China Fire & Security Group Inc.’s (CFSG) reported its third quarter results yesterday. The company posted earnings of 27 cents per share, in line with the Zacks Consensus Estimate. Quarterly EPS was up 17.4% year over year, primarily driven by higher revenues.
Revenue in the quarter was $24.8 million, up about 48.2% from the year-ago revenue of $16.7 million. The company benefited from higher sales of system contracting projects and products during the period. The company recognized revenues from 205 total solution, product sales and maintenance contracts in the reported quarter as compared to 163 contracts in the third quarter of 2008.
The company’s gross profit increased 41.9% on higher revenues. However, the gross margin was down 250 basis points at 56.4% due to a lower percentage of self-manufactured proprietary products sold through product sales contracts during the period.
CFSG reiterated its full-year revenue guidance in the range of $88 million to $95 million, reflecting year-over-year growth of 28% to 38%. The company is bullish about growth prospects for the year, primarily in the iron and steel industry. Also, the company is now 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 said that it has secured contracts from iron and steel companies, power plants and petrochemical plants during the quarter. Also, the company successfully expanded its presence into the fast-emerging power generation market in India. At the end of the third quarter, CFSG had a backlog of $75 million.
CFSG forecasts net income in the range of $28.3 million to $29.7 million or $1.00 to $1.05 per share for 2009. The Zacks Consensus Estimate for the year is $1.05 per share.
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