China Integrated Energy, Inc. (CBEH) recently reported record results for the fourth quarter as oil product demand stayed strong in China. CBEH is cheap, with a forward P/E of just 8.9.

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.

China Integrated Reports Record Fourth Quarter

On Mar 12, China Integrated announced its fourth quarter results and surprised on the Zacks Consensus Estimate by 7.1%. Earnings per share were 30 cents compared to the Zacks Consensus of 28 cents.

It was the second straight earnings surprise.

Sales jumped 57.9% to $93.3 million from $59.1 million in the year ago quarter. All 3 business segments saw sales increases. Petroleum product sales soared 80.1%, retail gas sales grew by 53.3% and biodiesel sales gained 5.4%.

There was strong market demand for heavy oil and finished oil products. The retail gas stations also performed well.

In January, the company announced the addition of two gas stations bringing the company’s total to 12. These two stations are expected to add $14.2 million in revenues in 2010.

China Integrated is Bullish about 2010

Given the record quarter and the Chinese economic recovery, the company is optimistic about 2010.

It is forecasting 2010 revenue to rise 32.8% to $382 million. This includes the additional 50,000 tons of biodiesel from the new manufacturing facility expected to come online in third quarter and the lease of 3 additional gas stations.

Zacks Consensus Estimates Rise

Analysts followed the company’s lead and raised estimates in the last 30 days. The Zacks Consensus rose 4 cents to $1.10 in that time period as 2 estimates moved higher.

Analysts project 5-year earnings per share growth of 26%.

Value Fundamentals

China Integrated Energy is a Zacks #1 Rank (strong buy) stock. It has a stellar 1-year return on equity (ROE) of 34.4% which blows away the industry average of just 0.71%.

The company also has an attractive price-to-book ratio of 2.42, which places it in value territory as it’s under 3x.

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.

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