Good article on CSGH:
Power Up Your Portfolio with China Sun Group
Written on Wednesday, December 23rd, 2009 by Rick Telfur
China Sun Group High Tech Co. (OTC:CSGH) may not be as popular as A123 Systems, Inc. (NASDAQ:AONE) or Ener1, Inc. (NASDAQ:HEV), but it is the only profitable company of the three and is trading at just 11x trailing 12-month earnings.
China Sun Group develops cobalt and lithium-ion battery component materials via its subsidiary, Dalian Xinyang High Tech Development Co). The company’s three main products are currently cobalt carbonate, cobaltosic oxide, and lithium cobalt oxide, which are all used in the production of lithium-ion batteries.
Recently, China Sun Group obtained a patent on its process for a next-generation power source called lithium iron phosphate that will be used in electric and hybrid vehicles. These batteries provide greater power, longer range, and better safety than other alternatives, while also recharging in just a few hours and providing full power until fully discharged.
Lithium Iron’s Powerful Potential
Lithium iron phosphate batteries are lithium-ion batteries that use lithium iron phosphate as a cathode material. When compared to standard lithium-ion batteries, these batteries have an improved safety through higher resistance to thermal runway, longer cycle and calendar life, higher current or peak-power ratings, and a lower impact on the environment.
While China Sun Group anticipates continued growth in the sales of its existing cobalt-based products, it noted that it could see sales of lithium iron phosphate adding up to 20% of total revenues in 2010. Meanwhile, the company remains highly confident that testing will be completely successful, in a recent interview.
China Sun Group has already been working with a partner in China to produce batteries that utilize its new lithium iron phosphate technology. The company manufactured and delivered prototypes to 21 customers undergoing technical testing, while demonstrating the technology to electric vehicle manufacturers to facilitate sales of the finished product.
A Compelling Fundamental Valuation
China Sun Group continues to trade at a compelling valuation based on both its historical and projected earnings growth rates. The stock currently trades at just 11x TTM earnings, with historical growth of around 50% in 2008. While growth in 2009 has moderated somewhat, the company’s new lithium iron phosphate technology could become a growth driver.
At the same time, the China Battery Industry Association’s research suggests that demand for portable and green technology in China alone will fuel a 30% annualized growth in demand for lithium-ion batteries. Meanwhile, China’s five year development program actually lists lithium-ion battery development as its third objective.
In addition to its strong growth potential and cheap valuation, China Sun Group also maintains a very healthy underlying balance sheet with no debt and $9 million in cash. Meanwhile, the stock trades at just 60% of its book value and only 2 times its revenues. Combined, these attributes make it a bargain for many value investors looking for a risky addition to their portfolio.
Takeaway Points…
China Sun Group is seeing significant growth in its lithium-ion battery sales and its new lithium iron phosphate batteries could be a strong catalyst going forward.
China Sun Group also maintains a strong balance sheet with no debt and $9 million in cash, while only trading for 60% of its book value.
http://sumfolio.com/power-up-your-portfolio-with-china-sun-group-103/
News 
Market Data 
Discover 
AI
