/60 well.. you can imagine that if they are going to instill confidence in the marketplace again, they will have to show serial production of NET profits.. which i believe are around the corner.
A big part of this comes with separating scams from legit companies.
.60 would be my minimum fair value for the company NOW.. not later.. or not after year end or 1Q 2013 reports. If those are favorable as i expect fair current value may be much higher over a dollar. i will repost why i am favorable on the comapny..
BTW the law firm Levi just retracted their "investigation" they removed it for CNAM... check the website.
"" I believe that there are a number of Chinese reverse mergers that have prices highly disconnected from potential fundamental performance. The entire arena was hit hard by a few companies that turned out to be fraudulent or scams as you may know. There awaits great value and opportunity for an investor that can identify the good companies from the bad.
Check out the Chinese reverse merger index.
www.bloomberg.com/quote/CHINARTO:IND
It is rallying very nicely even being weighed down by some bad companies. I believe however the majority of the bad companies have at this point been weeded out, or have enough data to be able to investigate and separate wheat from the chaff. I have been investigating several small cap Chinese reverse mergers and identified a few that are gems waiting to appreciate highly. One such company is CNAM.
CNAM has had it's price depressed by a series of unfortunate events for the company, from govt. power restrictions, teething difficulty in learning the scrap business. Sourcing scrap supplies, and finding reliable contracts for their product that do not cancel orders after fluctuations in the market place.
CNAM has addressed all these previous problems recently, becoming a demonstration scrap processing base courtesy of the PRC government. So their power problems are history. They have put in place more effective management especially at their scrap processing center. And increased margins from their scrap recycling by improving efficiency standards and through the new workforce gaining experience. They also qualify for a 70-50% VAT tax rebate on their scrap imports which could boost their margins substantially.
Also CNAM has obtained an import license from the PRC government for procuring scrap allowing them to skip some middlemen and even obtain resources and scrap for third parties. The confidence and support of the PRC government behind CNAM signals the government wants CNAM to be a successful enterprise.
Following this announcement it is revealed they are in talks with Mitsui,
and I have reason to believe that the talks with Mutsui involve taking advantage of the Japanese yen devaluation to import scrap metal and utilize lower labor rates for processing in China. CNAM will I believe source 250,000 tons annually from Mutsui.
This ahs potential to secure China Armco with plenty of scrap feed to add to their domestic networks which should net them at least another 150,000 tons annually.
CNAM has also changed the way they take orders for scrap requiring partial payment up front now on deposit in order to solve the problems they had with cancelled orders. The orders they announce now are much more valuable than the orders they announced in the past which had the tendency to either not be deliverable due to internal operational problems or cancellation of contracting.
CNAM just recently announcement they have already gained orders for 360,000 tons of scrap for the year 2013 which is 60% of their annual sales goal for 2013 of 500,000 tons and close to triple what they produced in 2012.
If CNAM can execute 500,000 tons of scrap metal processing on 2013 with their VAT tax break
500,000 tons x ~420 dollars per tonne will produce 210M in revenue from just their renewable division. And with 8-10% margins give them up to 21 million in gross profit. Which happens to be double the companies current market capitalization.
But in addition to this they have another stream of revenue from ore trading, and the recent spike in ore and scrap demand coming from the 2012 Sept lows in demand, has boosted iron ore spot prices from ~$90 to $140-160 per tonne. CNAM has ample financing and credit facilities (70-100 M) which many have recently been renewed reflecting the companies good relationship it has developed with creditors over the years and it's history of payment and shows the faith of the banking industry in CNAM.
Believe based on some statements from ore traders at armet & metawise in June 2012, that they were waiting to buy ore at low prices and have profited substantially off the recent iron ore price swing. This should bring in another 20-40 M in revenue for the 4Q of 2012 with high margins of ~15%. In addition to another ~30M revenue from their scrap processing facility with margins of 10-14% for the 4Q.
The companies history of bleeding value on their balance sheet from a bad investment in apollo minerals is also at an end. The company purchased a ~19% stake in apollo minerals and the price fell quickly along with some dilution by apollo to new investors. But the share price of apollo minerals has been appreciating rapidly since their last quarterly report. from a price of .03 to .072 today (up 20% on enormous volume as i write this
www.google.com/finance?cid=718373
This will change what had been a source of bleeding value for the company back into a positive source of positive value. This stake in apollo minerals adds at least a few more million to their value over the next two quarters I believe as the stock is rallying very strong, and when apollo starts mining in late 2013 early 2014, CNAM has offtake rights to 15% of their ore production.
The company does have one smudge against it, and that is the recent announcement of an investigation by the law firm levi into CNAM breach of fiduciary duty by the board of directors. I have found out this breach is compensation related, and connected with management raising their allotment of share compensation. This announcement has scared lots of small retail investors out of the stock, but they should not be so quick to exit! Because the announcement is imo, a positive development for shareholders in increasing confidence that our company will not be overly diluted into the hands of management.
A historical analysis of companies that have received this same announcement, show gains in most cases I was able to detail within a few months. Not counting the buyout announcements. You can check the historical performance of other companies with the seam announcement.
I might also add that management has been buying shares of the company from the company on the non open market at up to .50 cents per share recently. imo management wants to maintain close to 50% ownership of the company.
My best conservative estimate of the true value of the company, and although there is some dilution threat it is greatly eclipsed by the undervaluation of China Armco metals, which i believe in current market conditions deserves a market cap of at least 25 million dollars at the most conservative estimate, or more than double the current share price to at the very least .60-.70 cents
If CNAM continues to execute through 2013, the valuation could be much higher around 1.50-2.00 imo.
I would recommend you buy some shares under .40, before the year end report on March 28th which I believe will be a catalyst for investors to recognize the hidden value in CNAM. The next quarterly 1Q 2013 following in 1.5 months from the yearly will also be a very good numbers quarter, greatly surpassing YoY results.
Full disclosure I have just bought a large stake in CNAM multiple % of the company and am holding long. ""
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