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Welcome to Profit Confidential • Tuesday, May 22, 2012

This Chinese Pick Grows Revenues 82%

Wednesday, October 29th, 2008
By Mitchell Clark, B.Comm. for Profit Confidential

With all the big moves in the main stock market averages, attention is being taken away from third-quarter earnings.

It’s very easy to take your eye off the ball by focusing on the headlines. However, one company I’ve written about extensively in this column continues to deliver excellent financial growth in its business.

China Security & Surveillance Technology, Inc. (NYSE/CSR) is a company I wrote about earlier this month and back in August. This business is a kind of industry consolidator in the security industry in China. With all the new infrastructure growth in that country, this company is growing fast selling and installing alarm systems, surveillance cameras, fencing, water extinguishing systems, and more. For every new building, factory or plant built in China, it pretty much has to have these kinds of systems installed.

China Security manufactures and installs security and surveillance systems through its wholly owned subsidiary, Golden Group Corporation (Shenzhen) Limited. The company has a manufacturing facility located in Shenzhen, China, and a research collaboration agreement with Beijing University.

According to China Security, its third-quarter revenues grew an amazing 82% to more than one hundred and nineteen million dollars, up from revenues of over sixty-five million dollars generated in the third quarter of 2007.

Net income in the latest quarter fell a bit to $9.15 million from $11.70 million, but this is because last year’s third-quarter income included a one-time gain of $5.52 million on the disposal of some land.

China Security finished the third quarter with approximately sixty-six million dollars in cash and one hundred fifty-eight million dollars in total debt.

The company reiterated its full-year 2008 forecast for revenues to be between four hundred and ten million dollars and four hundred and twenty million dollars, with adjusted net income of between seventy-four million dollars and eighty-two million dollars.

For all of 2009, China Security’s current forecast is for revenues to grow to between six hundred million dollars and six hundred and thirty million dollars, with adjusted net income of between one hundred and eight million dollars and one hundred and thirteen million dollars.

All the turmoil in the broader market is taking its toll on a lot of well-managed, growing companies like China Security. Investors have all but abandoned some of the best small- and micro-cap companies in the latest correction. Most corporations are revising their growth expectations downward for the future and this is no big surprise. What’s great to see right now is a thriving business with excellent long-term fundamentals. 

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Profit Confidential AuthorMitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.

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