FYI:
By Shara Tibken
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Shares of China Ritar Power Corp. (CRTP) dropped as much as 18% Monday despite reporting relatively strong results in the second quarter and projecting solid growth.
Analysts said they weren't sure what was dragging down shares of the battery maker but said they would use the weakness to buy into the stock.
"The earnings were good, and the outlook provided was good," Rodman & Renshaw analyst Amit Dayal said in an interview, adding the stock has nearly tripled in the past three months. "So maybe there's some profit taking today. There's no fundamental reason why the stock is down."
Global Hunter Securities analyst Ping Luo agreed, saying the company's outlook is pretty optimistic. She said the company in a conference call projected 2010 revenue to jump 80% to 100%.
"The second quarter is a relatively weak quarter," Luo said, adding that about two-thirds of 2009 revenue is expected to be generated in the second half. "But there shouldn't be such a large response [in the stock]."
In recent trading, China Ritar shares fell 12% to $4.91 after earlier sliding as low as $4.55. Shares have rebounded sharply from their nearly 10-year low of $1.01 from November. Earlier this month, they hit a new 52-week high of $6.35.
Early Monday, China Ritar reported earnings of $1.79 million, or 9 cents a share, up from $1.74 million, or 9 cents a share, a year earlier.
Revenue slid 31% to $21.3 million, hurt by a 20% decline in average selling price due to a slide in the price of lead. Sales volume fell 13.5%.
Analysts polled by Thomson Reuters projected per-share earnings of 6 cents on revenue of $24.3 million.
Gross margin slipped to 19.2% from 19.5%.
Global Hunter's Luo said the company is expecting some gross margin improvement from targeting the Chinese domestic market and larger customers.
Looking ahead, China Ritar projected 2009 earnings of $9.2 million to $9.8 million on revenue of $125 million. It expects a gross margin of 19.7%.
The Street most recently expected earnings of $8.53 million on revenue of $124.7 million.
"While our financial results for the second quarter reflect the global economic downturn of the first part of the year, we have begun to experience a significant turnaround in demand for our lead acid batteries," Chairman and Chief Executive Jiada Hu said in a release.
He added he expects a "remarkable improvement" in revenue and earnings growth in the second half of the year compared to the first as demand for lead acid batteries for telecommunications, alternative energy storage and electric vehicles ramps up.
-By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com |
