China Fire & Security Group, Inc. (NASDAQ:CFSG)

Chinese reverse merger fraud.

cash buyout mergers+aquisitions

Tracking portfolio for China based companies that gained listings on US exchanges (Nasdaq, NYSE, or Amex) after conducting reverse mergers. Stocks that have been delisted have been omitted. Start date: Jun 24, average P/E of these companies: 3.

This is a tracking portfolio of all CAPS-ratable tickers in the Chinese RTO/SPAC space (i.e., companies that listed without filing an IPO).

China Fire & Security Group, Inc. went public via a reverse merger in 2006. The company is based in China.

I don't see much of a downside on this one

This is a brief outline of how and why I selected CFSG to outperform:

(1) CFSG appears maintained an absolute floor of about $7 for the last two months.

(2) CFSG was above $9.50 in August, above $12.00 in June, near $20 a year ago. The average price of CFSG over the last year is about $11.

(3) CFSG's revenue is growing at a rate of about 50% per year and its income is growing about about 40%.

(5) However, its P/E is less than 10.

(6) CFSG stands to gain a significant part of $2 billion of fire protection systems upgrades in the Chinese steel industry which have been mandated by new Chinese fire codes.

(7) A down turn in the Chinese steel industry caused CFSG to missed earning expectations slightly and resulted in a drop of the stock price from about $9.5 to $7.

(8) China is investing heavily in nuclear power and CFSG is suppling fire protection systems to China's nuclear energy program. It was awarded a relatively large contract, $10 million, in July from the the largest nuclear power company in China.

(9) CFSG has a backlog of $145 million of contracts, which greater than its expected revenue for 2010 by about 15%.

In short, as the Chinese government is serious about requiring industrial fire protection systems, CFSG appears to be a very safe investment given that it now available at a steep discount. It should be expect to approach $10 within six months.

Significantly undervalued given the Company's revenue and backlog growth (driven by impressive market size and share gains), strong cash flow conversion and solid balance sheet.

More expensive than most small cap Chinese stocks right now, but I still don't want to miss this price, unless there is fraud, which it seems like there almost always is, at least a little, that is just how business is there... They are practical: why waste money on perfect books? The real question is, what is the economic significance of fraud? At these prices, I can afford a little fraud; I can afford to ride the stocks down and wait.

Solid standing company with good returns. Don't see it leaving anytime soon, China needs what it sells. Hope it is a real company :P

bullishbabo

price down too much considering fundamentals

Nice fundamentals by GARP standards.

It has no where to go but up unless the bulls take a nosedive.... Anything is possible in that the market is only a huge gambling casino, the only difference being that we can sit at home and gamble.

Oh let me count the ways.

1. PE & PEG ratios indicate it's extremely undervalued currently. This is based on three straight years of increased YOY growth.

2. It's margins are obscenely huge. It has more cash than 83% of the general tech industry, and controls it's costs better than virtually any other industrial tech company out there. 33.25% profit margins. That's pretty Foolish.

3. It's also extremely attractive to me because it just reinvests it's cash, equity and assets so well. Returns between 23% and 33% in those areas.

4. The company has no debt. Let me say that again. 0 debt.

5. The company is primarily held by insiders. Only 11% is held by institutions.

6. It's in a field of technology that will grow as the country grows and modernizes. Here is a descriptions from ETRADE:

China Fire & Security Group, Inc. (CFSG), is engaged primarily in the design, development, manufacture and sale in China of a variety of fire safety products for the industrial fire safety market, and of design and installation of industrial fire safety systems, in which the Company uses its own fire safety products. It also provides maintenance services for customers of its industrial fire safety systems. The Company markets its industrial fire safety products and systems primarily to companies in the iron and steel, power and petrochemical industries in China. It is also developing its business in the nuclear power plants and the transportation, including subways and highway tunnels.

By the way, the company assists the Chinese government in writing the very laws it's products help enforce!

Fundamentals - China

Great numbers, very low P/E. One of 15 I own in real life.

Massively oversold

according to their numbers they should be booming-- so why are they apparently collapsing?

Next years est earnings 1.24

Next year avg est P/E = 20

Next year's price projected at 25