China Fire & Security Group Inc (CFSG)) continues to push higher, aided by its government’s stimulus plan and new legislation.
Company Description
China Fire & Security Group makes and maintains fire safety systems and products for industrial use in China.
Earnings…on Fire
Sorry the pun was too tempting. On Aug 10 the company reported second-quarter results that included a 37% increase in revenue, to $22.7 million. Contract volume is up to 205 for the quarter, compared to 177 in the same period last year.
Net income rose $1.7 million, or 25%, to $8.3 million for the period. This equated to 29 cents per share, 6 cents higher than the Zacks Consensus Estimate and 5 cents higher than last year.
Help From the Stimulus Plan
China Fire’s CEO, Brian Lin, said, “I am very pleased with our second quarter results. The Chinese government’s stimulus plan and the new amendment to the Fire Protection Law, which requires all fire protection products to pass compulsory product certification, has improved demand for our high quality systems, and increased bidding activities from our Tier-1 customers.”
Estimates Pop
Following the report the Zacks Consensus Estimate for this year rose to $1.05, up from 97 cents. Next year’s estimates are averaging $1.30, up from $1.19.
These projections show expected growth rates of 21% and 23%, respectively.
Solid Value
Shares of CFSG are trading at roughly 16 times forward earnings. Not too bad considering the growth rates bring the PEG down to about 0.6 times. Both figures are better than the industry and S&P average.
The Chart
Some see a run up in shares of CFSG and feel they may have “missed the party” but as you can see the volume has grown substantially, meanings this level is sustainable and the stock can continue higher from here.
