Interesting article. Notice that this is their first TRT. Wonder how many they will get going.
China Recycling Energy Corp. is on the rise
China Recycling Energy Corp. (Public, OTC:CREG) has leaped 216% in the last 5 days and the big jumped happened on Monday (9/24). Now shares are just under $1 so is it too late to cash in on this fast moving OTC?
Long story made short -- No it's not too late.
Since we all have been trying to discover stocks which are using environmental friendly ways to produce electricity and can strengthen the independency of a country from the depleted fossil fuels especially oil, I'm all over China Recycling Energy (CREG) likes flies on trash. Who are they? CREG is a brand new company which invests in producing electricity from waste and recycling materials as raw materials. They belong in the same category as China Industrial Waste Management (CIWT) in terms of the cheap raw materials used at its production procedure. Does China Industrial Waste Management Inc. (OTC:CIWT) - China's Modern King of Waste Management bring back any memories?
Some well experienced Chinese engineers with major expertise in such production procedures teamed up to create this company and OTC dream stock away. Its power systems can generate electricity from systems called as TRT (blast furnace top pressure recovery turbine unit), CHPG (Recovery of cement residual heat), GTPG ( Gas turbine power generation) and CGGE (power generated by coal gangue). They sell the electricity to major consumers like steel industries or public facilities so there are always potential customers for their energy. Additionally they can manufacture customized power systems tailored to the needs of the users.
They are currently operating a TRT power system for a major steel company and they have been in discussion with other steel companies of the same sector for further expansion. A moderate estimate for the revenue from their first TRT power system above are planned to be about $7 million until 2012. Since their net profit margin is ranging from 70 - 80 % of the respective revenue as shown at their income statement, we can easily conclude about the annual net earnings generated by their first operational power system. The reason for the high margins as mentioned above is the cheap cost of revenue as we all understand -- it's garbage, trash is not expensive. So since the estimated earnings for 2007 should come in about $600,000 to $800,000, not bad.
Needless to say that the majority of the company is owned by the directors and the insiders which is a positive sign for the future growth of CREG from my perspective. As shown at the latest 13F form of SEC, the only institutional major holder is the American Fund of Pope Asset Management which has a success in picking up promising profitable small cap companies generally so this could provide a further credibility to the corporate quality of CREG.
Yes the stock has jumped big time in the last few days, but there's still money to be made here, so let's wait for a slight pull back.
Article written by: Steve Reeves
Article posted on: September 25th, 2007
Disclaimer: The Author does not own any positions in the securities listed in this publication..
