts.php
China Electric Motor, Inc. is not a current client of QualityStocks
Good find -
This purchase of Ningbo Bang Shi Da does look very positive
Thanks - Jim
Don't forget the recent purchase of Ningbo Bang Shi Da. It gives them more exposure to the automotive sector.
China Electric Motor, Inc. Announces Acquisition of the Assets of Ningbo Bang Shi Da Electrical Equipment Co., Ltd.
Acquisition will enhance China Electric's DC Motor Unit product line and customer base
SHENZHEN, China, Nov. 9, 2010 /PRNewswire via COMTEX/ -- China Electric Motor, Inc. /quotes/comstock/15*!celm/quotes/nls/celm (CELM 4.44, -0.09, -1.97%) , a Delaware corporation and China-based company that engages in the design, production, marketing and sale of micro-motor products through its subsidiary Shenzhen YuePengCheng Motor Co., Ltd. ("Shenzhen YPC"), today announced that Ningbo Heng Bang Long Electrical Equipment Co., Ltd. ("Ningbo Electrical"), an indirect wholly-owned entity of China Electric Motor, Inc., has agreed to purchase the assets and business of Ningbo Bang Shi Da Electrical Equipment Co., Ltd. ("BSD") for an aggregate purchase price of RMB 49,322,100 (or approximately US$ 7.4 million based on the exchange rate as of November 6, 2010). The purchase price will be paid by Ningbo Electrical in a series of installments, and will be subject to certain adjustments.
BSD, founded in 1997 and based in Ningbo, Zhejiang Province, is a leading manufacturer of DC auto air compressors with an estimated 2010 annual revenue of approximately RMB 80 million and net profit of RMB 10 million. Its products are sold via local distributors to customers in the United States, Canada, Australia, Europe and the Middle East.
Mr. Yue Wang, Chief Executive Officer of China Electric, said, "Our acquisition strategy is focused on companies that have an impressive customer base and technological proficiency that is complementary to our existing business. Further, the deal must be accretive for us to move forward with an acquisition. Our agreement to acquire BSD meets all of these criteria. BSD's products and technological expertise are poised to leverage the automobile industry's booming growth, and they have made great strides in their development of products for hand-held appliances. We believe that BSD's broad customer base will greatly enhance our existing business. As we move forward with our strategic growth plans, we will continue to consider acquisitions that would provide us with a broader range of product offerings and access to new markets, and which would result in a strategic extension of our product line."
http://www.marketwatch.com/story/china-electric-motor-inc-announces-acquisition-of-the-assets-of-ningbo-bang-shi-da-electrical-equipment-co-ltd-2010-11-09
Looks like they have biggest stake in HOME Appliance Motors rather than automotive.
With China car market growing like crazy - it would be nice to seem them more heavily in Auto and Digital
Still I like this one -
CELM - Links to all Redchip updates
http://www.redchip.com/files/redchipReports/CELM_InitialReport.pdf
http://www.redchip.com/files/redchipReports/CELM_20100812_2Q10ResearchNote.pdf
http://www.redchip.com/files/redchipReports/CELM_20100910_2Q10Update.pdf?from=wu09102010
Save me bookmarking them :)
rich
CELM Update from redchip 10th Sept
http://www.redchip.com/files/redchipReports/CELM_20100910_2Q10Update.pdf?from=wu09102010
rich
RedChip following. Looks like RedChip is now following and is reiterating the guidance of .89 EPS. I did a little DD a while back and think this is high based on revised capacity plans. Below is an excerpt of what I posted on a different board. I'm also including an email exchange with Dexter Fong. Anyone else have any opinions?
...
I listened to the conference call this morning and am revising downward my estimates for 2010. The link to the CC is here: http://biz.yahoo.com/cc/6/114006.html
A few important items from the call
- the 24M unit expansion slated for June-July will now be staged throughout the year, with a maximimu expansion of about 15M units/year this year. If my interpretation is correct, we won't actually see an additional 15M units produced, but more on the order of 4.5M (my rationale is in my notes below).
- they are diluting the share count. I was curious previously why they were giving net income guidance, but not PPS guidance, and they basically said on the call it was because they couldn't accurately project the share count going forward.
- they are looking to make one or two accretive acquisitions
In addition, I noticed from the most recent 10Q that their backlog is priced at $3.25/unit, whereas the previous quarters backlog was priced at $3.5/unit. This may be purely a function of product mix, or possibly a reduction in selling price.
So, here are some of my new notes. I tried to include my assumptions, and based my multipliers off of historical ones. Hopefully I'm being too pessimistic. I still like them for 2011, but am having a difficult time determining how they will reach their Net Income guidance this year. I believe they will have to either make an acquisition, or significantly change their product mix to higher margin products.
2010 Estimate
Weighted Average Shares Outstanding - Fully Diluted
2009 12.9M
2010 Q1 18.4M (from guidance in 8K)
2010 Q2 21.2M (from guidance in 10Q)
- $3.55 average selling price/unit (this may be optimistic based on current backlog being priced at $3.25. I used the avg selling price from last year)
- 28.5 M units total production in 2010
o 24M unit current capacity
o 3M units from June expansion (6M/yr for 6 months = 3M)
o 1.5M units from September expansion (6M/yr for 3 months = 1.5M)
- Revenues 28.5 x 3.55 = 101.175
- Gross Profit 101.175 x .28 = 28.329
- Net Income 101.175 x .14 = 14.1645
- EPS 14.2/22 = 0.6455
EMAIL Exchange
Chad:
Thanks for the question, its detailed. We appreciate your attention.
You are basically right in the 4.5M units. However, this is just a guidline management plans on. The first badge of equipments unstalled will be basic, fully automated equipments and they are the most important base for the new addition. Out put can be expanded by around 30% if we go 24/7. And the equipment for the second stage are more flexible in that if we see more orders we can bring in more equipments and ramp up production in a week or so because the second stage equipment do not need much tunning time. Mix of the output can also impact absolute number of units prodiuced. For example, if we tune the equipments for appliance motors, then the out put volume will increase. Hope this will be helpful.
As far as selling price in the back log is concerned, its lower than the ASP in Q1 because its a huge lot of lower priced motors. But margin is good.
dex
Mr. Fong,
Thank you for your reply. I just listened to yesterday’s conference call and have another question about the capacity expansion plans this year. You mentioned that you aren’t going to bring all capacity on line immediately, but rather stage it throughout the year in order to lower depreciation costs, and maximize capacity utilization. Given the current plans, I believe you’ll be bringing on an additional 6M units/yr capacity in June/July, and then another 6M units/yr in the August/September timeframe. By my calculations, I have you increasing actual production this year by approximately 4.5M units. My calculations assume that the new capacity is quoted on an annual basis, therefore the 6M units capacity in June/July will result in 3M units this year, and the 6M units capacity in August/September will yield approximately 1.5M additional units this year. Are my calculations and assumptions correct? I also noticed that the average selling price for backlog orders is $3.25/unit versus the $3.5/unit in the Q1 projections. Has your average selling price reduced, or is this only a function of the current product mix backlog?
-Chad
China Electric Motor, Inc. Schedules 2010 First Quarter Earnings Release on Thursday, May 13, 2010
Friday May 7, 5:54 pm ET
Earnings Conference Call to be held on Friday, May 14, 2010 at 7:00 am (Pacific) / 10:00 am (Eastern) / 10:00 pm (Beijing/Hong Kong)
SHENZHEN, China, May 7 /PRNewswire-Asia-FirstCall/ -- China Electric Motor, Inc. (Nasdaq: CELM; "China Electric" or "the Company"), a Delaware corporation and China-based company that engages in the design, production, marketing and sale of micro-motor products through its subsidiary Shenzhen YuePengCheng Motor Co., Ltd. ("Shenzhen YPC"), today announces that it will release unaudited financial results for the first quarter ended March 31, 2010 after the US market closes on Thursday, May 13, 2010.
The earnings release will be available on the investor relations page of the Company's website at: http://szmotor.investorroom.com .
Following the earnings announcement, China Electric senior management will host a conference call at 7:00 am (Pacific) / 10:00 am (Eastern) / 10:00 pm (Beijing/Hong Kong) on Friday, May 14, 2010 to discuss the Company's 2010 first quarter financial results and recent business activity. To access the live teleconference, please dial +1 866 730 5763 (US) or +1 857 350 1587 (International), and enter the passcode 55295362. Please dial in approximately 10 minutes before the scheduled time of the call.
A replay of the conference call will be available from 11:00 am (Eastern) on Friday, May 14, 2010, by dialing +1 888 286 8010 (US) or +1 617 801 6888 (International) and entering the passcode 70590756.
A live webcast of the conference call and replay will also be available on the investor relations page of China Electric's website at: http://szmotor.investorroom.com .
About China Electric Motor, Inc.
China Electric Motor, Inc. (NASDAQ:CELM - News) is a China-based company that engages in the design, production, marketing and sale of micro-motor products through its subsidiary Shenzhen YPC. The Company's products are incorporated into consumer electronics, automobiles, power tools, toys and household appliances, and are sold under its "Sunna" brandname. The Company provides micro-motor products that meet the growing demand for efficient, quiet and compact motors from manufacturers of consumer electronics, automobiles, power tools, toys and household appliances. China Electric Motor, Inc. sells its products directly to original equipment manufacturers and to distributors and resellers both domestically in the People's Republic of China and internationally to customers in Korea and Hong Kong. The Company's manufacturing facilities are located in Shenzhen, Guangdong.
For further information, please contact:
China Electric Motor, Inc.
Dexter Fong
Tel: +86-755-8278-6083
Email: dexterfong@gmail.com
Simon Ze
Tel: +86-755-8257-7750
Email: ze_simon@hotmail.com
Taylor Rafferty
Ruby Yim
Tel: +852-3196-3712
Email: ChinaElectricMotor@Taylor-Rafferty.com
Delia Cannan
Tel: +1-212-889-4350
Email: ChinaElectricMotor@Taylor-Rafferty.com
Source: China Electric Motor, Inc.
Not sure if this is responsible for today's run up, but it's good PR regardless.
http://stocks.investopedia.com/stock-analysis/2010/Best-IPOs-In-First-Quarter-Of-2010-CELM-PRI-PDM-FNGN-HTHT0422.aspx?partner=YahooSA
All computes... forward! eom
rich
Received a reply from IR, and it is 48M. I like it.
Sold yesterday at $7.65 - back in today.
lmcat
Thanks. I think I misinterpreted your initial reply. About the 2 minute mark the speaker indicated the new plant will have a capacity of 24M, making total capacity 48M. For some reason, I interpreted your reply as 24M total. Doh! The problem as usual appeared to be within the 6 inches of my left and right ears.
Never a bad idea...
It's here....
http://biz.yahoo.com/cc/9/112109.html
rich
Couldn't locate the con call, so I shot a note to their IR. I'll let you know what I hear back.
-Chad
Think from the Conference call you should still be able to listen- I made a note in my spreadsheet.
rich
Are you taking the number from the 10K in the Manufacturing section? I assumed that it was the current capacity, and that the factory coming online in July would further increase it. I could, of course, be totally wrong.
New capacity is 24 Million... it's a double.
rich
Found this in the 10K as well ...
"Capacity expansion plans are on track, with the new production line expected to commence production in July 2010."
Have you seen any projections on the impact to total capacity? Their current capacity appears to be around 24 million micro-motor units annually (from the 10K).
-Chad
Hmm... well from the 10-K there were an aggregate of 20,744,743 shares outstanding of registrant’s common stock, par value $0.0001 per share, as of March 29, 2010 [1].
So, I would expect the weighted average to trend up - not sure if it's 20M from Q2 onwards?
That said they have steller finacial numbers - Rev $22M for quarter and Receivables of $8.5M! Wow, I thought I was dreaming. They have 10 million in the bank and cash flow positive from operations to the sum of 9M for the year.
I'm not sure how capital intensive they are but *IF* they don't need to dilute then this is cheap as chips at this level, still.
It's not complete plain sailing - price ramps in iron ore can have temporary affects on margins. Half of the products are exported (mainly to Korea think they are expecting to reduce this to 45%) - so we're reliant on world holding together and any changes in exchange rates not impacting margins too much (only 5% trade to US so they don't matter).
rich
[1] http://www.sec.gov/Archives/edgar/data/1421526/000114420410016950/v179203_10k.htm
From the most recent 8K
"Guidance for First Quarter and Fiscal Year 2010
As of March 31, 2010, the Company reports that there are 2.5 million AC motor units with an average selling price of $3.50 in the backlog; these products are mainly are used for industry drives and control motors. Management estimates that revenue for the first quarter of 2010 will be in the range of $20.7 million to $21.2 million, and that revenue for fiscal year 2010 will be in the range of $110 million to $120 million. Management expects net income for the first quarter of 2010 to be in the range of $3.0 million to $3.25 million, and net income for fiscal 2010 to be between $17.05 million and $19.8 million. Management estimates that basic and diluted earnings per share for the first quarter of 2010 will be between $0.163 and $0.176, based on 18,436,389 shares outstanding (on a fully diluted basis)."
Using their numbers, the EPS projection for 2010 is in the .93 to 1.07 range.
Taking a middle value of $1 and PE 10 yields $10 pps
http://idc.api.edgar-online.com/efx_dll/edgarpro.dll?FetchFilingConvPDF1?SessionID=DqumHtpdpUK1fIS&ID=7157003
Wishing you bought more is definetly the preferred feeling to it's converse
Thanks. I was scratching my head on this one. Wish I had bought more in the 5's, but that's always the case.
A bit of momentum + There was a conference over the w/e in Bejing and a few more punters heard about this cheap stock, that's my guess anyways.
rich
Nothing slow about today. Anyone have an opinion as to the catalyst(s)?
Up nicely today, slow and steady climb.
lmcat
When I meant fast I meant the next few months. Sorry if I was a little excited.
Whoa cowboy!! I'd be happy with $7.00
Nice Close! This thing is going to $10 in a hurry in my opinion. It is on a lot of people's radar and they are now beginning to jump in. Get in now in my opninion!
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China Electric Motor, Inc. is a China-based company that engages in the design, production, marketing and sale of micro motor products through its subsidiaries, Shenzhen YuePengCheng Motor Co., Ltd. and Ningbo Heng Bang Long Electrical Equipment Co., Ltd. The Company's products are incorporated into consumer electronics, automobiles, power tools, toys and household appliances, and are sold under its "Sunna" brand name. The Company provides micro motor products that meet the growing demand for efficient, quiet and compact motors from manufacturers of consumer electronics, automobiles, power tools, toys and household appliances. China Electric Motor, Inc. sells its products directly to original equipment manufacturers and to distributors and resellers both domestically in the People's Republic of China and internationally to customers in Korea and Hong Kong. The Company's manufacturing facilities are located in Shenzhen, Guangdong and Ningbo, Zhejiang.
Contact Information
China Electric Motor, Inc. Investor Relations
+1-646-405-4933
SOURCE China Electric Motor, Inc.
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