While watching the Olympics' figure skating competitions, I realized I had seen some very nice Asian figures that I ought to have mentioned here.
The first are from China Armco Metals, the metal broker whose recent steel recycling plant investment will make it one of the top ten metal recyclers in China. Located within 3km of a deep-water port, and close to a major hub for automotive production (both a potential customer and a potential source of scrap, as local law requires auto manufacturers to recover and recycle abandoned vehicles), China Armco's facility seems well sited to take advantage of the steel industry as China begins firing on all cylinders during the worldwide economic recovery. Heck, why wait for the world? China needs steel now, has a large population with a growing middle class, and is consuming steel at a regular and growing pace.
China Armco's recent numbers include improvement, but don't show what investors need to know: those numbers are based on its old non-ferrous metals brokerage business. Although China Armco is growing its distribution business, that's not the company's future. And the future is bright: the company has gone from trimming 2009 revenue projections in its distribution business to announcing post-2008 recovery and predicting record revenues and projecting $0.45 or so profit per share in the full year of 2009.
The fact that China Armco will be earning these revenues in China offers an interesting hedge against the value of U.S. currency. Yet, these past earnings are not the reason China Armco is interesting. The company's future is in higher-margin production. The company's prospects have been discussed favorably from time to time online, but now that the company is listed on the Americal Stock Exchange under the symbol CNAM, it'll get more attention from analysts and will get noticed by folks who'd have shuddered to consider buying on the pink sheets.
CNAM currently trades 10x the earnings it projected for 2009, while offering a steady business in a currency that is deliberately kept mispriced and which could explode once China's government becomes unable to maintain the currency's artificially low value. It offers a chance to buy productive assets at a discount (being bought with underpriced Yuan), take a share of a business yielding an income stream in a non-US currency from a country lacking a banking or inflation crisis, and get a piece of China's expected national growth. It might not be getting in on the ground floor, but it's hard to get closer and be on a major exchange.
There are a few other Asian figures worth discussing, but it's late here in Houston. Good night!