China Growth Stocks

[Brennus]

CHGS 4q ought to be VERY interesting.

We should collectively follow up on this during the call, but CHGS said batch production of precision abrasives would start in early September. Full year sales should be 2000 tons or about 70MM RMB. This number jibes with text of the 3q09 press release:

"The Company has also announced its first abrasives sales contract with a Taiwan-based customer. The term of the contract is five years, with 300 to 1,000 tons of the product delivered each month."

So 2000 tons in the 4q09 (assuming no shipments in 3q) is about the midpoint of the 1000 to 300 tons/month range.

This quarter CHGS did a little less than 15MM in revenue. The total revenue for precision abrasives in 2009 that I have in my notes is a little high...my notes say 70MM RMB from abrasives in 2009. That would be over 10MM USD, which seems a little high. I wonder now if they actually said 17MM instead...which would still be over 15% of revenue.