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.
- current stock price is way below revenue and earnings growth
- 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
- 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.
Related article: China's auto companies: will the legend of 2009 continue?
If you like us, spread the word to the fellow investors on your favorite Social Bookmarking websites
