Webster's Dictionary defines CONFLICTED
as..."experiencing or marked by ambivalence or a conflict especially of
emotions." For China Vesting and our tens of thousands of readers
every week the conflict lies in their heart and in their
portfolios. Why? Everyone wants a piece of
China's growth and have been trying to figure out how to profit from
this economic phenomenon. This is much easier said then done...without
some professional guidance.
- Fact: China is booming
- Fact: You cannot afford not be invested in China
- Fact: There are many great Chinese companies to invest in
- Fact: If you invest in the wrong Chinese Company you could lose
everything and in a hurry
- Fact: It seems like every week one Chinese Company blows up due
allegations of accounting fraud or some sort of corporate malfeasance
China Vesting has visited hundreds of cities in China and have met
hundreds of companies and corporate executives. Our team makes field
visits to Chinese companies every month. We have an incredible
local network to assist in our due diligence. Then there are the
bankers, auditors, IR firms and everyone in between who help us gain a
clear picture on Chinese companies that are listed in the U.S.
markets. The company China
Vesting is featuring today we regard
as one of our easiest assignments.
Commodities, Commodities and BRAIN TRUST?!?
On paper China Direct Industries (NASDAQ:CDII) looks like every
stock trading at a PE of 2 or 3 or 4. The company operates two
main segments, magnesium and basic materials. The magnesium segment
produces and distributes various magnesium products while the basic
materials segment is involved in the sale and distribution of
industrial grade synthetic chemicals, steel and non-ferrous metals.
CDII also offers consulting services to Chinese companies that are
already public or are looking to go public in the U.S. markets. So
what's the attraction you ask? The company is based in Florida
and the Chairman/Chief Executive Officer, Chief Financial Officer, and
most of the senior management team are all American Citizens living in
America. That means this Chinese public company is in reality
American and it can and will be held accountable for its actions.
An American Company Operating In China
China Vesting has actually visited CDII's Florida headquarters and
with the company's entire senior management team. We then visited
CDII's Shanghai headquarters located right by the famous Jin Jiang
Hotel in Shanghai and spent considerable time with the company
Chairman/CEO and CDII's China team. It is impossible not to see
some strange things in China when you've visited hundreds of cities and
companies. We can tell you one thing, there is a peace of mind
in knowing the people
behind this Chinese company live in the U.S.,
their families in the U.S., and also are held to U.S. standards across
the board. China Vesting has upgraded CDII to
Undervalued Index because the company deserves a higher valuation based
on the fact it is American.
Undervalued By Any Standard
China Direct has very impressive numbers providing Wall Street
with revenue for the
full 2011 fiscal year of $180 million with net income of $12 million.
Cash and cash equivalents is currently $8.1 million with an additional
$12.4 million in prepaid expenses. The company has almost no long-term
debt. CDII has $35 million in working capital and is not in need of
raising any additional capital.
The stock closed the day at $1.35 per share and with 34.98 million
shares out the company's entire value is $47.22 million. The $12
million in net income means the current PE is 3.94 which we believe is
cheaper than any USA company we could find in any sector. If
subtract the $8.1 million in cash along with
the $12.4 million in prepaid expense the company's
value is really just $26.02 million. Considering that the working
capital is $35 million one can say that CDII is being given a NEGATIVE
value for their business. Think about how much money it would
cost in the U.S. to build a company with $180 million in revenue with
$12 million in net income. Then factor in the cash on the balance
sheet of $8.1 million, the $12.4 million in prepaid expenses and the
$35 million in working capital.
This is truly the Best Chinese Company in America.