China Energy Corp. (fka CHGY)

[Nealio]

Well written post on anticipated earnings and the facts around the company at this date:

CHGY is scheduled to file it's annual report on March 1. I will not be surprised in the least if they request an extension (as they did last year, even with a CFO in place). I am expecting a minimum of .53 cents a share and more likely in the neighborhood of .60 in earnings. They have ramped up their mining activities, increased their coal trading business and extended the reach of Heat and Power to additional customers. In 2010 they earned .39 for the entire year. This year they earned .42 through Q-3. Before 2010, CHGY received a significant government subsidy in Q-4 for providing heat at below market rates. In 2010 they received the subsidy in Q-3. In 2011 there has been minimal subsidy payments received through Q-3. Unless the government has abandoned the subsidy (hard to believe because they regulate the below market rates) CHGY should have received a whopping subsidy in Q-4. If you couple the anticipated subsidy payment with the strong earnings from the coal group we should see approximately .60 per share in earnings. Even if no subsidy is paid in Q-4 earnings will be approximately .53 per share, a 33% increase over 2010 earnings, even without the subsidy. So, place your bets. Do you believe, as some do here, that CHGY is a scam set up only to benefit Mr. Ding, or do you believe this is a legitimate enterprise, with exceptional management that has established themselves as a primary coal supplier in Inner Mongolia. CHGY is not without it's warts (they care little for shareholder communications, financial controls obviously need tightening, and most importantly they have been slow to identify additional accretive coal mine acquisitions........the primary catalyst that will propel the stock above the pennies it currently trades for.) All that being said, I am a happy shareholder at these levels, and hope to see a return to a more realistic PPS sooner rather than later.

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