China Digital Trades at Discount
Over the past one to two years, the company has been expanding its production of finished, high-margin lithium ion batteries for phones, computers and other electronic devices. CMTP now derives the majority of its revenue from this line of products, which provides gross margins in excess of 30% and account for over two-thirds of revenues. The company has had positive cash flow from operations every quarter in the past and previous years.
CMTP is clearly an ignored, underfollowed stock. In March, CMTP briefly traded at a 20% discount to cash on its books. Six months later, the stock has tripled. Although I am kicking myself for not finding CMTP back then, I don't want to make the mistake of ignoring it now just because it has gone up so quickly, particularly since it is still trading at a very significant to its direct comparables.
Below are segments of interviews with CFO Junfeng Chen in Shenzhen, and Investors Relations Vice President Ken Lin (via phone from New York).
|CFO Junfeng Chen explains battery products to Rick Pearson.|
Mr. Chen, can you please give me some overview and background information on China Digital?Since 2001 we have been in the business of supplying battery caps and shells to the battery industry, particularly lithium ion batteries. Since 2008 we began expanding into the high margin business of producing finished batteries. Our operating subsidiary in Shenzhen is E'Jenie. We are U.S. listed and trade under the symbol CMTP.OB. Later this month, we will be changing our name to New Energy Systems Group to reflect our primary focus on producing lithium ion batteries.
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