China Armco Metals Strong Speculative Buy In Initiating Coverage By Dutton Associates
Dutton Associates initiates coverage of China Armco Metals with a Strong Speculative Buy rating and a price target of $6.48. The 22-page report by Dutton senior analyst Stanley Ng is available at www.duttonassociates.com as well as from First Call, Bloomberg, Capital IQ, FactSet, Reuters, and other leading financial portals.
China Armco is principally engaged in the import, sales and distribution of metal ores, non-ferrous metals to the metal refinery industry in China. The Company is constructing a scrap metal recycling facility in the Banqiao Industrial Zone of Lianyungang Economic Development Zone in Jiangsu Province with a production capacity of one million metric tons of recycled scrap steel. It is expected to commence operation in 3Q of 2009. In our view, China Armco is a quality niche play to participate in the prosperous growth prospects of China’s steel industry, which has emerged as the world’s largest producer and consumer of steel products with a total steel output of 489 million metric tons in 2007. We believe the prevailing bearish sentiment on China’s steel industry, triggered by concerns over sharp decline in demand and prices as a result of the global financial tsunami that will drive the major economies, including China, into deep recession has been overdone. It is because China is expected to maintain a relatively strong economic growth of 7-8% in the coming years and that the Central Government will choose to accelerate the country’s infrastructure developments to drive the economy. We are very bullish on the outlook of the scrap steel recycling industry in China, due to low level of scrap steel reused in steel production of just 16% in 2006 compared to 50% in the global market. We see very lucrative profit potential for the scrap steel recycling project.
About Dutton Associates
Dutton Associates is one of the largest independent investment research firms in the U.S. Its 20 senior analysts are primarily CFAs and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 120 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.
The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. The Firm does not accept any equity compensation. We received $35,000 from the Company for 4 quarterly Research Reports with coverage commencing on 11/10/2008. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst’s personal views about the subject securities or issuer. Neither the analyst’s compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.