|Moderated By: yassinzineb -- (Moderated) -- Started: 1/10/2006 10:10:43 PM Revision History|
ANALYST PRICE TARGET:
CHID historical revenues:
CHID revenues projections:
Historical financials and current year:
2004 EPS: (.02) revenues 2.3 M net income (0.8 M)
2005 EPS: 0.05 revenues 12.7M net income 2.7M
2006 EPS(e): 0.06 revenues 14M net income 3.52M
actual 2006 results
Q1 2006: 3.184 M revenues net income 0.737 M
Q2 2006: 3.028 M revenues net income 0.474 M
Q3 2006 4.031 M revenues net income 1,137 M
2006 EPS:0.09 revenues 19.3M net income 5.8 M
2007 EPS(e): 0.16 revenues 30.7M net income 10.1M
Sono Historical revenues:
2004 Rev: $1,585 M
2005 Rev: $5.339 M
2006 Q1 Rev: $ 0.087 M
2006 Q2 Rev: $2,490 M
2006 Q3 Rev: $1.81 M
2004 Income: $ 337,574
2005 Income: $1,868,605
2006 Q1 Inc: $ (108,207)
2006 Q2 Inc: $1,275,885
Currently CHID is trading at.37 with a 2006 PE of about 6 we have a PEG of Just 0.33 (this means CHID is trading with a PE wich ïs about 3 TIMES LOWER than the 2006 EPS growth).
CHID 6 months chart:
CHID 1 year weekly chart:
CHID 3 years chart:
CHID intraday chart:
CHINESE STOCK EXCHANGES
The President have bought 530 000 shares (May 12,2006) :
Tuesday November 8, 2005
China Digital Interviewed by Traders Nation(TM)
Interview with Vice President of Corporate Development Roy Teng
CHID video (battery production)
CHID profiled by hawk associates:
All you have to know about the Galaxy
We have agreements to purchase a companiy that make high tech products for the rapidly emerging 3G telecommunications market in China. As you probably know, 3G refers to third generation communications devices representing the next technological evolution in mobile telephones and consumer electronics.
The company we are acquiring is Galaxy View International, which owns Sono Digital, a leading supplier of 3G communications technology and equipment. Sono reported 2005 sales of $6 million and net profit of $2 million.
this company will be a great fit for China Digital and will not only help expand our company significantly but will also significantly expand our market opportunities. As the fastest growing major economy in the world, we believe China’s demand for 3G communications as well as portable electronics will be enormous. China is certain to become the world’s largest wireless society and user of portable electronic products.
With the successful completion of the acquisition, we are now projecting revenue of $19.3 Millions and net income of $5.8 Millions or $0.09 per fully diluted share.
CHID LONG TERM REVENUES PROJECTIONS :
In 2005, CHID had 2.6% of the worldwide market for these products, which was $8.4 B in 2005, growing 15% from 2004. China's domestic market is worth 25% of the global market and CHID has 11.3% of the domestic market, being the second largest player in an highly fragmented industry. It is the only Chinese publicly traded company in this market, and that gives CHID an unique advantage and potential for profitable acquisitions. The company is on the path for several acquisitions this year.
There's no better place to produce these products than China. CHID currently has 571 full time employees, but of course, their cost is minimal if compared with the cost of having 571 employees on any developed country.
CHID taking more and more market share from it's competitors, either by organic growth or acquisitions. And the market for mobile digital products and power sources won't stop growing anytime soon. It may very well continue to grow at double digit rates for the next 5 or 10 years. If the market grows 12% a year for the next 10 years, it will then be a $26 B market. If CHID's market share grows to 10% of this market over the next 10 years (perfectly plausible), the company will then have $2.6 B in annual sales. Even if net margin drops to 10%, it will still earn $260 M in net income. If you apply an average earnings multiple of 16 to this company it will be worth something like $4.16 B.
With the current number of shares outstanding, CHID would need to have a market price of $57 to have a $4.16 B market cap. This represents a 49% average annual return on your long term investment.
China Digital Communication Group (OTCBB: CHID), through its wholly-owned subsidiary Shenzhen E'Jenie Technology Development Co., Ltd. ("E'Jenie"), is one of the fastest growing providers of power-supply components to China's explosive $2.1 billion battery market. Based in southern China's manufacturing core of Shenzhen, E'Jenie develops, produces, distributes and markets steel and aluminum battery shells (ABS) and related technology for use in electronic products such as mobile phones, digital cameras, camera phones, PDAs and laptop computers in East Asia and beyond.
E'Jenie has been profitable from its inception in 2002, and has consistently grown its revenues and earnings. While the Company is focused on increasing manufacturing capacity at E'Jenie to meet skyrocketing domestic demand, CHID is actively pursuing licenses, joint ventures, mergers and acquisitions, and strategic partnerships that link Chinese manufacturing companies with U.S. distribution networks to achieve greater profitability. Management announced it is on track to achieve $11.4 million in revenues and a net income of $2.6 million, both up 100% year-over-year, at year-end 2005.
With its strong fundamentals and solid prospects for growth, China Digital is a dynamic new issue to the U.S. stock market that is poised to rapidly build shareholder value.
Strongly Favorable Market
With China becoming the world's manufacturing hub for cell phones and other digital mobile devices, E'Jenie is strategically positioned to supply vast numbers of battery shells for lithium-ion batteries, an industry standard in today's digital world.
Large & Growing Cell Phone Market: China's domestic mobile phone battery market is expected to expand in 2005 to 570 million units, up from 450 million in 2003. The worldwide market for mobile phone batteries is projected to see a two-year rise to 2.52 billion from 2.16 billion units. Domestic battery sales in China are expected to rise to $2.1 billion in 2005, up from $264 million, or more than 14%, from 2004. China will experience a 50% increase in demand of the lithium ion batteries in 2005 (Source: China Statistics). E'Jenie now recognized as a leading provider of ABS shells for lithium ion batteries.
video of the steps to replace the battery in the ipods.
Not only are more Chinese consumers buying mobile phones, but current users are also constantly upgrading their equipment as rapid advances in technology bring about new cell phones which are eagerly accepted into the marketplace. This trend also opens up the market for rechargeable batteries, which is valued at $500 million and growing 20% annually. A mobile phone battery has a typical usage life of 300 to 500 recharges, which translates to a ratio of 1.8 batteries in service life of each phone (source: Chinese Statistics). Moreover, battery replacement demand grows faster than this when consumers turn in their phones for new models before the normal life of the battery is over. A short product life, combined with an accelerated product innovation cycle, have created rapid product turnover and tremendous, ongoing demand for battery shell makers such as China Digital.
China's Move to Capitalism & the Appreciation of Chinese Currency: The Company is also poised to benefit from China's booming manufacturing sector. Makers of batteries and electronic products are direct customers for CHID's components, and their growth – fueled by exports as well as rising domestic demand – can translate into higher sales for CHID. China's entry into the World Trade Organization and the continued privatization of its industrial base will continue to fuel this expansion. State-owned enterprises are continually being reborn as private firms, creating demand for CHID to supply parts and materials to a new crop of manufacturers. In tandem with a move toward capitalism, the Chinese economy is benefiting from a stronger currency. Financial analysts predict the Yuan will continue to appreciate to a greater degree against U.S. currency. This trend favorably impacts the CHID's projected revenues and asset valuation.
Market Expansion - China's telecom equipment market has doubled since 2000 and is estimated to grow 23% annually for the next five years.
Driving the Industry Standard - Wholly-owned subsidairy, Shenzhen E'Jenie Technology Development Co., Ltd. ("E'Jenie") is one of China's largest lithium ion battery shell producers. Lighter and more compact, lithium batteries are emerging as the new industry standard for mobile devices.
Manufacturing Capacity - E'Jenie owns a modern 65,000 sq. ft. manufacturing facility in the hub of industrial southern China that employs a 550-plus workforce and operates multiple product lines.
Profitable & Growing - Since its inception in 2002, E'Jenie has been profitable and expects continued earnings growth. At year-end 2005, CHID expects to generate revenues of $11.4 million and a net income of $2.6 million, both representing 100% increases year-over-year.
Experienced Leadership Team - Principals contribute direct and extensive experience in the Shenzhen high-technology sector.
CHID's key acquisition E'Jenie operates a new 65,000 sq.ft. manufacturing facility with over 110 pieces of manufacturing and test equipment in the Xinglian industrial zone of Shenzhen, China. E'Jenie brings expertise in the research and development, manufacture and distribution of battery shells and related technology. Its main products are steel and aluminum battery shells, aluminum battery caps and lithium batteries. Its primary market consists of battery manufacturers selling to the mobile-phone industry.
E'Jenie was founded less than three years ago with one steel-shell production line. It quickly took advantage of China's skyrocketing demand for mobile phones, adding three more production lines before the end of its first year. By the end of 2003, it had 14 steel-shell production lines. In 2004, it bought five aluminum-shell production lines, adding to a pair of battery-cap lines purchased earlier. With its scalable manufacturing capacity, E'Jenie quickly became a major supplier to the Chinese electronics manufacturing sector. The facility now employees more than 550 skilled workers with a daily production capacity of 300,000 steel shells; 150,000 aluminum shells; and 150,000 aluminum caps.
E'Jenie also stands out as the first manufacturer to establish technical and quality production standards in the lithium ion battery industry. These guidelines solidify E'Jenie's position as a leading supplier in the lithium ion battery industry in China, while addressing increasing demands from consumers to deliver technical and quality standards for lithium ion battery shells.
E'Jenie recently signed a contract with Wuhan Jie Xin Communication Development Co., Ltd, one of the largest lithium ion battery manufacturers in China. The contract calls for E'Jenie to supply 9.4 million steel and aluminum battery shells and sell them to Wuhan Jie Xin over a 12-month period for a purchase price of $667,053. As a result, E'Jenie has met its goal of obtaining at least 25% of Wuhan Jie Xin's annual ordering capacity for steel and aluminum battery shell products and lithium ion batteries. This is a significant accomplishment for E'Jenie, earning it a larger portion of China's electronic power supply market.
Year 2005 and 2006 are projections based on management's expectations.
Multifold Growth Strategy
With the E'Jenie acquisition, CHID is now a major presence in the booming Chinese electronics manufacturing sector, and is poised to leverage its strengths to reach new global markets, including the U.S.
Aluminum battery shells (ABS) is at the center of China Digital's growth strategy. Battery makers are demanding aluminum shells and caps for a number of reasons. ABS components give batteries better electric conductivity; are lighter than steel; allow for greater capacity; and appear to be safer. In reports of battery explosions and other accidents, China Digital reports that ABS are linked to low injury rates when compared to steel components. ABS also has a cost advantage over steel. Though ABS products are sold at prices close to those of competing steel items, their raw material costs are much lower. Profit margins of ABS products remain above 30%.
E'Jenie's manufacturing capacity to produce ABS for lithium-ion batteries include multiple consumer product applications, including such mobile devices as digital cameras, MP3 players, cellular phones, notebook computers and PDAs. While increasing sales within this primary electronics market, CHID also has potential to expand to new and emerging markets, including the automotive market.
Overall, E'Jenie is currently holding 10% of the market in China and is now seeking to gain a presence beyond domestic sales. CHID is currently surveying the landscape of battery distribution networks in the U.S. to gain access to lucrative overseas markets. The Company's mid-term strategy is to use licenses, joint ventures, mergers and acquisitions to successfully bring together Chinese manufacturing companies with U.S. distribution networks. As the Chinese currency appreciates, CHID stands to significantly increase margins as it begins importing activities in the U.S.
Strong Upside Potential
For the fiscal year 2004, China Digital recorded pro forma sales of $5.18 million, nearly all of which was revenue acquired through E'Jenie. The Company also reported a sharp rise in revenue from sales of its new aluminum battery shell (ABS) line, which first went on the market in October 2004. For the first two quarters of 2005, China Digital posted revenues of more than $6.2 million, representing an explosive 528% increase from $991,541 in the same periods in 2004, and a net income after tax of $1,426,596, up 433% increase from a loss of ($428,087) in the same periods in 2004. China Digital expects its trend of record sales and profitability to continue through 2005.
Operating in a highly-fragmented global industry, E'Jenie's manufacturing strengths, experienced management team and established customer base provide CHID with unique advantages to attract acquisition targets. Combined with increasing business in E'Jenie, CHID is poised to rapidly build revenues and earnings. Management projects 2005 revenues of $11.4 million and net income of $2.6 million, both representing increases of 100% year-over-year. The Company also has a healthy balance sheet with over $1 million in cash, no long-term debt and is self-financed. Within the micro-cap sector, CHID represents a solid, long-term upside opportunity for investors to benefit from the fast-growing market of electronic components, both within China and overseas.
Yi Bo Sun, Chairman and CEO - Mr. Sun assumed the leadership post at CHID when it acquired E'Jenie, where he had been chief executive officer and president since February 2004. Previously, he was president of Shenzhen Jing Kong Chao Ying Electronic Industrial Corp.; marketing director of Shenzhen Heng Tian Communication Equipment Co., Ltd.; and executive president assistant of Shenzhen Te Fa Tong Cheng Industrial Inc. He holds a Bachelor of Science degree from Jilin University.
Yao Miao, Chief Financial Officer - Mr. Yao Miao has served as the chief financial officer of CHID since February 2004. Before assuming this role, he was the chief financial officer of Shenzhen Southern Heng Ye Industrial Co., Ltd.; the auditing manger of the accounting department at Shenzhen Run Ze Universal Development Co., Ltd.; and accounting department director at Golden Butterfly International Software Co., Ltd. He has a Bachelor of Science degree in economics from Hubei University, and is a Certified Public Accountant.
Mei Bin Jin, Secretary - Ms. Jin has been on the Board of Directors of CHID since February 2004. Before that, she was the executive general manager of Shenzhen E'Jenie Science and Technology Development Co., Ltd. She is a graduate of Hubei Province Huaangshi City Professional Institute.
China Digital Communication Group
1901 Ave. of the Stars, Suite 201
Los Angeles, CA 90067
Tel: 310 461 1322
Fax: 310 461 1323
A-3. Xinglian Industrial Zone. He Hua Ling Pingxin Road.
Xin Nan. Ping Hua Town. Longgang
Shenzhen China 51811
Tel: 001 755 2698 3767
Fax: 001 755 2698 3823