A Potential Ground Floor Opportunity with China America Holdings, Inc
By: Patrick J. Murphy, Murphy Analytics LLC, a provider of sponsored research coverage on small cap stocks.
China America Holdings, Inc. (OTC.BB: CAAH). is a holding company which owns a 100% stake in Ziyang Ceramics Co., Ltd. based in Zhucheng city of Shandong Province in China. Ziyang Ceramics Co., Ltd. manufactures porcelain tiles used for interior residential and commercial flooring and sells through a distribution network of more than 150 distributors across 10 provinces concentrating on major second and third tier cities located primarily in Eastern and Central China.
As an indication of the CAAH growth opportunity, following are comments and forecasts on the key markets and trends for Chinese real estate in general and for ceramic tiles in particular.
Cushman & Wakefield estimates 35% Commercial Real Estate Development Growth for Q1 2011: “Chinese real estate market has gone through a year of stringent controls in 2010. In the first quarter of 2011, the commercial property market in China witnessed new highs in the office, retail, industrial and investment markets. In the first two months of 2011, total volume of investment in real estate development grew by 35% year-on-year. Despite the government's tightening control of the property market, the pace of the real estate development in China is still accelerating.”
SouFun Holdings Limited America (NYSE: SFUN) reports record revenue for Q3 2011: As another indicator of the growth of the Chinese real estate market, SouFun, which operates the leading real estate internet portal and home furnishing and improvement website in China, continues to report substantial growth. For Q3 11, SFUN reported that quarterly revenue of $109 million nearly doubled over Q3 10. The Company also reported that revenue grew 116% from 2008 - 2010. Marketing generated 75% of SFUN 2010 revenue, and includes traditional Internet advertisements such as banners, links, logos and floating signs, as well as featured promotions. As an illustration of the types of operators that are active in the real estate sector, SFUN reports that its customers consist of the types of customers also likely to be tile purchasers, including:
- real estate developers
- real estate professionals, such as agents and brokers
- retailers and other suppliers of home furnishing and improvement products and services
- home design, decoration and re-modeling companies
- banks offering residential mortgage loan products
China Ceramics Co. Ltd. (NASDAQ: CCCL) Forecasts Net Increase in Urban Residential Building Stock in 10 Chinese Cities as Equal to or Greater than the Existing Residential Building Stock of Some European Countries: While the degree of growth cited by Cushman & Wakefield leads some to believe that the Chinese real market is strong and growing, this rapid growth has caused others to ask whether the Chinese real estate market is a bubble. This question was the subject a recent Time magazine article in which the possibility of a Chinese real estate bubble was argued to be as important an economic question as the future of the Euro and whether the U.S. re-enters a recession.
While the growth of the Chinese real estate market may be unprecedented, the massive rural to urban migration continues as some estimates forecast that 400 million more Chinese citizens will urbanize over the coming decades. While the market's ability to address this massive historical and current growth may be uncertain in the near term, and the impact of PRC monetary and fiscal policy on the market also is uncertain, the longer term trend towards a massive continuing wave of urbanization seems clear.
As one example of the potential for companies whose products supply this urbanization, the following data from China Ceramics Co. Ltd. illustrates the magnitude of the opportunity. Citing sources including the Economist Intelligence Unit, National Bureau of Statistics (China), and UNECE, CCCL's September 2011 Investor Presentation provides the following comparison for growth in Chinese cities relative to ten European nations:
| Forecast of Net Increase 2011 - 2020 | Existing Residential Building Stock | ||
| Chongqing | 1,109 | Poland | 807 |
| Chengdu | 447 | Greece | 494 |
| Zhengzhou | 396 | Portugal | 424 |
| Tianjin | 389 | Sweden | 411 |
| Beijing | 350 | Czech Rep. | 369 |
| Xi'an | 279 | Romania | 366 |
| Changsha | 272 | Switzerland | 352 |
| Shanghai | 271 | Hungary | 319 |
| Shenzhen | 265 | Austria | 318 |
| Dongguan | 234 | Denmark | 282 |
| a. all data in mm sq. meters | |||
| b. Figures are for urban areas within referenced prefecture/municipality. | |||
| c . Chongqing municipality's unusually large increase partly reflects its large size compared with other prefectures. | |||
Patrick Murphy Bio:
Patrick J. Murphy is the owner of Murphy Analytics LLC, a provider of sponsored research coverage on smallcap stocks. Mr. Murphy has nearly 20 years of capital markets experience providing institutional investment and transaction analysis across a range of asset classes including microcap equities, commercial real estate debt and equity, municipal derivatives and public finance, venture capital, fixed income, CMBS and mortgage REIT's. In addition to his work with Murphy Analytics, Mr. Murphy also serves as a consultant to a municipal derivatives advisory firm. Mr. Murphy is an alumnus of the University of Notre Dame (1991), with an undergraduate degree in Economics, and earned a Masters Degree in Finance from St. Louis University in 1997. Mr. Murphy is a CFA Charterholder and a member of the CFA Society of St. Louis.
China America Holdings, Inc. (OTC.BB: CAAH) is a holding company which owns 100% stake in Ziyang Ceramics Co., Ltd. based in Zhucheng city of Shandong Province in China. Ziyang Ceramics Co., Ltd. manufactures porcelain tiles used for interior residential and commercial flooring and sells through a distribution network of more than 150 distributors across 10 provinces concentrating on major second and third tier cities located primarily in Eastern and Central China
| Recent Stock Price: | $0.0090 |
| Shares Outstanding: | 436.7 million |
| Recent Market Cap: | $3.9 million |
| 52 Week Range: | $0.0025 - $0.0299 |
| Exchange: | OTCBB |
| Ticker: | CAAH |
| URL: | http://www.ziyangcorp.com/ |
Dore Perler
Pearl Group Advisors, Inc
954-232-5363
China America Holdings, Inc.
Lillian Wong
U.S. Representative
954-363-7333 ext. 317
Patrick Murphy Disclaimer:
Readers are advised that the above article is solely for information purposes and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. The views expressed herein are based upon the author's analysis of the issuer's public disclosures, and assumes both their accuracy and completeness. The opinions and statements included herein are based on sources (including the companies discussed and public sources) believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. The author has not independently verified the information contained herein. This information is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. You should review a complete information package on all companies, which should include, but not be limited to, the Company's annual report, quarterly reports, press releases and all regulatory filings. The foregoing discussion contains statements which are based on current expectations, estimates and projections, and differences from such expectations, estimates and projections can be expected. The author, Patrick Murphy, was compensated $500 by InvestorIdeas.com for writing this article. Murphy does not own shares of any of the companies mentioned in this article. Mr. Murphy's research firm, Murphy Analytics, may be engaged for the provision of a research report on the Company in the future.
i http://www.cushwake.com/cwglobal/jsp/newsDetail.jsp?Country=2200198&Language=EN&repId=c38000006p
ii http://ir.soufun.com/phoenix.zhtml?c=233487&p=irol-newsArticle&ID=1628854&highlight=
iii http://services.corporate-ir.net/SEC/ Document.Service?id=P3VybD1odHRwOi8 vaXIuaW50Lndlc3RsYXdidXNp bmVzcy5jb20vZG9jdW1l bnQvdjEvMDAwMDk1MDEyMy0xMS0wNTgxODYvZG9 jL1NvdUZ1bkhvbGRpbmdzTGlta XRlZF8yMEZfMjAxMTA2MTAucGRmJnR5cGU9MiZ mbj1Tb3VGdW5Ib2 xkaW5nc0xpbWl0ZWRf MjBGXzIwMTEwNjEwLnBkZg
iv http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTE1MTM2fENoaWxkSUQ9LTF8VHlwZT0z&t=1
v http://www.time.com/time/magazine/article/0,9171,2096345-1,00.html
vi http://www.cceramics.com/images/09-23-2011%20CCCL%20Presentation%20v1.pdf
Visit the company profile at Investorideas.com http://www.investorideas.com/CO/CAAH/ii http://ir.soufun.com/phoenix.zhtml?c=233487&p=irol-newsArticle&ID=1628854&highlight=
iii http://services.corporate-ir.net/SEC/ Document.Service?id=P3VybD1odHRwOi8 vaXIuaW50Lndlc3RsYXdidXNp bmVzcy5jb20vZG9jdW1l bnQvdjEvMDAwMDk1MDEyMy0xMS0wNTgxODYvZG9 jL1NvdUZ1bkhvbGRpbmdzTGlta XRlZF8yMEZfMjAxMTA2MTAucGRmJnR5cGU9MiZ mbj1Tb3VGdW5Ib2 xkaW5nc0xpbWl0ZWRf MjBGXzIwMTEwNjEwLnBkZg
iv http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTE1MTM2fENoaWxkSUQ9LTF8VHlwZT0z&t=1
v http://www.time.com/time/magazine/article/0,9171,2096345-1,00.html
vi http://www.cceramics.com/images/09-23-2011%20CCCL%20Presentation%20v1.pdf
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Disclosure/ disclaimer: Our sites do not make recommendations, but offer information portals to research news, articles, stock lists and recent research. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All information published is from public filings, news, SEC filings and or company comments and quotes.
BC Residents and Investor Disclaimer: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894
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