CHINA SHUANGJI CEMENT, GREAT INVESTMENT OPPORTUNITY FOR THE RISKY INVESTORS.

Today I wanted to do a little coverage on CHINA SHUANGJI CEMENT company quoted on the OTC market under the nemo CSGJ as we see here a very interesting opportunity for long-term investment for investors with a high risk profile and have a small portcentaje of participation in a diversified portfolio.

Before starting with the figures and recommendations is to be noted that it is a very small company, is a company dedicated to the production of cement in China and listed on the OTC market and with these characteristics has everything to be classified as high risk.

As I said, the company is engaged in cement production and currently produces around 1.5 million tonnes per year and by the end of this year a new is going operational to increase its production by 60% to 2.5 million tonnes.

Today was just released news that negatively impact the stock price to levels of 0.42 usd. the new was that one of their plants is in a 2000 list of companies that must improve or close some production lines due to contamination that is being generating and is part of a Chinese government program to improve environmentally.
Athough no dates have been said and it will be a long process. in the worst case the closure of this plant by 500,000 tons would impact the company's production is offset by the opening of the new plant that would raise the production in 1.000.000 tons and receive a monetary compensation.
(The company currently has four plants and the end of this year would come into operation one fifth)

The news in my opinion has been widely discounted by the market at current prices as the valuation metrics for this company are simply absurd, and while it may be classified as a "penny stock" and should look carefully, a participation in a portfolio of around 5% to 10% seems attractive as a risk exposure.

For today the company is listed under four times earnings (P / E of 3.5) and is listed at just 0.4 times its equity. These metrics have no sense, because the company has been with steady profits and this year with the opening of its new plant could increase profits by up to 50% to 7 million dollars and this way would be trading at only 2 times projected earnings (PE 2 FW)

The company currently has a demand greater than its estimated production capacity and that this trend will continue over the following years.


In 2009 sales were USD 54m, and for 2011 they expect this figure to increase to 96 million. The profits were about 4.4m by 2009 and expect to increase up to 7.5 million dollars in 2011

To give you an idea the company today have a market cap of just 12 million dollars, which is not at all consistent with an equity of 28m, 54m sales and 4.4m profits, and projected profits over 7m .. .. what we see here is a highly undervalue share.

This gives us the following ratios:
Price to sales: 0.22
Price to sales FW 2011: 0.12
Price to book: 0.42
PE: 3.1
FW PE 2011: 1.8

These metrics are obviously a gift, are extremely low multiples that merits them a look and although China has slowed a bit, still growing over 10% and the sector has a very good dynamics.

Hardly in the market are opportunities like these, where patience could double the investment, but you have to be aware of the risks.

In the coming months they will trigger more positive news for all, becasuse the opening of the new plant is almost ready and will come into operation and generate a strong increase in sales and profits.

Additional to this, the company, make a very positive spin for the administration. They have hired a new CFO who handles impeccably English, an expert on stock registration process in the American markets, and knowledgeable about American financial regulations with the SEC.
They have also hired new auditors and the law firm Sichenzia Ross Friedman Ference LLP, a firm with extensive experience in process listments of shares in NYSE and NASDAQ which is a future plan pointed by tje company.

Thus, despite the bad news spread today, we see these prices CSGJ an excellent opportunity to get very good returns.

This title is not a short-term investment, nor is it a trade title, much less to get a portfolio of 100% ... but it is very interesting option to have the risk exposure of a location in a portfolio of 5% or 10% depending on risk profile.

It is a very interesting opportunity for long-term investors, price target is now 1.2usd, which at these prices is a huge return (185% expected return), but so it is not a title suitable for people who can not wait a good time, with a risk profile or even as Warren Buffet would say: "Unless you can watch their investments fall by 50% with no urge to panic, you should not be in the stock market." and in this title if it is well possible to see this.


1.2usd target price (once is operating the new plant and analyzing their impact on results this price could be increased)


Harbinger has a price target 1.1usd
and the target price by invesbolsa is 1.3usd


Best regards and apologies for the language issues....
Sebastian Toro