China Tracker - Details for China Electric Motors (CELM)


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 China Electric Motors
Shares Outstanding (MRQ): 21.94 mill
New Shares / Dilution (TTM): 8.39 mill61.89%
Cash (MRQ): 36.42 mill0.00%
Account Receivables (MRQ): 16.01 mill0.00%
Account Receivables (Q/Q): + 6.14 mill  
Long-Term Debt (MRQ): NO DEBT
Revenue Growth (Q/Q): 29.98% 
Revenue Growth (Y/Y): 48.90%
Net Income Growth (Q/Q): 24.84% 
Net Income Growth (Y/Y): 60.99%
EPS Growth (Y/Y): -0.56%
Net Margin (Q/Q): 15.6% (16.3%)-0.60% 
Net Margin (Y/Y): 15.6% (14.5%)1.20% 
EPS | P/E (2 MRQ Projection): $0.840.00 
CFPS | P/CF (2 MRQ Projection): $0.540.00 
Price/Sales (2 MRQ Projection): 0.00
Price/Book (MRQ): 0.00 
Auditor: currently none
 
 Forward Projections (Fiscal Year)
EPS | P/E (Estimates updated 2011-01-04): $1.050.00 
 Basic Facts and History (show more)
Reporting Type: U.S. Company (10-K Filings) 
Going Public: IPO on 2010-01-29 
IPO Price: $4.50 (-100.00% since IPO)

 Business Outlook

COVERAGE TERMINATED (Going Dark)
Recent Chain of Events:
2011-09-20 -- Last SEC Filing
2011-09-16 -- CEO Appointment
2011-09-15 -- CEO Resignation
2011-06-14 -- Delisting from NYSE Amex
2011-05-31 -- Auditor Resignation
2011-05-31 -- CFO Resignation
2011-03-31 -- Trading halted by NYSE Amex
2010-11-12 -- Last Quarterly/Annual Report: Q3/FY2010 ended September 30, 2010

(Source: Trading China, 2012-09-30)

China Electric Motor received a letter dated May 17, 2011 from the Nasdaq staff advising the Company that the staff had determined to delist the Company's common stock. On May 24, 2011, the Company submitted a request for a written hearing before a Nasdaq Hearings Panel. On June 10, 2011, after further consideration, the Company withdrew the request for a hearing. The Company's decision to withdraw its request for a hearing is not, and should not be construed as, an admission, concession or statement with respect to any of the assertions or matters set forth in the aforesaid letter dated May 17, 2011 from the Nasdaq staff. On June 13, 2011, the Company received a letter from the Nasdaq staff advising the Company that the Company's shares will be suspended effective at the open of business on Tuesday, June 14, 2011.

(Source: 8-K Filing, 2011-06-14)

On May 24, 2011, all of the members of the Special Committee informed the Board that each such member had resigned, effective immediately, from the Special Committee. The Special Committee was allowed to and did conduct a preliminary investigation, which included being allowed to obtain official bank statements directly from the bank where the Company keeps its account, to conduct, through counsel, preliminary interviews with certain key executives and employees, who made themselves available for the preliminary interviews, and to retain forensic consultants. However, Messrs. Lee, Shen and Tang disagreed with certain Company officers and directors as to the appropriate scope of the investigation going forward (those officers viewing the scope as too wide and the estimated fees as too high), and this disagreement was the reason for their resignations from the Special Committee. As of May 26, 2011, each of Messrs. Lee, Shen, and Tang remain on the Company’s Board of Directors.

(Source: 8-K Filing, 2011-05-27)

    see all Business Outlook notes

 Analyst Coverage (show less)
2011-03-31Red ChipDowngradeSuspendedn/a
2011-03-31Global HunterDowngradeTerminatedn/a
 

We are discontinuing coverage of China Electric Motor, Inc. (CELM) due to possible issues raised by the company's independent auditor concerning its banking statements. As a result, the company delayed the filing of its 10-K while its Board of Directors has formed a Special Committee to investigate this matter.

2011-03-22Roth CapitalDowngradeSuspendedn/a
2011-01-25Roth CapitalReiterationBuy$10.00
 

We believe the current weakness represents a good entry point for CELM investors. CELM shares are trading at 3.9x to our FY11 est. EPS of $1.21, well below the peer multiple of 20x and our projected 3-year growth rate of 18%. We further believe a successful closing of the HRBN (Buy-$18.08) buyout (which is considered CELM's closest peer) and a potential auditor upgrade provide potential near-term catalysts. We consider 8x to our estimated FY11 earnings as a fair valuation, given the company's new listing status, low trading liquidity, smaller size than its peers, and the lack of research coverage. Accordingly, we maintain a BUY rating and $10 price target on CELM.

2011-01-04Global HunterInitiationBuy$9.00
 

China Electric Motor is a fast growing micro-motor manufacturer in China primarily serving consumer-related end markets such as home appliances and automotive applications. The company has grown revenue at a 75% CAGR in the last three years, with strong demand driven by overall industrial growth and increasing consumer spending in China. With competitive advantages in low cost manufacturing, R&D capability, production flexibility and quick turnaround, CELM has been taking market share from its international and domestic competitors. We believe CELM has proved its strong execution capability in the last few years with sustained margins, strong operating cash flow and healthy balance sheet. We expect continued growth, driven by capacity expansion and consolidation in a highly fragmented market. Shares are trading at just 4.3x our FY11 EPS estimate, thus we believe the valuation is attractive. We are initiating coverage with a Buy rating and $9 price target, which is 8.6x our FY11 EPS estimate.

Strong end-market demand. Both of the CELM’s primary end markets - household appliances and automotive - have been experiencing strong demand and rapid growth, driven by economic growth and rising consumer spending in China. China’s micro-motor industry is expected to produce 10B units in annual output in 2010 and grow at a CAGR of 8%+ for the next five years.

Unique competitive advantages. While the micro motor sector is highly fragmented and competitive, CELM has been able to establish and expand its market share in the last few years. Compared to foreign competitors, CELM has the advantage of low cost manufacturing, production flexibility (to handle large and small orders), quick turnaround time and close customer relationships. Compared to domestic competitors, CELM has large scale production, R&D capability, high product quality and reliability, and strong financial resources.

Strong operating results and financial condition. Despite a global slowdown, CELM achieved strong top line growth with a CAGR of 75% during 2007-2009, driven by strong domestic demand and successful penetration into the automotive market. It has maintained gross margins of 27%-29% and net margins of 14%-15%, thanks to its margin-focused development strategies. With sustained profitability and short DSOs, the company has been generating relatively strong operating cash flow and maintaining a healthy balance sheet, which helped support the company’s continued growth.

Well positioned for further expansion. With capital raised from its IPO and internal cash flow, CELM has been in the process of increasing its production capacity from 24MM units of micro motors at the end of 2009 to a total capacity of 46MM units of AC/DC motors and 43MM units of coreless motors by the end of 2010. Operating in a highly fragmented industry, we believe CELM is also evaluating different acquisition opportunities to increase its product offering and expand market share. We expect the increased capacity and new acquisitions to drive the company’s growth in the next two years.


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 Recent Financings
2010-12-03Filing$50.00 mill--

 Investor Presentations
2010-07-13 (HTML)   VIEW
2010-04-09 (PDF)   DOWNLOAD (right click, save as)
CELM
Electronics

COVERAGE SUSPENDED OR TERMINATED
 
READ: Score Cards Explained
SAFETY/RISK SCORE
EXTREME RISK
DETAILS: Safety/Risk Model for CELM
Current Price:  n/a
F10k Day (2010-01-29): -100.00%$4.45
2010 Close: -100.00%$4.55
2011 Close: -100.00%$0.08
High (2011-07-29): -100.00%$0.30
Low (2011-12-30): -100.00%$0.06
Exchange:
Market Capitalization: n/a
Total Shares: 21.94 mill
Float: n/a
Avg Volume: 134.20 k
Short Interest: 99.20 k
Short Ratio: n/a0.7 d
Last Quarter: 2010-09-30
Revenue (MRQ): 32.88 mill
Net Income (MRQ): 5.14 mill
Op. Cash Flow (MRQ): 1.99 mill
all financial data provided without warranty