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China Armco Metals, Inc. Common Message Board

  • mawsii1 mawsii1 Apr 25, 2010 12:26 PM Flag

    Scrap production started in march

    This info was mentioned on the last sec filing. It took a year longer than originally figured, but the co is now ready for huge revenue increases with all the capital expenditures completed. Scrap steel prices have been increasing, and all production from this plant I was told would stay in China due to the demand for at least 2 years..As much as they can produce they can sell. So the 100 million contract with a steel plant is only the first of many to come. The construction costs was only 16.9 million which can generate 400 million per year once they reach full capacity..There are very few co's out there with this much growth potential in such a short time frame..The 2nd qr will be a good read on the margins, and for the balance of the yr. We should soon see announcements on the commodity part of the business. I am also expecting large contract announcements. The moment they are put out, buy more..there is no way this stock will be this cheap for long. for the Co to put out 220 in rev this yr., my guess is most is in the bag already..eventually those that were given cheap shares will sell out or stop selling, new buyers will take control of the float, and hold for lots of upside. This is truly a growth story, even in a bad economy...good luck

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    • I completely agree that this is a solid business with lots of upcoming potential. The two biggest concerns I have, and am awaiting patiently, is where does the dilution stop and margins. If they can consistently show 8% margins, then we are in great shape. With revenues of 400M anticipated, I wouldn't be surprised to see an additional dilution later this year. However, as long as shares stay under 20MM outstanding, I think EPS will still be very strong as long as margins are good. I read in one of their filings that they have 4 strong banking relationships that finance short-term AR payable upon collection from the customer. This is a bonus IMO, as the company is not going after additional equity for the purpose of AR financing, rather expansion and "general" stuff (whatever that is). I've continued to catch this falling knife and now have my average below 7.00 (just barely).

      Strong Buy.