China Fire & Security: Big Targets – Analyst Blog
Source: http://www.zacks.com/stock/news/21733/China+Fire+%26+Security%3A+Big+Targets+-+Analyst+BlogPosted on Wednesday, July 1st, 2009 | In Market Commentary, Stocks to Watch
China Fire & Security Group, Inc.’s (CFSG) is a total solution provider of industrial fire protection systems in China, headquartered in Beijing.
The company is bullish about the growth prospects for its Total Solutions business (83% of 2008 revenue), primarily in the iron and steel industry. Despite challenging times for this group, the company is witnessing strong demand for its Total Solutions in this vertical, as some of its Tier-1 customers are receiving more government-subsidized funding and extra government support for consolidation.
In March 2009, China’s state council released China Iron & Steel Industry’s Revitalization Scheme, which promotes total production control, encourages industry consolidations and emphasizes the development of new technologies. This stimulus plan provides financial subsidies and loan discounts to leading iron & steel companies, allowing larger and more advanced steel producers to upgrade existing plants and to build new ground-breaking facilities. CFSG sees huge growth potential for the Total Solutions business as it derives more than 80% of its revenue from the iron and steel industry.
Also, the company is now looking at expanding into other sectors such as nuclear energy, power and petrochemical. With China’s industrial fire protection segment estimated to grow more than 11% annually until 2011, we believe the company is well positioned to leverage the growth potential in the market.
The company signed contracts worth $20 million in the first six months of 2009. Despite current economic conditions, the company continues to post revenue and earnings growth and is confident of posting top-line growth of 28-38% for fiscal 2009. Given its strong backlog, we believe the company is capable of achieving its targeted growth rate.
Read the full analyst report on “CFSG”
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