Agoracom Blog Small-Cap Company Feature: China Carbon Graphite

Posted by AGORACOM at 11:11 AM on Wednesday, April 29th, 2009

As many of you know, we are very bullish on the long-term future of Chinese small cap and mid 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]  Great Results and Valuations – Many Small Cap Chinese Companies are listing in the US (OTCBB, NYSE Alternext and NASDAQ) 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.

From a valuation point of view, many Chinese companies became a victim of their own success in Q4 2008 and Q1 2009.  Why?  When the world needed to start liquidating, one of the first places they looked were China where most investors had significant gains to sell into.  This resulted in the proverbial baby being thrown out with the bathwater and some great valuations.


China Carbon Graphite, Inc. (OTCBB: CGYV)

China Carbon Graphite Group, Inc. engages in the production of graphite products such as graphite electrodes, fine grain graphite and high purity graphite. The company is the largest wholesale supplier of fine grain and high purity graphite in China and one of the nation’s top overall producers of carbon and graphite products.

On April 20th, the company announced record sales and earnings for 2008.

Read Full Press Release

China Stocks TV Segment


  • Revenues up 7.67% to $27.3 million.
  • Gross profit up 36.41% to $6.7 million.
  • Net income up 11.08% to $3.98 million
  • However, they did have a one time non-cash deemed preferred stock dividend about $855,000 so that takes net income down to $3.13 million or $0.21 per share.


Great number when you consider the fact they closed on April 17th at 0.59.  You’ve got a company here trading at essentially 3 times earnings, representing excellent valuations

As always, this is my view in a snapshot.  It is intended to give you a running start into your research.  Now, you have to do your own due diligence to make sure the valuation is not impaired by other factors including balance sheet items, lawsuits or any other negative events.

If you have any comments, I’d love to see them below.


We’ve provided investors with two great starting points to research great Chinese small cap and mid cap companies.

1. – tracks 250 of the best small cap and mid cap companies trading on North American exchanges.  It provides you with the best of the best in two ways.  First, the front page lists the best news of the day coming out of the space. It does so by giving you a text view of the best press releases by industry and via Chinese Stocks TV, a 5-minute broadcast every morning just after the open.  Chinse Stocks TV is archived, so you can catch up on shows you missed.

Second, if you want to research each of the 250 companies to find candidates for your portfolio, it has a very intuitive directory that lets you quickly review each company on the master list, or parse it out by industry and exchange if you have a particular sector of interest. Cool stuff.

2.  Right here on AGORACOM, you can refer to our China category for other featured Chinese Small-Cap Companies.  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.


6 Responses to “ Small-Cap Company Feature: China Carbon Graphite”

  1. Franklin says:

    Another reason to invest in China (and it’s something that most people don’t think of), is, the fact that the Chinese doesn’t have a lending mentality, unlike most of the 1st world nations. So that just means that they hardly have any bad debts, which means there’s less likelihood of Chinese banks getting destabilised.

  2. Ben says:

    I agree George. China is in the best financial position BY FAR of any of the major industrialized nations and they’re in best position to grow their economy. They are the paper tiger financially so it makes sense to invest in Chinese companies. Extra due dilligance is required since some of their business regulation is not up to Western Standards yet though.

    But the potential price appreciation for quality Chinese companies is enormous.

  3. Eric says:

    How does an investor figure out the long term fundamentals of a carbon graphite market? Understanding the company through China Securities is an excellent first step, but where do investors do their DD to understand the fundamentals of end users and sources of demand?

  4. nanny says:

    Good afternoon George. I’ve been following your blog for a while now and simply love how you break these Chinese small-cap stocks down. Many of these Chinese companies have outstanding financial results which makes it very exciting to watch and keep an eye on. Not too sure if you know but ROTH Capital Partners has announced that its Director of Research, Mark Tobin will speak at the CCG hosted China Rising Investment Conference scheduled for May 18, 2009 at the Yale Club in New York City. Will you be attending?

  5. JC says:

    I think a bulk of the sell off has already taken place. Keep in mind a majority of these companies have real revenue and real profit to support their already deeply discounted stock prices. You will often hear of a Chinese “slowdown” it’s a all relative when they are still talking about mid-high single digit GDP growth.

  6. LeoPolenta says:

    George, i love your enthusiasm towards the Chinese small and mid caps however I do have a question to ask you. Do you think there is more profit taking still to come or have we seen the worst of it already?