Brennus

5 China Stocks on This Week's Watch List

Xinao had 72 stations by the middle of sep07. Towngas has about 12, I think. There are many, many others that own 10 or fewer station...evidence China Natural Gas' ability to acquire many of its first CNG stations. SNEN & CHNG are really mostly active in one city each. They are branching out a little but for the most part they are single-city CNG operators in a nation of single-city CNG operators.

Really, station count is a canard. Pent up demand is so large that both companies could double their projected station counts & probably still not have any one station in radio contact with the other's stations. The real question is whether or not they'll be able to get the gas contracts to meet demand. In both cases, the answer seems to be 'Yes!'.

Bottom line: SNEN is not in a race against CHNG. They are each racing the clock only.

Regarding china grain controls, 'industrial' in this case means 'ethanol'. A lot of SGTI's corn starch output is sold to food & beverage companies. Choking off starch to food and beverage companies in order to keep grain prices low sorta defeats the ultimate purpose, which is to keep the public passive.

Glucose, on the other hand, tends to trade at a pretty constant spread over the price of corn. Since SGTI doesn't operate in a vacuum (who is getting cheap corn prices these days?), expect glucose prices to respond to corn prices. The top line will change, the line right under the top line will change, the bottom line won't be affected much.

The Long Case for Sinoenergy

Retail CNG in China doesn't have much to verify. They contract the gas for decades at one price & sell it at another government regulated price. It costs ~40% less to run a vehicle w/CNG & early adopters are taxis/buses. Demand will be limited by supply & prices are capped...economics 101 tell us that will mean lines at the pump (price caps create shortages). Stations will quickly ramp to capacity.

Container & conversion kit business aren't contemplated in the (long term) model. Any contribution from these segments >0 will add to results. Recent history indicates results from these segments is >0.