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China Natural Gas, Inc (OTC:CHNG) is a company I have followed for some time. I have watched and owned this stock on and off over the last year. Most recently I sold my holdings as the company went into a three month PR hiatus. To me there are few things more frightening than an Over-The-Board Chinese company which fails to keep its share holders updated. The company’s silence coupled with the recent Bodisen Biotech inconsistencies convinced me to sell my holdings and run far away from this stealth Chinese based alternative energy company.

I however, have kept them on my radar primarily due to the company's phenomenal growth history. Although, a micro cap CHNG has demonstrated impressive revenue and profit growth over the last two years. The company also has a commanding position in the emerging Chinese compressed natural gas [CNG] industry. Due to restrictions on emissions and the rising cost of petroleum, the Chinese government has encouraged the use of CNG as an alternative for transportation fuel. The city of Xi'an(where the company operates) has approximately 20,000 Taxis, 3,000 buses and 2,000 special purpose vehicles that are powered by compressed natural gas.

CHNG is engaging in the transmission and distribution of natural gas to industrial, wholesale, commercial and residential customers. The company currently owns and operates 23 retail CNG fueling stations, a 120 kilometer long CNG pipeline and provides 75,000 residential, commercial and industrial customers with natural gas.

Despite my original intentions to avoid this company I have remained observant for some catalysis which could propel shares out of their current slump.

After the markets closed yesterday, the company filed its 10KSB Annual Report. Reading through the annual and the company's fourth quarter 2006 results once again remained me financially why this company is so attractive.

Financial Highlights for Fiscal Year 2006:

- Revenues increased 288% to $18.8 million;
- Gross profit grew 272% to $9.1 million;
- Income from operations increased 343% to $6.5 million.
- Net income increased 310% to $6.1 million or $0.23(ps).

As of December 31, 2006, the Company had $5.3 million cash on hand compared to $675,000 at December 31, 2005.

Fiscal Year 2007 Update:

-Add up to 30,000 new pipline users by the end of 2007.
-Start construction of 15 CNG filling stations through '07.
-Plans to construct an liquid natural gas [LNG] plant in Jinbiang, Shananxi province. With an estimated cost of $40 million and an expected for completion in June of '08.

Source: China Natural Gas: Tempting Financials, Sketchy Shareholder Relations