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China Carbon Graphite Group, Inc. Message Board

  • recordguy2000 recordguy2000 Apr 23, 2013 12:57 PM Flag

    question for emmylou

    I bought back into this stock this week because of the $2 book value. Not much 10,000 at .30 cents, in your opinion which of the following would you expect might happen a) they finally improve the business model and improve sales, b) they get bought out or c) bankruptcy?

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    • I expect that they will improve their business and improve sales. CHGI went through the same thing in 2009 when steel struggled, which required a PIPE to cover operations and expansion. They came through and increased sales until the current slowdown.

      Unfortunately there is a lot of pain trying to expand their business model from commodity electrodes to higher end products.

      The US tariff on Chinese solar panels and China's delay in developing nuclear reactors in response to the Japanese tsunami meltdown has also had an impact on higher end graphite applications.

      There is always a chance the company could go bankrupt. Right now the stock is priced for a likelihood of bankruptcy, which I feel is overdoing it since the facilities and assets of the company still yield a positive book value, even at discounted prices.

      I haven't sold any shares at these low prices. Clearly the horrible earnings last quarter demonstrate that it will be a long time until they start achieving sales and earnings based on their capacity. I expect earnings this quarter to be little improved.

      I also agree with topsnot, if management wanted to they could probably sell the company for around $1/share based on the facilities and inventory alone. There are multiple graphite players who would like a Chinese "partner" with the production capabilities of CHGI.

    • management would have to be total id*jits to just let it go bankrupt, their is still enough to work with here to get at least one buck per share.