Yesterday CSGH stock lost 14.29% of its value and closed the session at $0.9 for a share. Trading volume exceeded one million shares and was more than seven times the average, consisting mostly of sellers that got suddenly eager to sell out their shares shortly after the market opened. As the news for the day was actually positive, traders could only speculate on the unexpected reaction, speculations implying possible dilution or trading on insider information.
China Sun provided yesterday an update on the signed at the end of last month supply agreement for lithium iron phosphate materials with Henan Huanyu Sai Er New Energy Technology Co., Ltd. The additional information contained in the PR was the expected $12.7 million in revenues to be realized under that agreement for the entire 2011. The value does not sound unrealistic and the company also announced to have signed two raw materials supply agreements.
The filed in the middle of October financial results also suggest that CSGH is at its current price level slightly undervalued. The company reported growing sales and growing positive net income for the past four quarters, as well as on an annual basis for the past three years. In addition, China Sun has strong cash and total assets position, and no long-term debts.
A possible explanation for the unusual selling volume from yesterday could be a reported subsequent event in the latest 10-Q of the company. At the end of September, China Sun issued 2.05 million shares of common stock to certain consultants for services. The shares were valued at $0.87 each and the consultants might have decided that yesterday is the proper time to sell that shares.
