China Integrated Energy Inc. - Value - Zacks Rank Buy
China Integrated Energy, Inc. (CBEH) recently added 5 gas stations to its arsenal following its strategy to expand retail and distribution operations in 2010. CBEH is cheap, trading at just 8.06x forward earnings.
Company Description
China Integrated Energy distributes gasoline, petro-diesel and other petroleum products to retail customers throughout China, operates 12 retail gas stations in the Shaanxi Province, and produces alternative energy fuels at a bio-diesel facility with 100,000 ton annual capacity.
In November 2009, the company announced it was building a second structure at its bio-diesel facility which would expand production by 50,000 tons. Production is expected to begin in the third quarter of 2010.
China Integrated Energy is the only non-state-owned integrated bio-diesel producer with a distribution license in the country.
The distribution segment services over 640 million people in a wide geographic region in China.
Expanding Its Gas Station Operations
On Jan 14, China Integrated Energy announced the acquisition of 2 gas stations near the city of Xi'an. It paid $8.8 million for the operations. This came on the heels of 3 stations it added to its roster in December 2009.
The acquisitions are part of the company's strategy to expand its retail operations. Given its distribution capabilities, it is able to provide a stable supply of petroleum products to its own retail outlets.
China Integrated Energy believes sales volumes will increase in the next 12 months due to increasing demand for fuel.
The company intends to continue to acquire more stations in 2010 as well as expand its distribution network.
China Integrated Reports a Record Third Quarter
On Nov 13, China Integrated reported record third quarter results which surprised on the Zacks Consensus Estimate by 7.69%. Earnings per share were 28 cents compared to the Zacks Consensus of 26 cents.
Sales rose 15.1% to $72.4 million from $62.9 million primarily due to an increase in the finished oil wholesale distribution business.
"The number of customers in our wholesale distribution of finished oil and heavy oil business segment has grown substantially from 936 in 2008 to over 1,170 in 2009," said Mr. Gao Xincheng, Chief Executive Officer.
Bio-diesel revenue fell due to lower selling prices compared to the year ago period.
Outlook
China Integrated Energy reaffirmed 2009 guidance expecting an increase in sales of 22.4% or $265 million. This assumed no big downward price adjustments to crude for the remainder of 2009.
The fourth quarter Zacks Consensus Estimate has been holding steady at 25 cents for the last 30 days.
The 2009 Zacks Consensus Estimate has been at 99 cents for the last month. The company is scheduled to report results on Feb 13.
For 2010, analysts see earnings growth of just 7.07%. However, 1 estimate has moved higher in the past week, pushing the Zacks Consensus up by 3 cents to $1.06 per share.
Value Fundamentals
China Integrated Energy has attractive valuations. It has a price-to-book ratio of 2.13. Analysts expect earnings to grow by 45% over the next 5 years. China Integrated is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
