Replies to post #56266 on China Growth Stocks

[lostmyballs]

YONG So your assuming the lignite company only makes 3-5% selling its products to yong?? I havnt looked into it to tell you the truth..How much was the shipping costs (since new plant is next to the coal mine)) ,another issue to consider???

[Drexion2004]

YONG: Mining profit Margins are 30-40% easily, so the net impact to YONG will really depend on what percentage of its cost comes from the raw material costs. I think it is easily 33%+ (if I remember it correctly), so getting rid of a 35% middle-man profit-taker could give a 11%-13% margin increase once things are in full production.

The new factory is also really close to the mine, cutting down on transportation expenses that they must pay to get materials right now.

Disclosure: I am long YONG.

-Fernando

[derek2000]

YONG - Gross margin could be improved in two directions.

1) Ignite Mine
2) Less middle man in distribution to YONG branded stores.