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  • China Sun Group High-Tech Growth Prospects in the Lithium Ion Battery Market 0 comments
    Aug 13, 2009 11:36 AM | about stocks: CSGH

    The GeoTeam® is taking a closer look at China Sun Group High-Tech (OTCPK:CSGH), a producer of anode materials used in lithium ion batteries.   While raw quarterly earnings per share numbers have spanned a tight range for the last three years (between $0.01 to $0.05), recent comments in the China Sun's press releases and SEC filings indicate that its growth rate may accelerate:

    'China Sun Group is pleased with DLX's performance in the third fiscal quarter. Despite downward pricing pressure in the global manufacturing industry, DLX successfully captured new sales, expanded gross profit margins and increased profitability during the first nine months of fiscal 2009,' said Bin Wang, Chief Executive Officer of China Sun Group. 'While DLX filled new orders for its existing product lines in the third fiscal quarter of 2009, it introduced its next generation, 'green' power source, lithium iron phosphate. Lithium iron phosphate is ideally used in batteries that power eco-friendly vehicles like hybrids and electric cars. We anticipate to commence deliveries on large-scale orders for lithium iron phosphate in the fourth quarter of fiscal 2009.'

    We were able to locate a fiscal May 2009 analyst earnings per share estimate of $0.22 (~$0.18 fully taxed). At its current price of $0.94 the stock is selling at a fully taxed adjusted  P/E of 5.2.    

    Other potential positives: (source: 2008 10K)

    • China Sun Group High-Tech is involved in a "hot" industry; The lithium ion battery market is a green energy resource
    • Lithium ion batteries have desirable properties. (1) versatile, (2) compact and light weight, (3) high energy density and capacity, (4) high voltage, (5) excellent energy retention characteristics.
    • According to the Battery Industry Association of China, the lithium ion battery will become one of the most important sources of chemical power in 21st century. Research and development on the lithium ion battery has been added as a third objective to the PRC’s 11th five-year-development project.
    • The Battery Industry Association of China forecasts that the growing demand for portable products like mobile phones and laptops will stimulate the lithium ion battery industry in the PRC, which is expected to grow at rate of over 30% annually.

    Still, further investor due diligence is necessary in order to formalize a final conclusion regarding the CSGH story.  The GeoTeam® is somewhat disappointed that the Company has not returned our phone calls.  Still, due to its low P/E on analyst estimates we are coding the stock as a GeoSpecial (Re-Pricing of Risk Premium).


    Disclosure: Long CSGH

    Stocks: CSGH
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