Cavico Corp: How to Profit From Vietnamese Growth

Even though “B Fed” has paused interest rates yet again, there is still a level of uncertainty over the marketplace. Though the rates have stayed unchanged since last summer, the recent subprime fungus has taken its toll on the marketplace and will continue to do so with the declining of home prices. It’s pretty clear that the next stomp will be on lenders who muddle up their books of business with Subprime and Alt-A loans such as Downey Financial (DSL). The volatility in the marketplace has led many traders to keep smaller positions in the marketplace.

What to do with the cash you’re sitting on?

Well if you’re an investor that has an appetite for speculative plays or risk, there are still great opportunities in emerging markets. In many articles Vietnam has been dubbed the “China 2.0” and Merrill Lynch estimated its annual growth of 7-8% through 2010. With a tremendous growth rate and a gradually privatizing economy, it looks like Vietnam can see a lot of growth FAST. Large US companies have already setup operations in the region (Nike (NKE) and Intel (INTC) just to name a few) and it looks like it can serve as a great secondary outsource market for the East Asian region.

How to make money in the region?

If you are looking to get involved early on in this growth opportunity I suggest you look to Vietnamese companies that deal primarily with the more industrial necessities, such as energy and infrastructure development. Vietnam is one of the select countries that is actually experiencing a re-population by its Diaspora. The reason for this is simply because there are real economic opportunities they can capitalize on and their buying power is much larger in Vietnam than in many of the countries where the Diaspora is returning from.

If you have taken profits from recently placed trades and are looking for a speculative play with great risk/reward you might want to consider getting in on the only traded Vietnamese company on the American markets, Cavico Corp (CVCP.PK). As sited off their company description information (off their website) this Vietnamese company “is working in the fields of infrastructure development, including the construction of hydropower facilities, dams, bridges, roads, mines and urban buildings throughout Vietnam and the Pacific Rim”. This pink sheet traded company has a backlog of work totaling $500mil and has already met with both the NASDAQ and NYSE in hopes of future listing on the larger exchanges.

Currently Vietnam is going through a rapid growth stage and needs plenty of infrastructure built. This is primarily what Cavico is hoping to capitalize on and become a powerhouse in the region. They have already gotten permits to own and build their own building in what is being called the “financial center” of Hanoi, Vietnam and will relocate their headquarters there while leasing out the unused floors.

Furthermore, CVCP is currently developing several hydropower facilities which will also be a vital part of their game plan to generate revenue. Something also to note is that Cavico has created an audit compensation and nominating committee in order to have their books ready for the transition onto the bigger exchanges. Cavico has already met with representatives from the larger exchanges which will definitely bring it much more credibility as a company. Speculative play? Yes, though with a proper audit, there is tremendous potential.

If you are interested in reading a bit more in depth analysis, please see our free research report on Cavico.