Friday, August 05, 2011 10:57:31 AM
CALI to $10
CALI
CALI - Price/Sales: 0.11x (Actual) - (Industry Average: 0.70x)
CALI - Price/Book Value: 0.74x (Actual) - (Industry Average: 3.10x)
CALI - Operating Profit Margin: 4.21% (Actual) - (Industry Average: 4.70%)
CALI - Net Profit Margin: 3.05% (Actual) - (Industry Average: 3.47%)
CALI - Revenue Growth - MRQ: 49.98% (Actual) - (Industry Average - MRQ): 9.77%)
CALI - Revenue Growth - TTM: 27.00% (Actual) - (Industry Average - TTM): 14.48%)
Earnings growth at CALI outpaced revenue growth over the trailing twelve months. This result was better than that of the average company in the same industry where competitors earnings fell over the period.
CALI - Return On Equity: 23.61% (Actual) - (Industry Average: 12.50%)
CALI - Return On Assets: 10.24% (Actual) - (Industry Average: 2.80%)
CALI - Return On Investment: 23.81% (Actual) - (Industry Average: 4.55%)
CALI - Revenue Generated By Each Employee: $1,271,174 (Actual!) - (Industry Average: $0,645,082)
As you can see, CALI has consistently been one of the most efficient companies in the entire industry. With a Return on Assets, Return on Equity, and Revenues Per Employee of 10.24%, 23.61%, and $1,271,174 respectively, they are a company to be reckoned with - now and into the future as well.
CALI - Total Debt/Total Capital (MRQ): 50.51% (Actual) - which continues to improve.) - (Industry Average: 55.59%)
Validea Momentum Strategy based on book by Validea:
The EPS growth for this quarter relative to the same quarter a year earlier for CALI (37.50%) is above the minimum 18% that this methodology likes to see for a "good" growth company. Therefore, CALI passes the requirement.
Each year's EPS numbers should be better than the previous year's. One dip is allowed, but the following year's earnings should be a new high. According to this methodology, CALI, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were -0.05, 0.25, 0.32, 0.31, 0.44, passes this criterion. The one dip is considered acceptable, as earnings quickly rebounded after the decline.
Confirmation that a company's industry is attractive by confirming that at least one other company in the industry has a relative strength above 80. There is confirmation in CALI's industry (Auto & Truck Manufacturers), as there are 3 companies that have a relative strength at or above 80.
Companies who have consistently cut debt over the last 3 years, or who have a Debt/Equity ratio less than 2, are looked at favorably. CALI, which has a Debt/Equity ratio of 0.00%, passes this test.
Preferred companies must have a ROE of at least 17%. CALI's ROE of 23.6% is above the minimum 17% that this methodology likes to see, and therefore passes the criterion.
Shares outstanding should be less than 30 million, as fewer shares mean bigger price jumps when demand surges. However, there is no penalty for a large number of shares outstanding as long as all the other parameters are met. CALI currently has 19 million shares outstanding, which is favorable.
For the Value Investor based on book by Benjamin Graham:
SECTOR: CALI is neither a technology nor financial Company, and therefore this methodology is applicable.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for CALI is $0.0 million, while the net current assets are $37.1 million. CALI passes this test.
P/E RATIO: The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. CALI's P/E of 4.10 (using the 3 year PE) passes this test.
RICE/BOOK RATIO: The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. CALI's Price/Book ratio is 0.66, while the P/E is 4.10. CALI passes the Price/Book test.
Small Cap Growth Investor based on book by Motley Fool:
COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for CALI (37.50% for EPS, and 49.97% for Sales) are good enough to pass.
CASH FLOW FROM OPERATIONS: A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. CALI's free cash flow of $0.88 per share passes this test.
PROFIT MARGIN CONSISTENCY: CALI's profit margin has been consistently increasing over the past three years (Current year: 3.11%, Last year: 2.58%, Two years ago: 2.10%), passing the requirement. It is a sign of good management and a healthy and competitive enterprise.
CASH AND CASH EQUIVALENTS: CALI's level of cash $17.7 million passes this criteria. If a company is a cash generator, like CALI, it has the ability to pay off debt (if it has any) or acquire other companies. Most importantly, good operations generate cash.
INVENTORY TO SALES: This methodology strongly believes that companies, especially small ones, should have tight control over inventory. It's a warning sign if a company's inventory relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Inventory to Sales for CALI was 7.72% last year, while for this year it is 7.39%. Since the inventory to sales is decreasing by -0.33% the stock passes this criterion.
ACCOUNT RECEIVABLE TO SALES: This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for CALI was 13.02% last year, while for this year it is 20.58%. Although the AR to sales is rising, it is below the max 30% that is allowed. The investor should still consider this stock because all other criteria appear very attractive.
LONG TERM DEBT/EQUITY RATIO: CALI's trailing twelve-month Debt/Equity ratio (0.00%) is at the best level according to this methodology because the superior companies that you are looking for don't need to borrow money in order to grow.
AVERAGE SHARES OUTSTANDING: CALI has not been significantly increasing the number of shares outstanding within recent years which is a good sign. CALI currently has 19.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock.
SALES: Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. CALI's sales of $284.7 million based on trailing 12 month sales, are great, making this company one such "prospective gem". CALI passes the sales test.
INCOME TAX PERCENTAGE: CALI's income tax paid expressed as a percentage of pretax income this year was (26.95%) and last year (26.55%) are greater than 20% which is an acceptable level. If the tax rate is below 20% this could mean that the earnings that were reported were unrealistically inflated due to the lower level of income tax paid. This is not a concern with CALI.
Contrarian Investor based on book by David Dreman:
P/E RATIO: The P/E of a company should be in the bottom 20% of the overall market. Dreman uses the PE based on five year average earnings for cyclicals to counteract the fluctations in earnings they experience. CALI's P/E of 5.80 meets the bottom 20% criterion (below 8.61), and therefore passes this test.
PRICE/CASH FLOW (P/CF) RATIO: The P/CF of a company should be in the bottom 20% of the overall market. CALI's P/CF of 3.14 meets the bottom 20% criterion (below 5.19) and therefore passes this test.
PRICE/BOOK (P/B) VALUE: The P/B value of a company should be in the bottom 20% of the overall market. CALI's P/B is currently 0.66, which meets the bottom 20% criterion (below 0.75), and it therefore passes this test.
CURRENT RATIO: A prospective company must have a strong Current Ratio (greater than or equal to the average of it's industry [1.23]). This is one identifier of financially strong companies, according to this methodology. CALI's current ratio of 1.52 passes the test.
PAYOUT RATIO: A good indicator that a company has the ability to pay or even raise its dividend is a low payout ratio. The payout ratio for CALI is 0.00%. CALI passes the payout criterion.
RETURN ON EQUITY: The company should have a high ROE, as this helps to ensure that there are no structural flaws in the company. This methodology feels that the ROE should be greater than the top one third of ROE from among the top 1500 large cap stocks, which is 18.11%, and would consider anything over 27% to be negative. The ROE for CALI of 23.61% is high enough to pass this criterion.
LOOK AT THE TOTAL DEBT/EQUITY: The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry of 499.27%. CALI's Total Debt/Equity of 103.16% passes the criterion.
Growth Investor based on book by Martin Zweig:
SALES GROWTH RATE: An important issue regarding sales growth is that the rate of quarterly sales growth is rising. To evaluate this, the change from this quarter last year to the present quarter (50%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (12.6%) of the current year. Sales growth for the prior must be greater than the latter. For CALI this criterion has been met.
CURRENT QUARTER EARNINGS: The criteria is that the current EPS be positive. CALI's EPS ($0.11) passes this test.
QUARTERLY EARNINGS ONE YEAR AGO: The EPS for the quarter one year ago must be positive. CALI's EPS for this same quarter reported last year ($0.08) pass this test.
POSITIVE EARNINGS GROWTH RATE FOR CURRENT QUARTER: The growth rate of the current quarter's earnings compared to the same quarter a year ago must also be positive. CALI's growth rate of 37.50% passes this test.
EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: If the growth rate of the prior three quarter's earnings, 45.83%, (versus the same three quarters a year earlier) is greater than the growth rate of the current quarter earnings, 37.50%, (versus the same quarter one year ago) AND only if the growth rate in earnings between the current quarter and the same quarter one year ago is greater than 30%, then the stock would pass. The growth rate over this period for CALI is 37.5%, and it therefore passes this test.
TOTAL DEBT/EQUITY RATIO: A final criterion is that a company must not have a high level of debt. A high level of total debt, due to interest expenses, can have a very negative effect on earnings if business moderately turns down. If a company does have a high level, an investor would want to avoid that particular stock altogether. CALI's Debt/Equity (103.16%) is not considered high relative to its industry (499.27%) and it therefore passes this test.
Price/Sales Investor based on book by Kenneth Fisher:
PRICE/SALES RATIO: The prospective company should have a low Price/Sales ratio. Cyclical companies with Price/Sales ratios below or equal to 0.4 are tremendous values and should be sought. CALI's P/S ratio of 0.1 based on trailing 12 month sales, is well below 0.4 which is considered very favorable. It passes this methodology's P/S ratio test with flying colors.
Price/Sales Ratio: The Price/Sales ratio is the most important variable according to this methodology. The prospective company should have a low Price/Sales ratio. CALI's Price/Sales ratio of 0.10 passes this criterion.
FREE CASH PER SHARE: This methodology looks for companies that have a positive free cash per share. Companies should have enough free cash available to sustain three years of losses. This is based on the premise that companies without cash will likely soon be out of business. CALI's free cash per share of 0.88 passes this criterion.
Growth/Value Investor based on book by James P. O'Shaughnessy:
PRICE/SALES RATIO: The Price/Sales ratio should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. CALI's Price/Sales ratio of 0.10, based on trailing 12 month sales, strongly passes this criterion.
China Auto Logistic Inc.
No. 87 No. 8 Coastal Way Floor 2
Construction Bank FTZ
Tianjin, 300461
United States - Map
Phone: 86 22 2576 2771
Website: http://www.chinaautologisticsinc.com
About CALI - What they do:
Full Time Employees: 224
The Company's position as one of China's leading sellers of luxury imported autos with a base of 3,000 agents and dealers in more than 100 cities nationwide. Underlying this growth, the Company provides a unique "one stop" customs clearance, storage, delivery and finance service to imported auto dealers nationwide and is #1 in Tianjin (China's leading port for auto imports). The Company also operates www.at188.com, the largest website in China for imported auto dealers and customers.
It has expanded into the much larger domestic auto market with comprehensive, real-time, accurate trading information on the auto markets in 12 key cities throughout China, matching buyers with local dealers in a visually exciting, interactive format. CALI also operates www.at160.com, a national site serving China's domestic auto buyers and dealers. Consumers in each of the 12 cities the Company is now covering may access information on their local market with a single click. The Company's website business is being fueled by continuing strong domestic growth in auto sales and rapidly growing internet usage. Going forward, CALI expects significant growth in website advertising and web-based services. In addition, planned new online services will support the needs of the nation's auto dealers and provide consumers with the information they need to make purchase decisions in a market where only 20+ out of 1000 consumers owns an automobile compared with 600 out of 1000 in the U.S.
China Auto Logistics Inc.is engaged in automobile sales, custom clearance services, storage services and national transportation. It is also one-stop service provider in Tianjin, providing dealer financing to its customers. Its core business is selling the domestically manufactured automobile model, CHARADE. In November 2010, the Company completed the acquisition of www.goodcar.cn .
Sale of Imported Automobiles:
The Company conducts its sales operations of imported automobiles primarily through Tianjin Seashore New District Shisheng Business Trading Group Co. Ltd. (Shisheng) and Tianjin Zhengji International Trading Corp. (Zhengji). It sells approximately 25% of the vehicles to authorized dealers like Ford or Lexus, 70% to free traders or wholesalers located in inland China or non-port cities and 5% to government agencies and individual customers. Its sales network has approximately 3,000 agents and dealers in more than 100 cities. Shisheng is also an authorized agent for Mercedes Benz ambulances and fire trucks. It also works closely with automobile dealers in the overseas market.
Financing Services:
The Company’s financing services include letter of credit issuance services, purchase deposit financing, and import duty advance services. It provides financing services to its customers using its facility lines of credit with its banks. It earns a service fee for drawing its facility lines related to customers’ purchases of automobiles and payment of import taxes. These service providers are located in the port cities of Dalin, Tianjin, Shanghai and Guangzhou.
Automobile Import Value Added Services:
The Company is focusing to transform into a logistic provider. The imported automobile service industry has developed to address these barriers by providing customs clearance, storage and delivery services for the dealers and agents. These service providers are located in the port cities of Dalin, Tianjin, Shanghai and Guangzhou. The Company offers a value-added delivery service to inland China by air, by sea or by truck.
In addition, the company operates two Websites, www.at160.com, which provides quotes and other information on domestically manufactured automobiles; and www.at188.com that offers information on imported automobiles for the industry and individuals.
CALI - Observation, Facts and a glimpse of Future Trends:
CALI continues to expand its access to customer financing capital, has continued positive earnings, and a bright, profitable future going forward. With the PE and Price to Book ratios revealing the most appropriate valuation measures, CALI is currently an extremely underpriced stock with an actual PE value of (incredibly) approx 3.06x. As a comparison, the sector average is around 17x.
CALI's average share price, using the industry average ratio, should be priced at a minimum of$7+/share after the latest 10Q report and future guidance - yet CALI, despite 20 stright quarters of strong double digit growth combined with tidy profits and a very low share float, has somehow floundered below it's true value by a factor of at least 6+ (ie $1.45 x 6 = $8.70) and the fact that we will continue to witness the trend of investors fleeing a fair number of stocks tied to increasingly nervous companies based in the highly indebted, revenue needy (ie..practically bankrupt goverments) and increasingly currency weak economies of the western countries and you are now looking at a recipe for investors to inject some serious coin into company shares like CALI as investors search out profitable companies based in countries, such as China, in which one can invest with a fair amount of confidence of uninterupted strong growth and profits.
Recently CALI has suffered from a lack of visibility and focus by a large majority of level headed investors, many who refuse to invest in a stock based merely on the stocks current trading price rather taking the time to do some DD to discover a stock such as CALI that has an actual true value well above $5, creating a bizarre circle where the stock is underpriced because too many investors won't touch stock below a certain price level - leaving the stock looped in a vicious circle, continuing to be be extremely undervalued and underpriced. But not forever. At some point the stock breaks out and reaches forward towards its true valuation. It is my belief that CALI is very close to breaking out upwards toward its true price per share valuation. Very, very close.
The recent incredibly huge burst of volume in early July 2011, which saw an average trading day volume of around 12,000 shares per day explode to over 2.2 Million shares trade in just a single day (on July 7th), has most definitely increased visibility substantually, and, when combined with the handful of currently reported institutional holdings of CALI stock (who, by the way, usually won't even look at any stock trading below at least $5/share, let alone invest in it), clearly portends an upward valuation adjustment in share price as stronger hands and smart investors institute a steady scoop up available shares at these insanely low price levels from inexperienced/impatient sellers, slowly (so far) but surely increasing the percentage of ownership in CALI stock within their portfolios.
CALI stock, clearly, has been manipulated down with laser-like precision (price-wise) - an obvious targeting - especially after seeing more than 10% of all outstanding stock trade in one single day, which uncloaked the open but apparently largely unoticed tamping down of the stock price - even in the face of such an unprecedented and extreme surge of volume in CALI's trading pattern followed by a lighting fast drop in stock price, again, despite the clearly obvious lack of any strong selling pressure that would cause the stock price to drop so quickly and so extremely during the relatively low volume trading days that followed over the course of a mere 3 weeks! With the continued above double digit growth, true fair value of the stock should reach into the $9+ - $12/share range soon.
They are about to conduct a Blitz campaign in order to raise this stock to it's proper trading value (.46/share profit of last year will easily be above .50/share profit this year and is CALI expected to continue to grow at a double digit pace for many years to come. If real investors can buy and hold (next Q report is Aug 15 or 16) a good amount of the low float, thus knocking these penny profit day traders out of the way for a bit, this puppy is ready to set new highs in the $8 - $10+ range. For Real - Check it!
Company Executives - Biographies:
Name Age Since Current Position
Shiping,Tong 50 2008 Chairman of the Board, President, Chief Executive Officer
Mr. Tong Shiping is Chairman of the Board, President, Chief Executive Officer of China Auto Logistics Inc. Mr. Tong has served as President and Chief Executive Officer of the Company since 1995, when Shisheng was founded. He earned his Bachelors degree in computer science from the China Air Force Engineering University. Mr. Tong is also Director of the Tianjin Car Logistics Association.
Xinwei,Wang 53 2001 Chief Financial Officer, Vice President, Treasurer
Ms. Wang Xinwei is Chief Financial Officer, Vice President, Treasurer of China Auto Logistics Inc. Ms. Wang has served as the Chief Financial Officer, Treasurer and Vice President of the Company since joining Shisheng in 2001. She earned her Bachelors degree in industry accounting from Tianjin Radio and TV University. Ms. Wang is a qualified Chinese Certified Public Accountant.
Yangqian,Li 44 2003 Chief Operating Officer, Vice President
Mr. Li Yangqian is Chief Operating Officer, Vice President of China Auto Logistics Inc. Mr. Li has served as Vice President and Chief Operating Officer of the Company since 2003. He earned his Masters degree in engineering from Tianjin University. From 2001 to 2003, Mr. Li served as the regional manager for Tianjin OTIS Elevator. Mr. Li is also the deputy chairman of the China Automobile Dealers Association – Marketing Division.
Weihong,Cheng48 2008 Senior Vice President, Secretary, Head - Human Resources and General Administration, Director
Ms. Cheng Weihong is Senior Vice President, Secretary, Head - Human Resources and General Administration, Director of China Auto Logistics Inc. Ms. Cheng has served as Secretary and Senior Vice President (Head of Human Resources and General Administration) of the Company since 1995. She earned her Bachelors degree from Shijazhuang Military Medical University. Ms. Cheng is also a co-founder of Shisheng and has served as the Chairwoman of Shisheng since 1995.
Bin Yang 38 2008 Senior Vice President, General Manager, Head - Sales, Director
Mr. Yang Bin is Senior Vice President, General Manager, Head - Sales and Director of China Auto Logistics Inc. Mr. Yang has served as the Senior Vice President, General Manager, Head of Sales since 2003, when he joined Shisheng. He earned his Bachelors degree from Foreign Trade Nankai University and an Executive M.B.A. from Tsing Hua University. Prior to joining Shisheng, Mr. Yang served as the general manager of Tianjin Yingzhijie Car Trading Corp. from 1999 to 2003. Mr. Yang also serves with a Division of the China Association of Imported Automobiles.
Howard,Barth 58 2008 Independent Director
Mr. Howard S. Barth is an Independent Director of China Auto Logistics Inc. Mr. Barth has operated his own public accounting firm in Toronto, Canada since 1985, and has over 26 years of experience as a certified accountant. He has served as a director of Yukon Gold Corporation, Inc. (dual listed on OTCBB and TSX) since May 2005 (and has served previously as chairman of its audit committee) and was its chief executive officer and president in 2006. He is currently a director of Offshore Petroleum Corp. and recently rejoined Yukon Gold Corporation, Inc. as a director. He is a member of the Canadian Institute of Chartered Accountants and the Ontario Institute of Chartered Accountants. He earned his B.A. and M.B.A. at York University.
Yang,Gao 37 2008 Independent Director
Mr. Gao Yang is an Independent Director of China Auto Logistics Inc. Mr. Gao worked for the Bank of China from 1994-2002 and was responsible for its institution monetary credit business. Since 2002, he has served as the Institution Sales Manager at the Tianjin Branch of Shanghai Pudong Development Bank. Mr. Gao has experience in evaluating and controlling credit risk, as well as experience in investment, M&A and re-organizations. He received a bachelor’s degree in Economics from Tianjin University of Finance and Economics.
Xiaoyan,Kong 43 2008 Independent Director
Ms. Kong Xiaoyan is an Independent Director of China Auto Logistics Inc. Ms. Kong started her career in 1993 with the Tianjin Foreign Trade Law Firm, practicing foreign economic law. She worked as a China Legal Consular for Livasari & Co. from 1997-1999. From 1999-2004, she worked for Jiade Attorneys of Law as partner and senior partner. Since May 2004, she has practiced with Tianjin Jiade Hengshi Attorneys of Law as senior partner. Ms. Kong received her master’s degree in Law at Zhongshan University.
Zhong,Qu 48 2008 Independent Director» Insider Trading
Ms. Qu Zhong is an Independent Director of China Auto Logistics Inc. Ms. Qu joined Tianjin Jinma Property Development Corp. in 1992 as assistant manager and was later promoted to vice General Manager. Since 1995, Ms. Qu has served as the sales manager for Tianjin Guotai Anju Property Development and Management Corp. Ms. Qu received her bachelor’s degree in Engineering from Xi’An Telecommunication Engineering University, and in 2004, she received an Executive MBA from Tianjin University of Finance and Economics.
CALI
CALI
CALI - Price/Sales: 0.11x (Actual) - (Industry Average: 0.70x)
CALI - Price/Book Value: 0.74x (Actual) - (Industry Average: 3.10x)
CALI - Operating Profit Margin: 4.21% (Actual) - (Industry Average: 4.70%)
CALI - Net Profit Margin: 3.05% (Actual) - (Industry Average: 3.47%)
CALI - Revenue Growth - MRQ: 49.98% (Actual) - (Industry Average - MRQ): 9.77%)
CALI - Revenue Growth - TTM: 27.00% (Actual) - (Industry Average - TTM): 14.48%)
Earnings growth at CALI outpaced revenue growth over the trailing twelve months. This result was better than that of the average company in the same industry where competitors earnings fell over the period.
CALI - Return On Equity: 23.61% (Actual) - (Industry Average: 12.50%)
CALI - Return On Assets: 10.24% (Actual) - (Industry Average: 2.80%)
CALI - Return On Investment: 23.81% (Actual) - (Industry Average: 4.55%)
CALI - Revenue Generated By Each Employee: $1,271,174 (Actual!) - (Industry Average: $0,645,082)
As you can see, CALI has consistently been one of the most efficient companies in the entire industry. With a Return on Assets, Return on Equity, and Revenues Per Employee of 10.24%, 23.61%, and $1,271,174 respectively, they are a company to be reckoned with - now and into the future as well.
CALI - Total Debt/Total Capital (MRQ): 50.51% (Actual) - which continues to improve.) - (Industry Average: 55.59%)
Validea Momentum Strategy based on book by Validea:
The EPS growth for this quarter relative to the same quarter a year earlier for CALI (37.50%) is above the minimum 18% that this methodology likes to see for a "good" growth company. Therefore, CALI passes the requirement.
Each year's EPS numbers should be better than the previous year's. One dip is allowed, but the following year's earnings should be a new high. According to this methodology, CALI, whose annual EPS before extraordinary items for the last 5 years (from earliest to the most recent fiscal year) were -0.05, 0.25, 0.32, 0.31, 0.44, passes this criterion. The one dip is considered acceptable, as earnings quickly rebounded after the decline.
Confirmation that a company's industry is attractive by confirming that at least one other company in the industry has a relative strength above 80. There is confirmation in CALI's industry (Auto & Truck Manufacturers), as there are 3 companies that have a relative strength at or above 80.
Companies who have consistently cut debt over the last 3 years, or who have a Debt/Equity ratio less than 2, are looked at favorably. CALI, which has a Debt/Equity ratio of 0.00%, passes this test.
Preferred companies must have a ROE of at least 17%. CALI's ROE of 23.6% is above the minimum 17% that this methodology likes to see, and therefore passes the criterion.
Shares outstanding should be less than 30 million, as fewer shares mean bigger price jumps when demand surges. However, there is no penalty for a large number of shares outstanding as long as all the other parameters are met. CALI currently has 19 million shares outstanding, which is favorable.
For the Value Investor based on book by Benjamin Graham:
SECTOR: CALI is neither a technology nor financial Company, and therefore this methodology is applicable.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for CALI is $0.0 million, while the net current assets are $37.1 million. CALI passes this test.
P/E RATIO: The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. CALI's P/E of 4.10 (using the 3 year PE) passes this test.
RICE/BOOK RATIO: The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. CALI's Price/Book ratio is 0.66, while the P/E is 4.10. CALI passes the Price/Book test.
Small Cap Growth Investor based on book by Motley Fool:
COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for CALI (37.50% for EPS, and 49.97% for Sales) are good enough to pass.
CASH FLOW FROM OPERATIONS: A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. CALI's free cash flow of $0.88 per share passes this test.
PROFIT MARGIN CONSISTENCY: CALI's profit margin has been consistently increasing over the past three years (Current year: 3.11%, Last year: 2.58%, Two years ago: 2.10%), passing the requirement. It is a sign of good management and a healthy and competitive enterprise.
CASH AND CASH EQUIVALENTS: CALI's level of cash $17.7 million passes this criteria. If a company is a cash generator, like CALI, it has the ability to pay off debt (if it has any) or acquire other companies. Most importantly, good operations generate cash.
INVENTORY TO SALES: This methodology strongly believes that companies, especially small ones, should have tight control over inventory. It's a warning sign if a company's inventory relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Inventory to Sales for CALI was 7.72% last year, while for this year it is 7.39%. Since the inventory to sales is decreasing by -0.33% the stock passes this criterion.
ACCOUNT RECEIVABLE TO SALES: This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for CALI was 13.02% last year, while for this year it is 20.58%. Although the AR to sales is rising, it is below the max 30% that is allowed. The investor should still consider this stock because all other criteria appear very attractive.
LONG TERM DEBT/EQUITY RATIO: CALI's trailing twelve-month Debt/Equity ratio (0.00%) is at the best level according to this methodology because the superior companies that you are looking for don't need to borrow money in order to grow.
AVERAGE SHARES OUTSTANDING: CALI has not been significantly increasing the number of shares outstanding within recent years which is a good sign. CALI currently has 19.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock.
SALES: Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. CALI's sales of $284.7 million based on trailing 12 month sales, are great, making this company one such "prospective gem". CALI passes the sales test.
INCOME TAX PERCENTAGE: CALI's income tax paid expressed as a percentage of pretax income this year was (26.95%) and last year (26.55%) are greater than 20% which is an acceptable level. If the tax rate is below 20% this could mean that the earnings that were reported were unrealistically inflated due to the lower level of income tax paid. This is not a concern with CALI.
Contrarian Investor based on book by David Dreman:
P/E RATIO: The P/E of a company should be in the bottom 20% of the overall market. Dreman uses the PE based on five year average earnings for cyclicals to counteract the fluctations in earnings they experience. CALI's P/E of 5.80 meets the bottom 20% criterion (below 8.61), and therefore passes this test.
PRICE/CASH FLOW (P/CF) RATIO: The P/CF of a company should be in the bottom 20% of the overall market. CALI's P/CF of 3.14 meets the bottom 20% criterion (below 5.19) and therefore passes this test.
PRICE/BOOK (P/B) VALUE: The P/B value of a company should be in the bottom 20% of the overall market. CALI's P/B is currently 0.66, which meets the bottom 20% criterion (below 0.75), and it therefore passes this test.
CURRENT RATIO: A prospective company must have a strong Current Ratio (greater than or equal to the average of it's industry [1.23]). This is one identifier of financially strong companies, according to this methodology. CALI's current ratio of 1.52 passes the test.
PAYOUT RATIO: A good indicator that a company has the ability to pay or even raise its dividend is a low payout ratio. The payout ratio for CALI is 0.00%. CALI passes the payout criterion.
RETURN ON EQUITY: The company should have a high ROE, as this helps to ensure that there are no structural flaws in the company. This methodology feels that the ROE should be greater than the top one third of ROE from among the top 1500 large cap stocks, which is 18.11%, and would consider anything over 27% to be negative. The ROE for CALI of 23.61% is high enough to pass this criterion.
LOOK AT THE TOTAL DEBT/EQUITY: The company must have a low Debt/Equity ratio, which indicates a strong balance sheet. The Debt/Equity ratio should not be greater than 20% or should be less than the average Debt/Equity for its industry of 499.27%. CALI's Total Debt/Equity of 103.16% passes the criterion.
Growth Investor based on book by Martin Zweig:
SALES GROWTH RATE: An important issue regarding sales growth is that the rate of quarterly sales growth is rising. To evaluate this, the change from this quarter last year to the present quarter (50%) must be examined, and then compared to the previous quarter last year compared to the previous quarter (12.6%) of the current year. Sales growth for the prior must be greater than the latter. For CALI this criterion has been met.
CURRENT QUARTER EARNINGS: The criteria is that the current EPS be positive. CALI's EPS ($0.11) passes this test.
QUARTERLY EARNINGS ONE YEAR AGO: The EPS for the quarter one year ago must be positive. CALI's EPS for this same quarter reported last year ($0.08) pass this test.
POSITIVE EARNINGS GROWTH RATE FOR CURRENT QUARTER: The growth rate of the current quarter's earnings compared to the same quarter a year ago must also be positive. CALI's growth rate of 37.50% passes this test.
EPS GROWTH FOR CURRENT QUARTER MUST BE GREATER THAN PRIOR 3 QUARTERS: If the growth rate of the prior three quarter's earnings, 45.83%, (versus the same three quarters a year earlier) is greater than the growth rate of the current quarter earnings, 37.50%, (versus the same quarter one year ago) AND only if the growth rate in earnings between the current quarter and the same quarter one year ago is greater than 30%, then the stock would pass. The growth rate over this period for CALI is 37.5%, and it therefore passes this test.
TOTAL DEBT/EQUITY RATIO: A final criterion is that a company must not have a high level of debt. A high level of total debt, due to interest expenses, can have a very negative effect on earnings if business moderately turns down. If a company does have a high level, an investor would want to avoid that particular stock altogether. CALI's Debt/Equity (103.16%) is not considered high relative to its industry (499.27%) and it therefore passes this test.
Price/Sales Investor based on book by Kenneth Fisher:
PRICE/SALES RATIO: The prospective company should have a low Price/Sales ratio. Cyclical companies with Price/Sales ratios below or equal to 0.4 are tremendous values and should be sought. CALI's P/S ratio of 0.1 based on trailing 12 month sales, is well below 0.4 which is considered very favorable. It passes this methodology's P/S ratio test with flying colors.
Price/Sales Ratio: The Price/Sales ratio is the most important variable according to this methodology. The prospective company should have a low Price/Sales ratio. CALI's Price/Sales ratio of 0.10 passes this criterion.
FREE CASH PER SHARE: This methodology looks for companies that have a positive free cash per share. Companies should have enough free cash available to sustain three years of losses. This is based on the premise that companies without cash will likely soon be out of business. CALI's free cash per share of 0.88 passes this criterion.
Growth/Value Investor based on book by James P. O'Shaughnessy:
PRICE/SALES RATIO: The Price/Sales ratio should be below 1.5. This value criterion, coupled with the growth criterion, identify growth stocks that are still cheap to buy. CALI's Price/Sales ratio of 0.10, based on trailing 12 month sales, strongly passes this criterion.
China Auto Logistic Inc.
No. 87 No. 8 Coastal Way Floor 2
Construction Bank FTZ
Tianjin, 300461
United States - Map
Phone: 86 22 2576 2771
Website: http://www.chinaautologisticsinc.com
About CALI - What they do:
Full Time Employees: 224
The Company's position as one of China's leading sellers of luxury imported autos with a base of 3,000 agents and dealers in more than 100 cities nationwide. Underlying this growth, the Company provides a unique "one stop" customs clearance, storage, delivery and finance service to imported auto dealers nationwide and is #1 in Tianjin (China's leading port for auto imports). The Company also operates www.at188.com, the largest website in China for imported auto dealers and customers.
It has expanded into the much larger domestic auto market with comprehensive, real-time, accurate trading information on the auto markets in 12 key cities throughout China, matching buyers with local dealers in a visually exciting, interactive format. CALI also operates www.at160.com, a national site serving China's domestic auto buyers and dealers. Consumers in each of the 12 cities the Company is now covering may access information on their local market with a single click. The Company's website business is being fueled by continuing strong domestic growth in auto sales and rapidly growing internet usage. Going forward, CALI expects significant growth in website advertising and web-based services. In addition, planned new online services will support the needs of the nation's auto dealers and provide consumers with the information they need to make purchase decisions in a market where only 20+ out of 1000 consumers owns an automobile compared with 600 out of 1000 in the U.S.
China Auto Logistics Inc.is engaged in automobile sales, custom clearance services, storage services and national transportation. It is also one-stop service provider in Tianjin, providing dealer financing to its customers. Its core business is selling the domestically manufactured automobile model, CHARADE. In November 2010, the Company completed the acquisition of www.goodcar.cn .
Sale of Imported Automobiles:
The Company conducts its sales operations of imported automobiles primarily through Tianjin Seashore New District Shisheng Business Trading Group Co. Ltd. (Shisheng) and Tianjin Zhengji International Trading Corp. (Zhengji). It sells approximately 25% of the vehicles to authorized dealers like Ford or Lexus, 70% to free traders or wholesalers located in inland China or non-port cities and 5% to government agencies and individual customers. Its sales network has approximately 3,000 agents and dealers in more than 100 cities. Shisheng is also an authorized agent for Mercedes Benz ambulances and fire trucks. It also works closely with automobile dealers in the overseas market.
Financing Services:
The Company’s financing services include letter of credit issuance services, purchase deposit financing, and import duty advance services. It provides financing services to its customers using its facility lines of credit with its banks. It earns a service fee for drawing its facility lines related to customers’ purchases of automobiles and payment of import taxes. These service providers are located in the port cities of Dalin, Tianjin, Shanghai and Guangzhou.
Automobile Import Value Added Services:
The Company is focusing to transform into a logistic provider. The imported automobile service industry has developed to address these barriers by providing customs clearance, storage and delivery services for the dealers and agents. These service providers are located in the port cities of Dalin, Tianjin, Shanghai and Guangzhou. The Company offers a value-added delivery service to inland China by air, by sea or by truck.
In addition, the company operates two Websites, www.at160.com, which provides quotes and other information on domestically manufactured automobiles; and www.at188.com that offers information on imported automobiles for the industry and individuals.
CALI - Observation, Facts and a glimpse of Future Trends:
CALI continues to expand its access to customer financing capital, has continued positive earnings, and a bright, profitable future going forward. With the PE and Price to Book ratios revealing the most appropriate valuation measures, CALI is currently an extremely underpriced stock with an actual PE value of (incredibly) approx 3.06x. As a comparison, the sector average is around 17x.
CALI's average share price, using the industry average ratio, should be priced at a minimum of$7+/share after the latest 10Q report and future guidance - yet CALI, despite 20 stright quarters of strong double digit growth combined with tidy profits and a very low share float, has somehow floundered below it's true value by a factor of at least 6+ (ie $1.45 x 6 = $8.70) and the fact that we will continue to witness the trend of investors fleeing a fair number of stocks tied to increasingly nervous companies based in the highly indebted, revenue needy (ie..practically bankrupt goverments) and increasingly currency weak economies of the western countries and you are now looking at a recipe for investors to inject some serious coin into company shares like CALI as investors search out profitable companies based in countries, such as China, in which one can invest with a fair amount of confidence of uninterupted strong growth and profits.
Recently CALI has suffered from a lack of visibility and focus by a large majority of level headed investors, many who refuse to invest in a stock based merely on the stocks current trading price rather taking the time to do some DD to discover a stock such as CALI that has an actual true value well above $5, creating a bizarre circle where the stock is underpriced because too many investors won't touch stock below a certain price level - leaving the stock looped in a vicious circle, continuing to be be extremely undervalued and underpriced. But not forever. At some point the stock breaks out and reaches forward towards its true valuation. It is my belief that CALI is very close to breaking out upwards toward its true price per share valuation. Very, very close.
The recent incredibly huge burst of volume in early July 2011, which saw an average trading day volume of around 12,000 shares per day explode to over 2.2 Million shares trade in just a single day (on July 7th), has most definitely increased visibility substantually, and, when combined with the handful of currently reported institutional holdings of CALI stock (who, by the way, usually won't even look at any stock trading below at least $5/share, let alone invest in it), clearly portends an upward valuation adjustment in share price as stronger hands and smart investors institute a steady scoop up available shares at these insanely low price levels from inexperienced/impatient sellers, slowly (so far) but surely increasing the percentage of ownership in CALI stock within their portfolios.
CALI stock, clearly, has been manipulated down with laser-like precision (price-wise) - an obvious targeting - especially after seeing more than 10% of all outstanding stock trade in one single day, which uncloaked the open but apparently largely unoticed tamping down of the stock price - even in the face of such an unprecedented and extreme surge of volume in CALI's trading pattern followed by a lighting fast drop in stock price, again, despite the clearly obvious lack of any strong selling pressure that would cause the stock price to drop so quickly and so extremely during the relatively low volume trading days that followed over the course of a mere 3 weeks! With the continued above double digit growth, true fair value of the stock should reach into the $9+ - $12/share range soon.
They are about to conduct a Blitz campaign in order to raise this stock to it's proper trading value (.46/share profit of last year will easily be above .50/share profit this year and is CALI expected to continue to grow at a double digit pace for many years to come. If real investors can buy and hold (next Q report is Aug 15 or 16) a good amount of the low float, thus knocking these penny profit day traders out of the way for a bit, this puppy is ready to set new highs in the $8 - $10+ range. For Real - Check it!
Company Executives - Biographies:
Name Age Since Current Position
Shiping,Tong 50 2008 Chairman of the Board, President, Chief Executive Officer
Mr. Tong Shiping is Chairman of the Board, President, Chief Executive Officer of China Auto Logistics Inc. Mr. Tong has served as President and Chief Executive Officer of the Company since 1995, when Shisheng was founded. He earned his Bachelors degree in computer science from the China Air Force Engineering University. Mr. Tong is also Director of the Tianjin Car Logistics Association.
Xinwei,Wang 53 2001 Chief Financial Officer, Vice President, Treasurer
Ms. Wang Xinwei is Chief Financial Officer, Vice President, Treasurer of China Auto Logistics Inc. Ms. Wang has served as the Chief Financial Officer, Treasurer and Vice President of the Company since joining Shisheng in 2001. She earned her Bachelors degree in industry accounting from Tianjin Radio and TV University. Ms. Wang is a qualified Chinese Certified Public Accountant.
Yangqian,Li 44 2003 Chief Operating Officer, Vice President
Mr. Li Yangqian is Chief Operating Officer, Vice President of China Auto Logistics Inc. Mr. Li has served as Vice President and Chief Operating Officer of the Company since 2003. He earned his Masters degree in engineering from Tianjin University. From 2001 to 2003, Mr. Li served as the regional manager for Tianjin OTIS Elevator. Mr. Li is also the deputy chairman of the China Automobile Dealers Association – Marketing Division.
Weihong,Cheng48 2008 Senior Vice President, Secretary, Head - Human Resources and General Administration, Director
Ms. Cheng Weihong is Senior Vice President, Secretary, Head - Human Resources and General Administration, Director of China Auto Logistics Inc. Ms. Cheng has served as Secretary and Senior Vice President (Head of Human Resources and General Administration) of the Company since 1995. She earned her Bachelors degree from Shijazhuang Military Medical University. Ms. Cheng is also a co-founder of Shisheng and has served as the Chairwoman of Shisheng since 1995.
Bin Yang 38 2008 Senior Vice President, General Manager, Head - Sales, Director
Mr. Yang Bin is Senior Vice President, General Manager, Head - Sales and Director of China Auto Logistics Inc. Mr. Yang has served as the Senior Vice President, General Manager, Head of Sales since 2003, when he joined Shisheng. He earned his Bachelors degree from Foreign Trade Nankai University and an Executive M.B.A. from Tsing Hua University. Prior to joining Shisheng, Mr. Yang served as the general manager of Tianjin Yingzhijie Car Trading Corp. from 1999 to 2003. Mr. Yang also serves with a Division of the China Association of Imported Automobiles.
Howard,Barth 58 2008 Independent Director
Mr. Howard S. Barth is an Independent Director of China Auto Logistics Inc. Mr. Barth has operated his own public accounting firm in Toronto, Canada since 1985, and has over 26 years of experience as a certified accountant. He has served as a director of Yukon Gold Corporation, Inc. (dual listed on OTCBB and TSX) since May 2005 (and has served previously as chairman of its audit committee) and was its chief executive officer and president in 2006. He is currently a director of Offshore Petroleum Corp. and recently rejoined Yukon Gold Corporation, Inc. as a director. He is a member of the Canadian Institute of Chartered Accountants and the Ontario Institute of Chartered Accountants. He earned his B.A. and M.B.A. at York University.
Yang,Gao 37 2008 Independent Director
Mr. Gao Yang is an Independent Director of China Auto Logistics Inc. Mr. Gao worked for the Bank of China from 1994-2002 and was responsible for its institution monetary credit business. Since 2002, he has served as the Institution Sales Manager at the Tianjin Branch of Shanghai Pudong Development Bank. Mr. Gao has experience in evaluating and controlling credit risk, as well as experience in investment, M&A and re-organizations. He received a bachelor’s degree in Economics from Tianjin University of Finance and Economics.
Xiaoyan,Kong 43 2008 Independent Director
Ms. Kong Xiaoyan is an Independent Director of China Auto Logistics Inc. Ms. Kong started her career in 1993 with the Tianjin Foreign Trade Law Firm, practicing foreign economic law. She worked as a China Legal Consular for Livasari & Co. from 1997-1999. From 1999-2004, she worked for Jiade Attorneys of Law as partner and senior partner. Since May 2004, she has practiced with Tianjin Jiade Hengshi Attorneys of Law as senior partner. Ms. Kong received her master’s degree in Law at Zhongshan University.
Zhong,Qu 48 2008 Independent Director» Insider Trading
Ms. Qu Zhong is an Independent Director of China Auto Logistics Inc. Ms. Qu joined Tianjin Jinma Property Development Corp. in 1992 as assistant manager and was later promoted to vice General Manager. Since 1995, Ms. Qu has served as the sales manager for Tianjin Guotai Anju Property Development and Management Corp. Ms. Qu received her bachelor’s degree in Engineering from Xi’An Telecommunication Engineering University, and in 2004, she received an Executive MBA from Tianjin University of Finance and Economics.
CALI
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