China Tracker - Details for China Integrated Energy (CBEH)


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 China Integrated Energy
 Analyst Coverage
2011-05-02Rodman & RenshawDowngradeTerminatedn/a
 

Effective immediately, we are terminating coverage on China Integrated Energy Inc. to better allocate resources within our coverage universe. Our last rating for CBEH was Under Review / Speculative Risk. Investors should not rely on our previously published financial projections.

2011-03-29Rodman & RenshawDowngradeUnder Reviewn/a
 

We are putting our rating on CBEH Under Review from Market Outperform. Our rating change is driven by the company's announcement to undertake an independent third party investigation surrounding recently published allegations. We will continue to monitor developments and revisit our rating on the completion of the third party review.

CBEH has dropped over 50% in the last two weeks as management has publicly sparred with short interests over various allegations. The outcome has created confusion in the market about the company's business and M&A driven growth strategy. We are removing our financial projections on CBEH while we have the company Under Review. 

2011-03-17Roth CapitalDowngradeNeutral$5.50
2011-03-15Rodman & RenshawReiterationOutperform$12.50
 

We believe the stock's recent weakness is in sympathy with other small cap China names that are under auditor and 10K / 10Q filing related scrutiny. We believe pressure should abate once the company files its 2010 10K with the SEC. We expect this to happen by March 15, 2011.

FY11 Guidance: Management is now guiding for revenue and earnings of $588.1 MM and $72.2 MM for full year 2011, representing 34% growth in both top-line and bottom-line.

Revising 1Q11 Estimates: We are now expecting CBEH to generate top-line, bottom-line, and diluted EPS of $124.5 MM, $15.0 MM, and $0.29, respectively. For the full year numbers, our projections are in line with the company's guidance, with $587.5 MM in revenue, $72.9 MM in earnings, and $1.41 in diluted EPS.

Valuation: At current levels CBEH is trading at a P/E multiple of ~4.0x to our FY11 earnings estimates. We maintain our Market Outperform rating and highlight CBEH as a vehicle to participate in China's increasing energy consumption. At our PT of $12.50, CBEH will be trading at ~8.9x FY11 earnings, still significantly lower than its peer group.

2011-03-10Roth CapitalReiterationBuy$8.00
 

We maintain our BUY rating and $8 price target on shares of CBEH after the company reported Q4 results slightly above our estimates and issued strong 2011 guidance, driven by strong pricing trends. We view the most meaningful take-away from the report is the imminent completion of the company's 2010 audit by newly appointed KPMG (10K expected to be filed next week).

2011-01-18Roth CapitalReiterationBuy$8.00
 

Last Wednesday, we visited the site of CBEH's Tongchuan biodiesel expansion project in Shaanxi Province. Construction of the new facility structures are complete and installation of new equipment is underway (all equipment is on-site). Furthermore, four representatives from CBEH's Japanese partner (Micro Energy) are overseeing equipment installation. Based on our assessment of construction progress and discussions with CBEH and Micro Energy personnel, we believe late-January completion appears achievable.

Existing Tongchuan plant undergoing maintenance; consistent with our model. We also noted during our visit that CBEH's existing Tonghuan plant was undergoing periodic maintenance and would likely be shut-down from early Jan to late Feb 2011. This is consistent with our model; we assume plant volumes will be roughly flat with 1Q10. We maintain our BUY rating and $8 price target.

2011-01-14Rodman & RenshawReiterationOutperform$12.50
 

At current levels CBEH is trading at P/E multiples of ~5.3x and ~4.8x to our FY10 and FY11 earnings estimates. These multiples are significantly below the peer group averages of ~20.7x and ~20.1x (includes China and US operating companies). Our $12.50 price target is predicated on a P/E multiple of ~9x to our 2011 EPS estimate. We believe this multiple is in line with the range currently being assigned by the market to small cap US listed Chinese companies. We maintain our Market Outperform rating and highlight CBEH as a vehicle to participate in China's increasing energy consumption. We believe the stock is available at a very reasonable multiple for a company that has substantial growth opportunities ahead, a strong market position and a healthy balance sheet. Historically energy distribution companies have traded within a range of 8x to 30x on a P/E basis.

2011-01-07Roth CapitalReiterationBuy$8.00
 

Lowering estimates. We are updating our 2011 estimates to reflect the capital raise (est. $0.18 dilution). Based on our expected timing of the project and the inherent execution risk, we anticipate this financing will not be accretive until late 2012 or early 2013. We are also raising our wholesale distribution estimates to reflect increased volumes from the company's recently announced contract expansion (increase est. +$0.05). This benefit is offset by a tempered expectation for the ramp-up of CBEH's new Tongchuan biodiesel facility, which has experienced delays and is expected to begin testing later this month (decrease est. -$0.05).

Lowering price target; maintain BUY rating. We are lowering our price target to $8 (from $10), reflecting our reduced estimates and a lower applied multiple. While we remain optimistic for the company's long-term prospects, we believe meaningful share price upside will be limited until the realization of key catalysts, including the successful start-up of the Tongchuan facility (est. 1Q11) and the completion of the 2010 annual audit by KPMG (est. Mar 2011).

2011-01-05OppenheimerDowngradePerformn/a
2011-01-03Roth CapitalReiterationBuy$12.00
2010-11-05Roth CapitalReiterationBuy$12.00
 

We are raising both our FY10 and FY11 estimates to reflect strong Q3 results and to account for a near-zero effective tax rate (2% vs 15% previously) in 2011. For FY10, we estimate revenue of $435.4mm, vs. our previous estimate of $425.3mm. We estimate net income of $53.1mm, or $1.22 per share, vs. our previous estimate of $50.7mm, or $1.18 per share. Our net income estimate remains slightly below management guidance.

For FY11, we estimate revenue of $523.9mm vs. our previous estimate of $511.9mm, based on higher expected pricing We model pricing roughly flat from current levels, which we view as conservative. We estimate net income of $67.6mm, or $1.55 per share, vs. our previous estimate of $56.2mm, or $1.30 per share. Approximately $0.20 of the $0.25 upward revision relates to the lower effective tax rate. Our $12.00 price target is based on a 10.1x multiple applied to our FY11 Non-GAAP EPS estimate of $1.19 (fully taxed at 25%).

2010-11-04Roth CapitalReiterationBuy$12.00
 

Management raised FY10 guidance and provided point estimates (instead of a range), calling for revenue of $435mm and net income of $53.5mm. Prior guidance called for $425mm-$430mm and $52.0-52.5mm The incremental increase primarily reflects upside to Q3 results. The new revenue guidance is above ROTH estimates and in-line with consensus ($425.3/$434mm) while the revised net income is ahead of both ($50.8mm/$52.7mm).

2010-11-01Rodman & RenshawReiterationOutperform$12.50
 

We are increasing our projections for 3Q10 revenue, net income and diluted EPS to $107.2 MM, $14.0 MM, and $0.32 from $97.7 MM and $13.0 MM, and $0.30, respectively. For the full year FY10, our estimates are raised to $439.1 MM, $54.3 MM, and $1.24 from $425.7 MM, $52.3 MM, and $1.20, respectively. Management also reaffirmed its full year FY10 revenue and net income guidance of $425 MM ~ $430 MM, and $52 MM ~ $52.5 MM.

We are now introducing our FY11 estimates. We are projecting revenue, net income, and EPS of $553.4 MM, $61.9 MM, and $1.41, respectively. This implies a 26.0% Y-o-Y growth in top-line and a 15.1% gross margin. At current levels CBEH is trading at P/E multiples of ~6.7x and ~5.9x to our FY10 and FY11 earnings estimates. These multiples are significantly below the peer group. We are comfortable maintaining a $12.50 price target on CBEH, which translates into P/E multiple of ~10.1x and ~8.9x to our estimates for FY10 and FY11. 

2010-10-27OppenheimerReiterationOutperform$12.00
2010-10-26Roth CapitalReiterationBuy$12.00
 

Yesterday, CBEH announced that it has acquired a retail gas station located in Yulin City, Shaanxi Province. CBEH paid total cash consideration of $9.2 million. The company expects that this station will sell ~12,000 tons of fuel and generate ~$12.3 million in revenue during 2011. These expectations are in-line with the assumptions in our model.

Assuming approximately 10% net margin, we believe this acquisition was completed at roughly 7.5x 2011 earnings. This compares to 9.5x for its Dec 2009 acquisition of three stations and 6.2x for its January acquisition of two stations. This is the third gas station acquisition that CBEH has completed during 2010, bringing its total number of stations to 13. We believe the company's pace of acquisitions has slowed during the year, presumably due to rising valuations. As such, we believe the company could fall short of its targeted five acquisitions during 2010.

2010-08-06Rodman & RenshawReiterationOutperform$12.50
 

For 3Q10, we are now projecting a revenue and net income of $97.7 MM and $13.0 MM, with diluted EPS of $0.30. This compares to our previous estimates of $89.7 MM, $12.7 MM, and $0.30, respectively. For the full year FY10, our estimates are now raised to $425.7 MM, $52.3 MM, and $1.20 from $386.2 MM, $49.6 MM, and $1.18, respectively.

2010-08-05Roth CapitalReiterationBuy$12.00
 

2Q10 results exceed estimates. Revenue equaled $104mm (+60%), beating Roth/consensus est. of $79mm/$91.7mm. Net income and EPS of $13.4mm (+51.8%) and $0.30 (+20%) beat Roth/consensus est. of $10.1mm/$11.4mm and $0.24/$0.27. Upside was primarily due to stronger than expected wholesale distribution sales (volume and pricing). The sequential decline of only 12% in wholesale sales indicates the impact from distributor destocking was less significant than we had anticipated. Gross margin of 14.9%, vs. est. 14.2%, improved 270 bps sequentially and 380 bps y/y, mainly due to higher margins in retail gas station segment.

2010-07-08OppenheimerReiterationOutperform$11.00
2010-07-07Roth CapitalReiterationBuy$12.00
 

Assuming current diesel prices and an all-cash transaction, we believe the Sichuan acquisition will be accretive to EPS by approximately $0.15 in the first year. We plan to update our model upon the completion of the acquisition, which we expect by the end of 3Q10. Currently trading at 6.5x our 2011 EPS estimate, we believe the stock is significantly undervalued given Chinese energy stocks historically trade for 10x EPS. We reiterate our BUY rating and look at recent weakness as an attractive opportunity given the discount to historical energy peer multiples and expected accretion from the biodiesel plant acquisition.

2010-07-07Rodman & RenshawReiterationOutperform$12.50
 

We are encouraged by CBEH’s recent moves on capacity expansion of its bio-diesel production, which currently accounted for ~16% of total revenues in 1Q10. Management is currently running a 100,000 ton bio-diesel production facility in Tongchuan City, and expects to ramp to 200,000 tons by the year end if it completes the acquisition and new facility build-out on time. We continue to believe that the demand for cleaner fuel in China should be largely driven by regulatory push. Chinese government aims to achieve renewable energy usage of 15% of total energy consumption in China by the year 2020, and bio-diesel consumption is expected to reach ~2 MM tons by 2020. We are confident that management should be able to effectively execute its expansion strategy, and the new facility should be come into play on time. We are not factoring any revenue contribution from the potential acquisition in our financial models, but we will revise our numbers once the transaction is closed. At current levels CBEH is trading at P/E multiples of ~6.1x to our FY10 earnings estimates. These multiples are significantly below the peer group. We are comfortable maintaining a $12.50 price target on CBEH, which translates into P/E multiple of ~10.7x to our estimates for FY2010, still implying a discount compared to ~16.2x multiple for its peer group (includes China and US operating companies).

2010-05-14Rodman & RenshawInitiationOutperform$12.50
 

At current levels CBEH is trading at P/E multiples of ~7.8x to our FY2010 earnings estimates. These multiples are below its peer group. We are comfortable assigning CBEH a $12.50 price target, which translates into P/E multiple of ~10.6x to our estimates for FY2010, still implying a discount compared to ~20.6x multiple to its peer group. We believe this is a reasonable multiple for a company that has substantial growth opportunities ahead, a strong market position and a healthy balance sheet.

2009-11-18Cowen & CoInitiationOutperformn/a
2009-11-10OppenheimerInitiationOutperform$10.00
2009-06-25Roth CapitalInitiationOutperform$9.00
CBEH
Oil & Gas
SCORE
0
UNDER REVIEW
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SAFETY/RISK SCORE
EXTREME RISK
DETAILS: Safety/Risk Model for CBEH
Current Price:  n/a
F10k Day (2008-07-08): -100.00%$6.05
2009 Close: -100.00%$7.04
2010 Close: -100.00%$7.33
2011 Close: -100.00%$0.39
High (2012-02-02): -100.00%$0.96
Low (2012-09-27): -100.00%$0.31
Exchange:
Market Capitalization: n/a
Total Shares: 42.20 mill
Float: n/a
Avg Volume: 423.70 k
Short Interest: 1.93 mill
Short Ratio: n/a4.6 d
Last Quarter: 2010-12-31
Revenue (MRQ): 118.05 mill
Net Income (MRQ): 15.32 mill
Op. Cash Flow (MRQ): 22.59 mill
all financial data provided without warranty