Agoracom Blog

Chinese Small-Cap Company Feature: China Energy Recovery, Inc.

Posted by AGORACOM at 2:48 AM on Wednesday, November 19th, 2008

As many of you know, we are very bullish on the long-term future of Chinese Small Cap Companies for two reasons:

1]  The obvious reason – China is the fastest growing economy on the planet and nothing is going to slow down its ascent over the next 50 years and beyond. Investing in growth companies there just makes too much sense.

2]  Many Small Cap Chinese Companies are listing in the US (OTCBB, AMEX and graduating higher) with great financial results.  Unlike many dubious US Small Cap Companies, Chinese Companies don’t seem to believe in losing money or failing to execute in a business plan.  As such, 7-digit revenues and profits are very common.


In addition to the featured company below, you can refer to our China category for other featured Chinese Small-Cap Companies, or view our extensive coverage of them on AGORACOM TV .  As always, we will disclose any IR relationship with any public company.  Given the sheer number of great Chinese Small-Cap Companies out there, you can expect us NOT to have an IR relationship with most of these companies.


China Energy Recovery, Inc. (OTCBB: CGYV)

A leader in China’s waste-heat recovery sector of the alternative energy industry, recently announced financial results for the nine months and the third fiscal quarter ended September 30, 2008.


Financial Highlights for the Nine Months Ended September 30, 2008

  • Revenue increased to $16.0 million, up from $7.5 million in the corresponding period in 2007, an increase of 112.0%. The increase in revenue is due to increased sales volume of energy recovery systems and services of the company as a result of increasing market demand.
  • Gross profit increased by 411.4% to $3.5 million, representing a 22.0% gross margin, compared with gross profit of $0.7 million, or a 9.1% gross margin, for the same period in 2007. The increase in gross profit is mainly attributable to increased licensing and design service revenue with higher margins and the company’s efforts in adjusting contract prices in coping with orders of increasing size and the increased prices of raw materials in 2008.
  • Net income increased to $0.8 million, as compared to a net loss of $0.2 million for the same period in 2007.

Financial Highlights for the Three Months Ended September 30, 2008

Comparing the third fiscal quarter of 2008 to the third fiscal quarter of 2007:

  • Revenue increased by 56.7% to $6.1 million from $3.9 million
  • Gross profit rose to $1.6 million from $0.1 million, a 1,099.4% increase. The respective gross margins were 26.3% and 3.4%.
  • Net income rose to $0.2 million compared to a net loss of $0.1 million for the same period in 2007.

“With contracts continuing to come in including some of our biggest systems
to date, and with clients who represent some of the largest manufacturers in
their industries, we expect that we’ll continue on this trajectory of growth and
expansion into 2009 and beyond.”

CEO, Mr. Qinghuan Wu.

What is Energy Recovery?

Industrial facilities and power plants release significant amounts of excess heat into the atmosphere in the form of hot exhaust gases or high pressure steam. Energy recovery is the process of recovering vast amounts of that wasted energy and converting it into usable electricity, dramatically lowering energy costs. Energy recovery systems are also capable of capturing the majority of carbon emissions and other harmful pollutants that would otherwise be released into the environment. It is estimated that energy recovery systems installed in U.S. industrial facilities could produce up to 20% of U.S. electricity needs without burning any additional fossil fuel, and could help many industries to meet stringent environmental regulations.

2 Responses to “Chinese Small-Cap Company Feature: China Energy Recovery, Inc.”

  1. Andrew Knight says:

    Hi Agoracom,

    I’m emailing you in regards to an email I sent to you last month about a partnership, have you had a chance to think about it?

    If you have any questions or would more information, please advise me and we can go from there.

    Kind Regards,
    Andrew Knight

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