DIAS Holding, Inc.(fka DSHL)

[sliverbullet]

Look at this article, Componus/DIAS merger couldnt be at a better time. Amazing growth going on in China's automotive market right now and it's just the beginning.

China Automotive Systems on fast track
Thursday August 7, 6:13 am ET
Shannon Roxborough

On China's vast system of roads and highways, where traffic was once almost exclusively made up of bicycles, two-wheel modes of transport are increasingly sharing the pavement with cars of every stripe—from a wide range of American, European and Japanese imports to a host of affordable offerings from homegrown automakers.

In fact, the automotive industry in China has grown by leaps and bounds in the past several years, thanks to the country's 2001 entry into the World Trade Organization and its phenomenal economic progress. Annual sales of passenger vehicles doubled between 2003 and 2007, driving China past Japan into the spot of the world's second-largest vehicle market after the United States.

While the global auto industry is being battered by sagging economic conditions that have caused consumers to put big-ticket items on the back burner, China's vehicle sales continue to increase, albeit at a slower pace than in previous years. And in one segment of the automotive sector, a domestic player is accelerating fast, grabbing market share and expanding its alliances with automakers to cash in on the automotive boom. Meet China Automotive Systems, Inc. (NasdaqCM:CAAS - News), a top supplier of automotive steering systems and components to Chinese automakers and, to a lesser extent, the American market.

Operating through seven Sino-foreign joint ventures from its base in the south-central city of Jingzhou in Hubei province, nine-year-old China Automotive has grown to become a major player in its niche, supplying the expanding mainland passenger and commercial vehicle market. The company produces over 1 million power steering systems as well as steering columns, steering pumps and steering hoses. Its customer base is primarily comprised of Chinese auto and truck manufacturers including Chery Automobile Co., Ltd., Beiqi Foton Motor Co., Ltd., Dongfeng Auto Group Co. and China FAW Group, Corp. In total, it has forged relationships with over 60 vehicle manufacturers, including joint ventures established by General Motors (NYSE:GM - News) and Volkswagen. The company also markets parts and provides after sales service and R&D support in North America through its subsidiary, Henglong USA Corporation, based in Troy, Mich., a suburb of Detroit.

China Automotive raced through the first quarter, finishing with exceptional result that included a 46% increase in net sales, which rose to $41.5 million, and a nearly 170% spike in net income, which shot up to $4.4 million. The top brass expects second-quarter revenue to cross the finish line at over $52 million, which would mean more than a 43% year-over-year increase, with diluted earnings per share (EPS) of between $0.18 and $0.22.

Last month, the company's Jingzhou Henglong Automotive Parts Co. subsidiary won a contract to supply Dongfeng Peugeot Citroen, a Chinese-French venture, with 3000 units of power steering gears for its 206 model subcompact car. The two companies are also on the verge of finalizing terms for orders for two other Dongfong Peugot models.

While some industry watchers express concerns over the state of China's economy, the mixed signals being sent by Chinese consumers, and surging production costs being faced by auto manufacturers, others are anything but fearful about the health of the Chinese auto market.

Analyst Ping Luo of Global Hunter Securities kicked off coverage of China Automotive Systems with a "buy" rating and a 1-year target price set to $9. The analyst noted the company's robust supply agreements with leading original equipment manufacturers and said it is poised for growth going forward, bolstered by the expansion of the domestic auto market in China. Global Hunter expects China Automotive to generate top-line growth of 30% in the next two years, fueled by rising in domestic sales and foreign exports.

According to Indian research firm RNCOS, publishers of the China Automobile Industry Forecast (2006-2010), even with the rise of gasoline prices and slower-than-expected growth in the Chinese auto market (which is expected to dip to around 15%, down from 22% in 2007 and 24% in 2006), the continuing increase of discretionary income among the Chinese should mean ongoing growth in auto sales, thus China Automotive's business.

China Automotive's fortunes are inseparably linked to the performance of the overall domestic auto market (if the sector is being squeezed, auto parts suppliers feel the pinch in their bottom line). And while there's no question that the Chinese auto business faces serious obstacles to achieving growth on par with the lofty numbers seen in recent years, a slowdown was inevitable given the sheer size of the market.

The company has a lot riding on the strength of the burgeoning Chinese auto industry, which according to the latest report released by the China Association of Automobile Manufacturers, is still "showing stable growth." If the assessment proves to be everything it is cracked up to be, China Automotive appears well on its way to steering clear of bumps in the road to continued success.

The stock, which has traded between $4.40 and $10.47 over the past 52 weeks, closed at $6.xx on Wednesday.

http://biz.yahoo.com/smallcapinvestor/080807/10579.html?.v=1