China Transinfo Tech (CTFO) research, news, and more from GeoInvesting

Company description

Mon, 31 Mar 2008 04:00:00 GMT

China TransInfo, through its subsidiary Beijing PKU ChinaFront High Technology Co., Ltd. ("PKU"), is primarily focused on providing transportation information services. The Company aims to become the largest transportation information product and comprehensive solutions provider, as well as the largest integrated transportation information platform and commuter traffic media platform builder and operator in China. China TransInfo is involved in developing multiple applications in transportation, digital city land and resource filling system based on GIS technologies which is used to service the public sector. In addition, the Company is also developing its transportation system to include ETC technology. The Company is the co-formulator to several transportation technology national standards and has software copyrights to 23 software products. China TransInfo has won 3 of 4 model cases sponsored by the PRC Ministry of Communications. The Company's affiliation with Peking University, which currently owns 5% of PKU, provides access to the University's GeoGIS Research Laboratory, including over 30 Ph.D. researchers. As a result, the Company is currently playing a key role in setting the standards for electrified transportation information solutions. )

The Company had two and three major customers that individually represented 10% or more of the Company’s total net sales during the three months ended March 31, 2010 and 2009, respectively. Total net sales was $10,397,438 and $2,959,068 for the three months ended March 31, 2010 and 2009, respectively, and related accounts receivable balance was $1,276,189 and $1,186,042 as of March 31, 2010 and 2009, respectively..

Comments & Business Outlook

Fri, 13 Aug 2010 04:00:00 GMT

Second Quarter 2010 Results:

Revenue increased 151.1% to $24.0 million from $9.6 millionin the comparable period of 2009.
Net income attributable to the Company increased 28.9% to $3.6 million, or $0.14 per diluted share, as compared to $2.8 million, or $0.13 per diluted share, in the same period of 2009. Adjusted net income attributable to the Company.
Excluding non-cash stock based compensation expense and amortization expense of intangibles from acquisitions, increased 41.9% to $4.1 million, or $0.16 per diluted share, as compared to $2.9 million, or $0.13 per diluted share, in the comparable period of 2009. Weighted average diluted shares outstanding increased to 25.1 million shares, from 22.4 million shares in the second quarter of 2009.

"There are vast business opportunities available in China's transportation information industry, due in large part to the government's emphasis on leveraging technology to manage the country's overwhelming traffic flow. The acquisition of UNISITS further strengthens our leading position in the Intelligent Transportation Systems (ITS) market and we look forward to increasing penetration in the highway segment while consolidating our foothold in the urban transportation market," commented Mr. Xia. "Our new fleet management business represents a largely untapped commercial market that enjoys strong support from the government. We believe we are well positioned to emerge as a major player in this evolving market."

For fiscal 2010, the Company reaffirms its previous guidance for revenue of approximately $120 million and adjusted net income of approximately $18 million.

Historically, the Company sees lower sales during the first half than the second half of the year due to governmental seasonal budgeting activities.

Research

Tue, 13 Jul 2010 04:00:00 GMT

Added to the GeoBargain list on August 12, 2009 @ $5.67

Catalyst: Strong guidance; Low valuation.

Peak performance: Reached a high of $12.90 on Oct. 12, 2009

Current Price: $6.84

Current road block: Issued net income guidance, but no EPS guidance; EPS is forecast to grow less than 30% for the 2010 June quarter; Cash Flow from operation for the 2010 first quarter was negative $10.2 million; Increase in account receivables.

From an EPS point of view, except for the 2010 & 2011 June quarters, CTFO is forecast to meet our 30.0% minimum growth requirement.

June 2010 quarterly EPS estimate: $0.12 vs. $0.13 in 2009
June 2011 quarterly EPS estimate: $0.11 vs. $0.12 in 2010 estimate.

The pressing issues are the company’s negative cash flow and increasing accounts receivable positions.

"Net cash used in operating activities was approximately $10.20 million for the three-month period ended March 31, 2010, while for the same period of 2009, we had approximately $3.96 million net cash used in operating activities. The increase of the cash used in operating activities was mainly attributable to the increase of accounts receivable, which was mainly due to the increase in sales and slow seasonal collections during the first quarter of 2010. We also experienced the increase in other receivable, which consists mainly of contract bidding and performance bonds that we put into escrow accounts set up by our customers for contract bidding and performance purposes. Such increases were in correlation to the increase of our sales and also negatively impacted our cash from operations. We also had the decrease in accounts payable and billings in excess of costs and estimated earnings on uncompleted contracts, which also negatively impacted the cash flow from operations for the three months ended March 31, 2010 compared to the same period of 2009."

We are not sure how much of an issue is created by the negative cash flow position. In 2009, the company ended up with positive $8.8 million operating cash flow, after being negative $2.4 million for the first nine months.

The real issue is one of timing: Will the company�s cash flow inconsistencies enable it to sustain growth initiatives during times of cash flow pressure and necessitate a capital raise? (note: as of the 2010 first quarter the company cash stood at $25.8 million, which could help mitigate cashflow concerns.)

According to the company liquidity is sufficient:

"We believe that our current cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures for at least the next 12 months. We may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue."

The company also recently secured a loan agreement:

"On June 21, 2010, Beijing PKU Chinafront High Technology Co., ("Beijing PKU") a variable interest entity of China TransInfo Technology Corp. entered into a short-term loan agreement with Bank of Beijing, Zhongguancun Branch ("Bank of Beijing"), pursuant to which Bank of Beijing has agreed to loan to the Beijing PKU RMB 30,000,000 (approximately $4,400,000) as working capital."

Still, investors must realize that the cash flow and accounts receivable situation may limit P/E expansion.

Our intent over the short-term is to build a check list to assess the risk position of firms in the ChinaHybrid space. For the time being this will consist of the following: (this list is likely to grow substantially)

-Is the company's auditor ranked in the top 100?
-Is the auditor located in the USA? If located in China the PCAOB (Public Company Oversight Board) may be denied access to investigate the practices of the auditing firm. Short sellers have been using this information as a tool to validate their opinions.
-Are the company's internal controls satisfactory?
-Are their any outstanding legal issues?
-Do the company's top ten customers represent less than 10% of revenues?
- Operating cash flow divided by current liabilities is greater than one. The higher the better.
- Cash divided by current liabilities. This is an the most conservative liquidity ratio. The higher the better
- Is the company buying back stock?
- Chinese filings match respective SEC filings.(In process)

Criteria	Meets Criteria	Notes
Top Ten Auditor	Yes	BDO China
Auditor Located USA	No	Shenzhe, China
Satisfactory Internal Controls	Yes	Based on that evaluation, Mr. Shudong Xia and Mr. Zhihai Mao concluded that as of March 31, 2010, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective at the reasonable assurance level.
No Legal issues	Yes	None Found
Customer Concentration	No	The Company had two and three major customers that individually represented 10% or more of the Company’s total net sales during the three months ended March 31, 2010 and 2009, respectively
Cash Flow Ratio is Greater than 1	No	Negative
Cash Ratio is Greater than 1	No	0.57
Buying Back Stock/Insider Buying	No	n/a

GeoTeam Note:

Short term and risk adverse investors should be aware of the quality issues currently present in the ChinaHybrid Space, questioning the validity of what seem like solid fundamental stories. It is beginning to get ugly so be cautious and understand that more pain may have to be endured, as ChinaHybrids are easy prey for short investors. The broad stereotype that is being applied to these stocks appears unfair, but we can’t ignore the psychological impact this can have on investors’ portfolio decisions. If history is our guide, fear will eventually create an immense opportunity to invest in the companies that prove they can meet quality litmus tests and enact shareholder friendly moves. Credibility can also be restored if independent legal/SEC opinions validate accounting practices currently in question.

We have yet to verify if the Chinese filings for ChinaHybrid stocks we monitor match respective SEC filings. We are in the process of completing this task. Conservative investors may want to limit exposure or buy put options on stocks that have this availability as insurance against long positions, until we publish our findings. Odds are we will identify some promising companies that will fail this litmus test.

Comments & Business Outlook

Fri, 14 May 2010 04:00:00 GMT

"During the first quarter of 2010, we continued to experience strong demand for our innovative solutions for traffic management," commented Mr. Shudong Xia, Chief Executive Officer of China TransInfo. "As a result, revenue more than tripled and adjusted net income increased almost 50% year over year. Our $10 million equity financing from SAIF Partners enabled us to acquire the majority stake in UNISITS. This is a significant acquisition for us, which solidifies our strategic commitment to gain market share in the expressway market and expand our geographic penetration."

"We continue to be optimistic about our business opportunities in China's transportation information industry, where we clearly benefit from our first mover advantage in an industry with few major players," commented Mr. Xia. "With the debut of the IC System, the launch of our Fleet Management Service business, and our participation in the National Highway Information Grid, we have leveraged major synergies from our acquisition of UNISITS. We believe the Company will sustain its strong growth through recurring revenue streams from diverse products and services."

For fiscal 2010, the Company reaffirms its previous guidance for:

Revenue of approximately $120 million
Adjusted net income of approximately $18 million.

Comments & Business Outlook

Thu, 10 Dec 2009 05:00:00 GMT

"In addition to launching our TransPLE and real-time traffic website, we recently added our mobile phone application, Palmcity Live-Traffic, to China Telecom's Surfing Space AppMarket. As a result, we are well-positioned to benefit from China's rapidly developing transportation infrastructure and growth in private vehicle ownership. As of September 30, 2009 our contract backlog was approximately $60 million, which we believe will enable us to meet our financial goals for 2009. In addition, we are very pleased with our controlling position in UNISITS, which is expected to further expand our footprint in the transportation systems market in China," commented Mr. Xia.

FULL YEAR 2009 Guidance Ending December ^a

	Full Year 2009 Guidance	Full Year 2008 Reported	Period Change
GAAP Revenue	$55.0 million	$29.4 million	87.1%
GAAP Net Income	$13.3 to $13.5 million	$11.1 million	19.8% to 21.6%

Source: PR Newswire (November 12, 2009)

^a The above forecasts reflect the Company's current and preliminary views and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

Comments & Business Outlook

Sun, 23 Aug 2009 04:00:00 GMT

'We are pleased to report another quarter with strong revenue and net income growth, resulting from our continued business expansion and increased market share gains. Thanks to China's RMB 4 trillion (approximately $586 billion) economic stimulus plan, China has experienced tremendous growth in transportation-related infrastructure projects since the beginning of 2009, which is feeding demand for our solutions in order to successfully manage the development and operations of transportation systems,' said Mr. Shudong Xia, Chief Executive Officer of China TransInfo.

FULL YEAR 2009 Guidance Ending December ^a

	Full Year 2009 Guidance	Full Year 2008 Reported	Period Change
GAAP Revenue	$45.0 million	$29.4 million	53.1%
GAAP Net Income	$13.0 million	$11.1 million	17.1%

Source: See Release, August 12, 2009

GeoBargain Notes

Wed, 12 Aug 2009 04:00:00 GMT

China Transinfo Tech has been added to the GeoBargain list.

Comments & Business Outlook

Sun, 24 May 2009 04:00:00 GMT

China Transinfo reaffirmed guidance in its 2009 first quarter earnings release.

'The Chinese government's determination to develop a modern, nationwide transportation infrastructure has given us tremendous growth opportunities. At China TransInfo, we are dedicated to becoming the leading transportation information solution and application provider in terms of both business scale and technology. We will continue working on the development of cutting edge technologies to ensure our products are the most sophisticated on the market,' commented Mr. Xia. 'As we continue to expand our transportation business, we were encouraged to see that 10 of our products and services were included on the Beijing Municipal Government's most recent procurement list, up from five last year. We view the steady stream of repeat business to be one of the strongest endorsements of the quality of our offerings.'

For the fiscal year ending December 31, 2009, China TransInfo is reaffirming its previously stated guidance of approximately $45.0 million in revenues and net income of approximately $13.0 million.

Comments & Business Outlook

Mon, 30 Mar 2009 04:00:00 GMT

Guidance Report:

"As we step into 2009, the domestic and international business environment has seen dramatic changes compared to last year. However, we believe that the market for our products and services offers tremendous growth potential going forward. The aggressive $586 billion (RMB 4 trillion) economic stimulus plan initiated by the Chinese central government will likely act as a catalyst toward the development of the transportation information industry in China," said Mr. Xia. "As a result, we are confident that 2009 will bring another year of continued growth. We plan to increase emphasis on technology research and development in 2009 to maintain our leadership position in the market over the long term. In addition, we intend to build on the series of acquisitions we made in 2008, further expand our business and improve our brand recognition on a nationwide basis."

FULL YEAR 2009 Guidance Ending December ^a

	Full Year 2009 Guidance	Full Year 2008 Reported	Period Change
GAAP Revenue	$45.0 million	$29.4 million	53.1%
GAAP Net Income	$13.0 million	$11.1 million	17.1%
GAAP EPS ^b	$0.58	$0.50	16%

^a The above forecasts reflect the Company's current and preliminary view and are therefore subject to change. Please refer to the Company's Safe Harbor Statement (usually in press releases) for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

^bThe company did not provide EPS guidance. The GeoTeam® used the 2008 year ending outstanding share count of 22,328,782 to derive an implied EPS number.

Comments & Business Outlook

Tue, 06 Jan 2009 05:00:00 GMT

For the fiscal year ending December 31, 2008, China TransInfo reaffirms its guidance of approximately $30.0 million in revenues and approximately $11.0 million in net income.

'While most of the major global economies have suffered from significant downturns recently, however, according to the latest government estimates, China will maintain a positive rate of growth. Along with its continuing economic expansion, especially the recently announced $586 billion (RMB 4 trillion) economic stimulus plan, China will emphasize the development of its infrastructure on a nationwide basis. The country's rapid urbanization has been accompanied by dramatic increases in private car ownership, necessitating the development of more advanced GIS-based transportation solutions. Our advanced GIS technologies, strong links to government agencies, and our recent $15 million financing will allow China TransInfo to more effectively take advantage of all potential opportunities in this area,' stated Mr. Shudong Xia, the Company's CEO. 'We are particularly excited about the progress of our taxi media platform in Urumqi and Huhhot. In addition, our recent acquisitions of Dajian Zhitong and Shanghai Yootu will furnish us with new tools to further enhance our taxi media and real time transportation business.'

Source: PR Newswire (November 12, 2008)