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James Kar
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  • China Natural Gas surged today with successful stock offering
    I have been a big fan of China Natural Gas (NASDAQ: CHNG) as you can see from my prior posts.  Today, CHNG surged close to 20% at $11.25 (at this writing) without apparent reason.  The only news is that the company successfully completed its public offering of more than 5 million shares and raised about $47 million (after underwriting expenses).  The proceeds will be used for constructing liquefied natural gas facility, acquiring 8 natural gas fueling stations, buying 8 trucks to transport the natural gas.  Also, part of the proceed will be used to establish a joint venture with China National Petroleum Corp.

    Obviously, the public offering news is not new so the stock price already reflected the potential of earning dilution.  However, if the offering proceeds can actually increase both revenue and earnings above the cost of equity, then the offering is welcomed by investors.  Based on today's price action, investors are pleased that the stock offering is successful and believe the managment can increase its earnings with the additional equity funding.
     
     
     
    Sep 03 3:44 PM | Link | Comment!
  • BYD Co. plans to sell full-electric car in the US
    China auto maker, BYD Co (OTCPK:BYDDF), partly owned by Warren Buffet's company, announced its plan to sell all-electric battery car in the US next year.  The story was reported by Wall Street Journal Aug 21 weekend edition.

    The chairman of BYD Co. announced that he would use the proceeds (up to $500 million offering) from a planned new share sale ( up to 100 million) in China to help marketing the car in the US.  The company is entering into the US market with its most advanced model with 5-seated, and the car is expected to sell at slightly over US$40,000.  The chairman claimed that its customers at the beginning will be government agencies, utilities and may be some celebrities.  BYD co. is also plan to enter into Europe with a similar strategy in 2011 or later.

    Note: there are some discussions of whether BYD Co. actually has the technology to put the all-electric car together.  Due to this pessimism, the stock is still not advancing to fully reflect its potential.  Furthermore, the company needs funding to market the car in the US.  Thus, BYDDF.PK is planning to sell up to 100 million new shares.  Of course, the new shares will dilute current earnings.  However, if the new offering proceeds can fund the marketing expansion into US, the potential revenue and earning may more than offset any dilution.  It takes money to make money.  If the company can generate more earning with the new money, then the potential dilution is not a concern.  The stock has been under pressure for the above reason.  Thus, if you are a long-term investor with risk capital, you may want to buy some shares.  Remember, it is a highly risky investment, but it also has an excellent return potential.

    Aug 24 3:31 AM | Link | Comment!
  • China Natural Gas Update
    China Natural Gas (OTC:CHNG) announced an update for its power supply agreement with local government.  On March 25, 2009, CHNG announced that it had an agreement with the Yulin local government providing about RMB20 million to build a transformer substation for CHNG's liquified natural gas plant.  Now, Yulin municipal government doubled its investment to RMB 40 million (about US$6 million) for the transformer substation.  This investment will ensure stability and capacity of the electricity supply for CHNG's LNG plant.  For detail of the press release, please see finance.yahoo.com/news/China-Natural-Gas...

    In the press release, CHNG is expecting an increase in the natural gas price in the near future.  This is good news for CHNG as the gas price is controlled by the central government and is at artificially low level.  The increase will make the China natural gas price closer to the market price.  At the current gas price, CHNG continues to increase its earning.  Imagine how the price increase can help the earning figure in the future.

    The stock is down for the last couple of days in sympathy with the sell-off in the China stock market.  For long-term investors, you should consider gradually increase your holding.  But then again, the stock market seems to be heading lower and you may be able to get the stocks at a lower price.  So, I suggest to invest 1/3 of your planned investment, and buy more when the stocks drop even lower.

    Aug 17 1:27 PM | Link | Comment!
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