New CFO Positive for China Architectural Engineering

China Architectural Engineering (Amex: RCH) came out of the gate with a full head of steam gaining over 440% in value in its first week of trading. However, since hitting a high of $27.25 last October, the stock has seen a steady decline and is now trading back at IPO levels. RCH is now looking very attractive as a China play with solid fundamentals to support it at current valuation once the China craze slows down after the Beijing Olympics.

RCH is on-track to report another year of record revenues of over $90 million on earnings of over $12 million. It is a fast growing construction company operating in one of the world’s fastest growing economies - - China.

Based on recent announcements, 2008 should be a break-through year for them. They have a backlog of over $100 million - - in only the first two months of the year. Their earnings are expected to grow at a high double-digit rate as it continues its very successful international expansion. With this rate of growth, a doubling of its current valuation is easily justified based purely on fundamentals.

The catalyst for such an upward move can be the new CFO the company just hired. The significance of a Chinese-American CFO for a Chinese company on a US exchange is crucial to its success in terms of generating investor support. With a new CFO on board, they can now easily communicate their story to the Street. The new CFO allows RCH to incorporate a much more aggressive disclosure policy, including conference calls, financial guidance, and overall shareholder communications to maintain the interest that the IPO proved Wall Street had on the stock. With new analyst coverage, the new CFO embarking on a series of institutional meetings and presenting at investor conferences both in China and the US, this stock can relive its IPO glory days very quickly.

Disclosure: Author has a long position in RCH

Comments

[webmasterjo...:]

APRIL 8TH - Piper Jaffray initiates coverage on China Architectural Engineering, Inc. (AMEX: RCH) with a Buy rating and $10 price target.

The firm said, "We believe this China-based firm specializing in the design, engineering, and installation of high-end curtain wall systems will capitalize on the strong growth in nonresidential construction in China."

The firm also said significant contract wins and sizeable project backlog provide increased visibility. They say the stock is undervalued at its current price of around $5.60. [LJ]

www.streetinsider.com/......

APRIL 14TH - Start of 5-day non-deal roadshow from San Fran to NY.

Zacks average brokerage recommendation: STRONG BUY
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INSTITUTIONAL OWNERSHIP:
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ADVISOR FYI ALERTS:
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OWNED PATENTS:
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A LITTLE OLD BUT GOOD NEWS:
CAE Expects 2008 to Represent a Breakthrough Year in Both Revenues and Earnings

The Company also expects that its recent series of large multi-million dollar contracts, many of which will be recognized in the current year, positions CAE towards achieving a record year in both revenues and earnings. This is further supported the Company’s rapidly growing backlog figures, amongst other metrics. The Company noted that CAE’s backlog has grown substantially since January 2008 – when it released a backlog figure of over $100 million. A more current backlog figure is expected to be announced shortly.

To be added to China Architectural Engineering's investor lists, please contact Haris Tajyar at [e-mail] or at 818-382-9702.


FINAL ADVICE: HOLD YOUR SHARES & BUY MORE IF YOU CAN.

2008 Apr 12 12:44 PM

[IRI Analysts:]

RCH's CEO is one of the smartest, most aggressive and driven man I've encountered in a very long while. They also have a strong, English-speaking CFO with a CFA. The management team of a Chinese company makes all the diference. I think this is definitely a long-term strong buy.

2008 May 17 06:29 AM