A Closer Look at China Sun Group
China Sun Group High Tech Co. (CSGH) may not be in the most exciting business, but recent contract awards could spell profits down the road for this battery company.
China Sun Group High Tech Co. [[CSGH.OB]], which produces and sells chemical compounds used in lithium ion rechargeable batteries in China, has developed a next generation “green” power source in the form of lithium iron phosphate that can be built into batteries that power electric cars, hybrids, scooters, and other state-of-the-art electronic devices.
The first batch of lithium iron phosphate energy productions came out of China Sun Group’s production lines in April 2009. In June, China Sun Group entered into contracts with four battery production companies to begin testing samples of lithium iron phosphate. Once this testing is complete, the company plans to begin mass marketing the product domestically.
The testing involves running the batters on the natural attenuation rate curve, which measures the rate of decay over time on a curve. Early reports have indicated that customer testing indicated good consistency with little decay, which is very promising given the market potential for the products in several major Chinese provinces.
Last quarter, China Sun Group reported net income of $2.03 million, or $0.04, on revenues of $8.8 million. Meanwhile, the company’s balance sheet remains healthy with $12.1 million, or $0.22 per share, in cash and a healthy current ratio. The stock itself trades at just 5.1x trailing earnings, but 3.75x trailing earnings when subtracting cash.
In the end, China Sun Group remains a very promising company given its new lithium iron phosphate technology undergoing testing as well as its attractive valuation given its growth rates and cash levels. As a result, long-term investors may want to take a closer look at this company, especially as its new technologies gain traction.
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