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CAAS 2010 Q1 beats expectations, forecasts flat

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carparts2 May 6, 2010 (Chinavestor) Shares of China Automotive Systems (NASDAQ:CAAS), an investor in Chinese car parts makers, jumped 7.40% or $1.43 to $20.75 on Thursday morning by 10:30 following better-than-expected 2010 first quarter results. The company reported $84.2 million revenues for the first three month, an increase of 88% YoY and a slight increase of $0.1 million from $84.1 million in 2009 Q4. Net income jumped to $10.3 million or $.34/share, up 357.6% YoY.



There are a couple of important observations.


  1. current stock price is way below revenue and earnings growth
  2. net income jump from 2009 Q4 to 2010 Q1 is due to a significant increase in gross margin, from 23.8% to 26.8% for the corresponding period
  3. China Automotive Systems (NASDAQ:CAAS) issued 2010 full year revenue guidance of 25% increase YoY. That gives ~$320 million for the full year or $80 million for each quarter. This is represented by the blue column.
The question is if CAAS will be able to keep up with such a rapid growth. If not, how investors will react for a flat revenue and earnings chart. Whatever next quarter earnings will be, it is certain that current stock price of $20.75 looks cheap.


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