First of all, I would like to thank you for your questions and your interests to the company.
As you may heard in our conference call, we are ready to launched our new transformer
production line in third quarter of 2011. Most of the clients purchasing transformers are large
national grid companies, unlike our clients for transformer cores, most of who are private
companies. Eve we do believe in the market potential for transformer and the synergy of this
vertical integrated value chain, the days sales outstanding is also much longer than that of
transformer cores'. And giving the fact that the Chinese monetary policies is continuously
tightened by the government, after considering all our shareholders' interests, we believe a
prudent and strong balance sheet would help us better leverage the market opportunities in the
Again, thanks a lot for your interest and your support.
China Power Equipment Inc.
Cell (86) 186-1633-1170
bought 25,000 more at $0.75 today. Looks like there is a real seller at R.F. Lafferty & Co which is LAFC on the level two here http://www.otcmarkets.com/stock/cpqq/quote
When the dust settles I think this is going to be a double from here. Which means my costs basis of $1.30 on my fatty six figure position means I can break make a 20% gain. Hopefully I can buy another 50,000 at $0.75
Good post rstewart! I do feel that bringing in a strong operations guy and some help with sales, pr, and marketing would do wonders for this company. Their products and their market is very exciting and their infrastructure is now in place and paid for.
CPQQ is still making money and has good cash flow even during their expansion, which is not easy to do. The hard work is over, the easier part is adding some members to the mangement team that can take this Company to the next level. Remember this stock is solid and real and has a PE of 3. Anyone selling stock at this price will really regret it. This is very similar to Ford, GM and the banks when nobody was buying and there was panic selling. Then Ford went from $1.50 to $12 in a year and people who bought in at the lower levels made huge profits.
I have had an exchange with her as well. Needless to say their IR firm is worthless.
They have high hopes for the new line and by this time next year we could see the stock begin an uptrend. Third quarter will probably be lite when it comes to sales of the new line. Q4 could finally see an uptick in sales. Unfortunately Q4 won't be released till March of next year.
The stock is dead money. I had hoped the 1 dollar line would hold and I have been constantly stacking the ask trying to unwind my position. Its pretty impossible since the stock has nearly no buyers left. I would expect the stock to fall into the 80's soon and if that doesn't hold look out below.
We are trading at cash value and to be honest it will likely go lower. The CFO told me that they will need at least the cash in the bank to bring the new line to production and may even need to dilute or pursue a line of credit. This will tail spin the stock back to its price 2 years ago.
It appears they have reached full saturation in the sales of Alloy cores.
The remaining problem in the business models are this:
Alloy core transformers are not selling well. I imagine its do to a lack of history. Its possible the grid companies would like a little longer to verify they will hold up as long as steel cores. If not then the cost savings are lost do to larger maintenance costs for the grid up keep.
In order for them to sell the new line they will need to take business away from the customers they are supplying. That is a huge problem. They are not trying for new business but rather to compete against the companies they already do business with. This is why vertical integration will have a higher margin.
The longer AR times will be the reason why the company will fall into a cash flow negative position and require large sums of cash to fund operations. Not that bad long term but very negative short term.
It could take some time for this stock to see any sizable recover. Sorry its true, of course everyone could just say its my fault that's fine too.
If anyone is interested, I would recommend buying SNEY. The stock is showing some weakness today but will probably move rather nice next week. I would expect the stock to double in the 30-60 days. A solid short at recovering losses here. CPQQ has a maximum of 20% gain from this point.
One last note. Look at the analyst estimates. The company has been consistantly missing expectations and the analyst is now saying growth for 2011 is expected to be-
Revenue up 10%
Income down 5%.
Not a solid scenario for the next 12 months.
Good luck all
"They have high hopes for the new line and by this time next year we could see the stock begin an uptrend. Third quarter will probably be lite when it comes to sales of the new line. Q4 could finally see an uptick in sales. Unfortunately Q4 won't be released till March of next year."
If you believe the market looks 6-8 months in advance, then price appreciation should start in about 4 to 6 months.
Just a thought.
I guess I am a little surprised the CFO gave you the detailed info that he did. This borders on inside info. While you are and have been quite negative for a long you have been dead on on price and I agree with the ST dead money statement. It looks like the company and therefore and analyst were both too optimistic on bringing out the new line in a timely manner
"giving the fact that the Chinese monetary policies is continuously tightened by the government, after considering all our shareholders' interests, we believe a prudent and strong balance sheet would help us better leverage the market opportunities in the coming year"
That line gives me some worry. I interpreted it as CPQQ is worried more than they let on about the Chinese monetary policy hindering their sales, meaning they will need the extra cash on their books if the trend continues of tightening to support their business in the future.
Anyone else get something different out of this?