China Valves Technology: The Case for a Strong Q1 2011

Old China Hand submits:

CVVT is China's leading valve company and the primary industry consolidator, with three acquisitions in 2010. Revenues for 2010 increased by 92.6% while EPS grew by 45%, producing a historical P/E ratio of 4x. The company has been criticized for lack of transparency, and therefore, the Board of Directors on December 27th, 2010 voted to upgrade their auditors from Frazer Frost to a Big Four.

Much has been said about CVVT guiding down 2011 revenues from 30% growth to the 25%-28% range (equating to $228 to $235 million). Q4 2010 revenues came in at $52 million compared to analyst expectations of $44 million. If the additional $8 million of revenues had not come through, 2010 revenues would have been reduced from $183 million to $175 million. 30% revenue growth for 2011 from that latter number is $227 million. So revenue projections for 2011 have actually been raised.

Furthermore, in the


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