CHINA RITAR POWER CP (NASDAQ:CRTP)

Rodman and Renshaw on CRTP                              6/27/2011

CRTP: Terminating Coverage

Terminating Coverage: Effective immediately, we are terminating coverage on China Ritar Power Corp. (Nasdaq: CRTP) to better allocate resources within our coverage universe. Our last rating for CRTP was Market Outperform / Speculative Risk with a price target of $10.00. Investors should not rely on our previously published financial projections.

Non-Compliance Notice and Trading Halt: CRTP announced that the company had received an oral notice from Nasdaq Stock Market regarding the company’s status of non-compliance with the exchange’s continued listing requirement due to its failure to timely file annual report on 10-K form with SEC. Consequently Nasdaq halted the trading of CRTP’s shares effective Monday April 18, 2011.

Voluntary Delisting: On June 23, 2011, CRTP issued a press release announcing that the board has determined that the company intends to voluntarily delist from Nasdaq Global Stock Market by filing form 25 around July 5, 2011, and it expects the delisting to be effective July 15, 2011. CRTP stock is expected to be traded on Pink Sheet upon delisting.

3Q10 Results: CRTP reported its 3Q10 revenue and net income of $31.5 MM and $1.7 MM, with diluted EPS of $0.08. Top-line declined by 7.0% Y-o-Y and 6.0% sequentially. Gross profit was $5.2 MM or 16.4% in margin, compared to $6.4 MM or 18.7% in margin in 3Q09 and $5.5 MM or 16.4% in margin in 2Q10. The company generated $2.6 MM in EBIT, implying an EBIT margin of 8.3%, lower than 12.5% and 9.7% in 3Q09 and 2Q10. Net income was $1.7 MM, compared to $3.3 MM in 3Q09. Diluted EPS was $0.08, compared to $0.16 in 3Q09 and $0.10 in 2Q10. CRTP ended the quarter with $10.7 MM in cash and $44.3 MM in working capital, accounts receivable and inventory stood at $34.0 MM and $26.3 MM, respectively.

Company Description: China Ritar Power Corp., through its subsidiaries, designs, develops, manufactures, and sells environmentally friendly lead-acid batteries with a wide range of product specifications primarily for applications in telecommunications, uninterrupted powers source (UPS) devices, light electric vehicles and alternative energy production (solar and wind power). All of CRTP’s operations are conducted in China. Since its founding in 2002, the company has established itself as a leading lead-acid battery manufacturer and demonstrated revenue growth of ~44% (CAGR) from $16 MM in FY04 to ~$98.6 MM in FY09. The company has grown its customer base to over 170 customers in 56 countries, with international sales accounting for 69.8% of the total revenue during the first 9 months of 2010.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

          

SHENZHEN, China, June 23, 2011 /PRNewswire-Asia-FirstCall/ -- China Ritar Power Corp. (the "Company") (Nasdaq: CRTP), today announced its intent to voluntarily delist the Company's common stock from the Nasdaq Global Stock Market ("Nasdaq"). The Board determined that maintaining the listing has imposed difficult burdens and high costs on the Company. The Company has immediately proceeded with delisting by providing a written notice to Nasdaq on June 23, 2011 of its intention to delist and will file a Form 25 with the Securities Exchange Commission on or around July 5, 2011. The Company expects the delisting from Nasdaq to become effective July 15, 2011, ten days after filing its Form 25.

Upon delisting from the Nasdaq, the Company expects that trading of the Company's common shares by shareholders may be effected through quotations on the Pink OTC Market (a centralized quotation service that collects and publishes market maker quotes for securities). This will require at least one market maker to quote the Company's common shares on the Pink OTC Market after the market maker complies with Pink OTC Market rules. There is no assurance that a market maker will comply with those rules. The Company will remain subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended.

The Company has previously reported its receipt of notices from Nasdaq indicating that the Company is not in compliance with Nasdaq listing requirements contained in Marketplace Rule 5250(c)(1), which requires timely filing of SEC periodic reports due to the failure to timely file its annual report on Form 10-K for the fiscal year ended December 31, 2010 and its quarterly report on Form 10-Q for the three months ending March 31, 2011.

Third Quarter Summary

• Revenue decreased 4.75% year-over-year to $31.55 million

• Domestic and international sales accounted for 32% and 68%, respectively, of total revenue

• Gross profit decreased 17.41% year-over-year to $5.16 million

• Net income decreased 48.2% year-over-year to $1.7 million

• Fully diluted earnings per share were $0.08

"We are not satisfied with our financial results for the quarter.  Looking forward to 2011, we will implement measures to improve our operational efficiency, control our cost and improve the R&D efforts.  The demand for stationary lead acid battery remains at a strong level, both in the developed and emerging markets.  China Ritar is at a strong position to strengthen our market position in 2011 and beyond," Mr. Jiada Hu, China Ritar's Chairman and CEO commented.

Rodman & Renshaw on China Ritar Power:

Phase II Construction Mostly Complete: We visited CRTP’s new facilities in Hengyang on Oct. 23, 2010. We were impressed with the magnitude of new construction that has taken place in this facility relative to our visit in January this year (3 buildings of 8,000 sq. mt. each plus 2 buildings of 6,000 sq. mt. each). We saw some equipment starting to be put in place in the new buildings. We believe one of the buildings could become operational by year end. Phase I of the Hengyang has been operational since the beginning of the year and was busy with production and shipping. Pls. find pics in pg. two. 

Near Term Catalysts: Outside of the availability of new capacity we believe M&A related activity could act as a near term catalyst for the stock. We believe the company is looking at opportunities in both the lead acid and lithium ion plays. We believe the recent appointment of Adam Sun should also be a positive from an IR perspective as this fills the communication gap that has existed for over a year and a half between management and the street. 

Valuation: At current levels CRTP is trading at a P/E multiple of 6.9x to our 2010 earnings estimates. Comparable public entities in the energy storage and battery domain are trading in a range between 6.8x and 48.3x to their 2010 earnings expectations. In line with this, we are maintaining our price target of $10.00 on CRTP, which translates into P/E multiples of ~18x to our earnings estimates for 2010. We are comfortable assigning this multiple to CRTP as the company is playing in a growth industry and taking steps to further increase market share by expanding capacity. Historically battery manufacturers have traded within a range of 12x to 30x on a P/E basis. We maintain our Market Outperform rating.

Risks: 1) Intense Competition 2) Technology Risk 3) Volatility in raw material prices.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

• Revenue increased 57% year-over-year to $33.6 million.
  
• Domestic and international sales accounted for 32% and 68%, respectively, of total revenue.
  
• Gross profit increased 34% year-over-year to $5.5 million.
  
• Net income increased 27% year-over-year to $2.3 million.
  
• Fully diluted earnings per share were $0.10, up from $0.09 in second quarter 2009.

"We are pleased with our financial results for the quarter. Our growth is the result of continued demand for our lead acid batteries resulting in revenue from domestic and international markets increasing 104% and 41%, respectively," Mr. Jiada Hu, China Ritar's Chairman and Chief Executive Director commented.

The GeoTeam™ is attempting to verify data as it relates to insider ownership.

In connection with the private placement on February 16, 2007, our largest stockholder, Jiada Hu, entered into an escrow agreement with the private placement investors. Mr. Hu deposited 3,601,309 shares into escrow that private placement investors will be entitled to receive, if minimum after tax net income thresholds are not met for the fiscal year 2007 or 2008.

Minimum After Tax Net Income Thresholds:

1.) 2007: $5,678,000 (Implied Earnings Per Share is $0.29)

2.) 2008: $8,200,000 (Implied Earnings Per Share is $0.41)

Source: SEC Form 424B3 (February 5, 2008)

The GeoTeam is assuming that the tax rate is 20%, as reported in the company's 2008 first quarter. (The GeoTeam is attempting to clarify these assumptions).

Adjusting for a fully taxed situation results in the following:

1.) 2007: $4,769,520 (Implied Earnings Per Share is $0.24)

2.) 2008: $6,888,000 (Implied Earnings Per Share is $0.34)

CRTP may qualify as a GeoBargain. Stay tuned for updates.