KHD Humboldt: Russia Infrastructure Play with Outstanding Potential

KHD Humbolt Wedag, International, Ltd. (KHD) has announced two new concrete plant contracts signed with Russian concrete companies worth $119 million. This is a pretty nice addition to the company’s reported order backlog of $925 million.

KHD provides industrial equipment like concrete plants primarily in developing nations, with a significant amount of their business in Russia and India. As these countries work to improve their infrastructures, KHD will have lots of opportunities for increased orders, revenues and profits.

From what information I can find, this company has had very little following in the financial world. KHD is Hong Kong based and in 2007 divested itself of a financial services arm, that had up until that time defined the company. They now are focused 100% on the equipment business, and growth prospects are excellent there.

The share price has fallen significantly recently on no news. The press release has had a positive effect on the shares. I think the company has huge longer term potential and the stock could double or triple in the next few years.

Disclosure: I have a long position in KHD.

Comments

[valueinvest...:]

I agree that the company has great long term potential and own shares. However, to help realize that potential they must at some point pick up some coverage by some of the bigger brokerage houses so more people learn the story. An initiation with a "Buy" from a big firm would do great things for this name because my guess is most investors have never heard of it.

2008 Feb 20 10:57 AM

[mowgli:]

They should now have more than a billion in backlog orders. And now is the time to get in, before any brokerage house starts the coverage.

2008 Feb 23 01:06 PM

[mowgli:]

Also, worth noting is that they have a steady, significant royalty revenue stream from Wabush Iron Ore Mine. In 2007, this would account to approx $16 million or $0.50 per share. With price of Iron Ore increasing 65% this year, the royalty should increase too.

2008 Feb 23 03:40 PM