China Natural Gas Reports Another Stellar Quarter

by: James Kar November 13, 2008 | about stocks: CHNG.OB    

James Kar

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China Natural Gas (CHNG.OB) is a leading provider of pipeline natural gas to both commercial and residential customers in Xian, China.  Yesterday, the company announced another great quarterly earnings report.  Here are the highlights released by the company:

Financial Highlights for 3Q 2008:

  • Revenue increased 102.7% year over year to $18.4 million
  • Gross profit increased 119.7% year over year to $9.5 million
  • Income from operations increased 173.2% year over year to $6.4 million
  • Net income of $5.1 million, or $0.18 per diluted share
  • Non-GAAP net income of $5.2 million, or $0.18 per diluted share

Net income for the current third quarter is $0.18 per share, compared to $0.07 per share for the same period last year.  The main results are improvement in both gross margin and operating margin for the current quarter from the last quarter.  The company has improved from 45.4% to 51.6% and from 29.9% to 34.9%, respectively. 

The best news is that the company raised its full year revenue growth guidance from previously announced 70% to 92%. The company continues to grow its top line revenue and bottom line net income. 

The stock has dropped along with the market, but the business fundamental justifies for significant higher value of around $10.00.  If you are a long-term investor with at least 3 years holding period, the stock should be a buy at the current price level around $3.30.

Disclosure: Author holds a long position in CHNG.OB

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This article has 4 comments:

  •  
    Nov 13 08:46 AM
    Great news....I have held CHNG for some years now....will continue to add to my position!
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  •  
    Nov 13 08:47 AM
    Great news....I have held CHNG for some years now....will continue to add to my position!
    Reply | Link to Comment
  •  
    Nov 13 09:14 AM
    CHNG is very worthwhile company, and will grow through and long after the current downturn. Way undervalued.
    Reply | Link to Comment
  •  
    Nov 13 02:59 PM
    I'm a lot more afraid for anything export related when it comes to China than I am for CHNG--- natural gas demand is a lot less tenuous, or so it seems to me.
    Reply | Link to Comment
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