(CFSG) China Fire & Security Group – Helped by the Stimulus Plan

October 22nd, 2009

China Fire & Security Group (CFSG) continues to capitalize on the booming Chinese economy.

Company Description

China Fire & Security Group makes and maintains fire safety systems and products for industrial use in China.

Revenues Surging

On Aug 10 the company reported second-quarter results that included a 37% increase in revenue, to $22.7 million. Contract volume is up to 205 for the quarter, compared to 177 in the same period last year.

Net income rose $1.7 million, or 25%, to $8.3 million for the period. This equated to 29 cents per share, 6 cents higher than the Zacks Consensus Estimate and 5 cents higher than last year.

Help From the Stimulus Plan

China Fire’s CEO, Brian Lin, said, “I am very pleased with our second quarter results. The Chinese government’s stimulus plan and the new amendment to the Fire Protection Law, which requires all fire protection products to pass compulsory product certification, has improved demand for our high quality systems, and increased bidding activities from our Tier-1 customers.”

Estimates Pop

Following the report the Zacks Consensus Estimate for this year rose to $1.05, up from 97 cents. Next year’s estimates are averaging $1.30, up from $1.19.

These projections show expected growth rates of 20% and 24%, respectively. China Fire and Security is set to report quarterly results on the 10th of November.

Solid Value

Shares of CFSG are trading at roughly 18 times forward earnings. Not too bad considering the growth rates bring the PEG down to about 0.7 times. Both figures are better than the industry.

The Chart

Shares of CFSG have not just dramatically increased in value, but are also seeing much more volume. The recent success combined with China’s popularity is buoying the stock.


Zacks Investment Research
View original at: Zacks.com News Feed

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Read more on Investing in China, China Fire & Security GP at Wikinvest

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