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Report:
Low Hanging Fruit For Energy Investors |
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The
long wait for our newest company profile is now officially over. Today
we unveil the stock we believe is one of the very few significant opportunities
available to investors right now.
A handful of
the company's competitive advantages have already been shared, including:
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Revenue in the
first half of 2008 was 170% stronger than the first half of 2007.
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The backlog for
the remainder of 2008 puts them on pace more than double 2007's revenue
total.
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The use of the
product they build is almost in essence being mandated by their local government.
Several facilities have already been shut down for failing to comply with
government standards, even though this company's equipment could have prevented
it.
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The device saves
companies money, and helps protect the environment.
As exciting as
those basic prospects are, the details of the company's technology and
recent news could make the stock an even more attractive idea. We
strongly suggest investing a few moments to fully explore this unique offer.
We also recommend
you view the brief video presentation in addition to reading our profile.
The video (link below) illustrates the technology's operation in addition
to providing much more relevant background.
China's energy-conservation
and environmental-protection market is growing rapidly, and China
Energy Recovery (OTCBB: CGYV) is well-positioned to capture an
enormous amount of that market.
China Energy
Recovery - or CER - provides a low cost, environmentally-friendly
energy conservation solution to manufacturing facilities and power generation
companies. They have developed leading-edge technologies to (1) reduce
harmful emissions by (2) making energy-generation systems more efficient.
 More
specifically, CER's technology captures wasted energy - in the form
of heat - to produce low cost electrical power. This in turn enables
industrial manufacturers to reduce their energy costs. Their ideal customers
are:
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Petrochemical Industry
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Paper Manufacturing
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Refining / Power
Generation Industry (including Ethanol refining)
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Coke Processing
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Cement Industry
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Steel Industry
China
Energy Recovery has successfully installed over 100 energy recovery systems
in several countries, with the strongest focus being in China where
the demand is greatest. Recent expansion of their manufacturing facility,
however, will allow them start expanding in both North America and Europe
(where
demand is growing).
In simplest
terms, China Energy Recovery makes customized boilers specifically designed
to turn water into steam using heat that would have otherwise been wasted.
Once created, that steam is used to turn generators to produce electricity,
or is transferred to a point in a factory or plant where steam heat can
be utilized.
 Either
way, the process doesn't requite any additional consumption of fuel or
electricity, since the heat used to make the steam was already being created...just
not used.
An example may
better illustrate the technology, so let's use a coal burning factory to
explain.
In this scenario,
coal burns to create steam, which in turn turns a generator, which is turn
creates electricity. Unfortunately, only about 1/3 of the heat generated
by the coal is actually used to make steam - the other 2/3 of
that heat (not to mention sulfur dioxide) - is expelled into the environment.
CER's equipment
effectively 'intercepts' that heat and uses it to make more steam, which
of course can be used to generate more electricity, or be redirected where
steam heat is needed.
Amazingly, China
Energy Recovery's equipment can utilize up to 90% of the heat that was
being wasted.....the 2/3 of the original amount of heat created.
This
effectively makes a process that was only 33% efficient now about 90% efficient,
allowing users to slash energy expenditures by up to two-thirds. Even better,
the process doesn't create any additional dangerous gases.
The nearby comparison
chart illustrates the idea as well.
The technology
and equipment is custom designed to meet various customer needs, and is
reasonably priced. In most cases, the equipment creates such a drastic
cost savings it can pay for itself in a very short period of time. And
yes, the technology is protected by a patent.
The inspiration
for this kind of equipment may have been born from the desire for
a clean way of producing more energy. The math and dollars, however,
have
helped propel CER into its current growth stage. More recently,
China's
government has spurred interest in this technology by giving factories
end electricity plants an ultimatum ...reduce consumption, or be
shut down.
 We're
still in the early stages of the industry's birth. And, though every country
in the world is facing energy problems such as high costs or shortages,
China is arguably the ideal incubator for a company like China Energy Recovery.
In short, China's
energy infrastructure is inefficient, physically and fiscally. Even today,
the country experiences temporary electricity outages. Yet, China also
uses (relatively) more energy than any other country, most of which is
consumed buy China's industries. In fact, it requires four times as
much energy to generate one unit of GNP (gross national product) in China
than it does in the U.S.
Simultaneously,
2/3 of the country's energy needs are met by burning coal, which is one
of the more environmentally-unfrendly fossil fuels thanks to substantial
amounts of sulfur dioxide created when coal is burned. Though the pollution
problem was generally recognized, it's become such a liability that the
government now realizes it can't be allowed to fester any further. (Some
Chinese factories had to shut down 30 days before the Beijing Olympic games
to help clear the air, and acid rain caused by SO2 pollution has affected
1/3 of China's farmland - some soil can't be farmed any longer.)
The culmination
of all these headaches prompted the state's government to implement legislation
against environmentally-unfriendly power generation, as well as against
inefficient industrial facilities. Now, clean and efficient energy is
one of only three national initiatives for the next several years.
It's not just
lip-service legislation either. China's government vowed to shut down
inefficient factories in high-pollution industries like electricity generation,
coal/coke, and steel production.
Then in 2007,
China's
energy regulation body did indeed shut down several facilities for not
meeting the new standards of efficiency and pollution. Annually, between
all the plants that were shut down last year, they were producing 25 million
tons of cement, nearly 10 million tons of iron, nearly 9 tons of steel,
and more.
 The
decision to shut those facilities down served as a wake-up call for any
factory suspecting the threat was hollow. It was also around that time
demand went into high gear for CER's technology.
Looking forward,
China's goal is to reduce emissions of sulfur dioxide and other pollutants
by 10%, and to reduce the amount of energy consumed (per unit of GDP) by
20%, by the year 2010.
The introduction
of solar, wind, and geothermal power are all efforts to meet those goals,
and solar power in particular has been a relatively fruitful industry for
investors (albeit volatile). However, all of those 'alternative' energies
are expensive ...usually too expensive to implement without government
subsidies. And, subsidies come and go, taking demand with them.
China Energy
Recovery's technology, on the other hand, is not really an 'alternative'
energy. It's actually a method for using the current energy infrastructure
to create something more efficient. More importantly, using CER's
solution is far more cost effective. Some have described their strategy
for energy conservation as the low-hanging fruit of energy efficiency.
We tend to agree.
That said, China
certainly isn't the only country interested in economical and clean energy
consumption. Those goals are held globally, which is largely why CER is
looking to cultivate overseas business. And, there's certainly a big enough
market out there to make it worth seeking out; about $170 billion is
spent each year on energy efficiency. The global market for heat-recovery
boilers alone is already $1.4 billion annually, and the energy recovery
concept is still young.
You may now
want to view the brief clip by clicking here: http://www.microcappress.com/video/fp/company/cgyv/.
Be sure to return here though, as we have some final thoughts not found
in the video.
China Energy
Recovery is a strong investment opportunity for two clear reasons. The
first
reason is, as mentioned above, the technology is effective and feasibly
installed. The second reason is - and this is the key to a small company's
success - China Energy Recovery has already proven they can achieve
enough sales volume and control costs to produce a profit. Their next
step is growing those top and bottom lines by ramping up the amount of
equipment manufactured and then sold.
Per today's
press release (below), the company appears to be well on their way to such
growth.
 In
short, China Energy Recovery's 2008 backlog now stands just under $16 million.
Adding that figure in with the $9.9 million in sales they did in the first
half of this year, and you're talking about a top line somewhere in the
neighborhood of $25.9 million for 2008. Just for perspective, they did
$11.8 million in 2007, which translates into a 119% increase on a year-over-year
basis.
The pace of
growth is obviously the impressive part of the story, but those numbers
alone don't even do the growth pace justice.
In all of 2006,
they did $5.5 million in business. For the first half of 2007, they did
$3.4 million in sales. In the last half of 2007, CER posted revenues of
roughly $8.4 million. For the first half of 2008, they pulled in $9.9 million.
And now, we learn they're sitting on $16 million in orders. See the
trend?
Though the news
release didn't even mention a specific number for 2009, we have to take
it at face value when the company says "CER expects to announce record
revenues for 2008 with the outlook toward 2009 continuing in an upward
trend."
Even of greater
importance was something not mentioned in the news release ....China
Energy Recovery swung to profitability in the prior six months. As the
top line grows over the course of this year and next year, we also
expect profits to widen.
In summary,
we expect China Energy Recovery shares to appreciate largely because of:
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Direct and indirect
supporting pressure from local government
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Proven, marketable,
and patent-protected technology
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History of substantial
(global) capital spending on similar equipment
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Consistently strong
sales growth and projections
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Recent steps toward
sustained profitability
Any single
one of those ideas alone could be a compelling argument for ownership
of CGYV. However, we believe the combination of all of them at
this point in time makes China Energy Recovery an outstanding
investment prospect.
China Energy
Recovery Announces Record Backlog Orders for Rest of 2008
Friday September
12, 4:00 pm ET
Contracts for
rest of 2008 total more than RMB 115M ($16 million USD)
Total value
of contracts up nearly 115% year-over-year
SHANGHAI, China--(BUSINESS
WIRE)--China
Energy Recovery, Inc. (OTCBB: CGYV) ("China Energy Recovery" or "CER"),
a leader in the waste-heat recovery sector of the alternative energy industry,
today announced that the company expects to hit record backlog orders for
its fiscal year 2008. With sharply increased interest in efficient energy
use and cleaner emissions from industrial facilities spreading to customers
both inside China as well as neighboring regions, CER expects to reach
record revenues for 2008 with the outlook toward 2009 continuing in an
upward trend.
"We're very pleased
to see such widespread and growing interest in our systems," stated China
Energy Recovery CEO, Mr. Qinghuan Wu. "Our product is catching on with
customers in our traditional sectors such as industrial chemicals, but
we're also experiencing considerable growth in new industries such as bio-mass.
And we expect our markets to continue to expand."
Total contract
values for backlog orders received and expected to be completed during
2008 are currently approaching RMB 115 million ($16 million USD), nearly
a 115% increase over the same period in 2007 with backlog orders valued
at RMB 53.8 million ($7 million USD). CER's systems have been installed
in over 100 manufacturing facilities in China and other countries including
Egypt, Turkey, Korea, Vietnam and Malaysia. The systems have primarily
been designed for chemical manufacturing, refining, paper mills, etc. The
systems are also adaptable to metallurgy and coking industries.
China is emerging
as one of the world's largest consumers and generators of energy, with
a generation capacity of 622 GW at the end of 2006. In that year, power
generation grew 13.5% to 2,834 billion kWh, with nearly 80% of power generation
coming from coal (76%) and natural gas (3%). Forecasts indicate the need
for many more power plants to meet future demand, creating a further burden
on the environment and limited natural resources. In order to meet demand
without further increasing pollution, we anticipate that China will need
to invest in energy-efficiency technologies. Recovery systems are proving
a very adaptable solution to an ever-increasing problem.
Advantages for
installing systems such as those CER produces include: reducing energy
costs by producing 2-3 times the useable energy from the same fuel, reducing
pollution by eliminating a number of toxic combustible wastes such as carbon
monoxide gas, sour gas and carbon black off gases and capturing carbon
that can be reused in the recovery process and monetized through the sale
of carbon credits. The systems can also help reduce the sizes of equipment
used as they reduce fuel consumption, leading to reduction of flue gas
and reduction in equipment sizes of all handling equipment such as fans,
ducts and burners can be achieved. Also, with the reduction in equipment
sizes, additional benefits can be realized in the form of reduced auxiliary
energy consumption.
From a clean,
alternative energy generating perspective, CER's technology generates power
at a small fraction of the cost of other leading clean energy technologies.
For example, for the cost of a solar energy system producing up to 54 MW
of power that would normally cost upwards of $200 million, CER has installed
a waste-heat recovery system with the same power generation capacity for
as little as $12 million. The systems are designed for the Chinese market,
but the company is finding customers globally interested in energy savings
and more efficient and cleaner use of the energy they consume.
As the numbers
presented represent backlog orders estimated to be completed in 2008 based
on contracts signed as of the press release date, the actual revenue realized
through the end of year is subject to the completion of all these orders
in 2008. The company acknowledges that there may be cases where there would
be causes which are out of the company's control, such as those by customers,
that would lead to delay in the completion of these orders, thereby affecting
the revenue generated for the company in 2008. The numbers presented are
contract values which also include 17% value added tax and the retainage
amounts for product warranty purpose which are usually 5-10% of the contract
values and will be recognized as deferred revenues.
What is Energy
Recovery?
Industrial facilities
and power plants release significant amounts of excess heat into the atmosphere
in the form of hot exhaust gases or high pressure steam. Energy recovery
is the process of recovering vast amounts of that wasted energy and converting
it into usable electricity, dramatically lowering energy costs. Energy
recovery systems are also capable of capturing the majority of carbon emissions
and other harmful pollutants that would otherwise be released into the
environment. It is estimated that energy recovery systems installed in
U.S. industrial facilities could produce up to 20% of U.S. electricity
needs without burning any additional fossil fuel, and could help many industries
to meet stringent environmental regulations.
About China
Energy Recovery, Inc.
CER is an international
leader in energy recovery systems, with a primary focus on the Chinese
market. CER's technology captures industrial waste energy to produce low-cost
electrical power, enabling industrial manufacturers to reduce their energy
costs, shrink their emissions footprint, and generate sellable emissions
credits. CER has deployed its systems throughout China and in such international
markets as: Egypt, Turkey, Korea, Vietnam and Malaysia. CER focuses on
numerous industries in which a rapid payback on invested capital is achieved
by its customers, including: chemical, petro-chemicals, refining (including
Ethanol refining), coke processing, and the manufacture of paper, cement
and steel. CER continues to invest in R&D and plans to build China's
first state-of-the-art energy recovery system research and fabrication
facility to allow it to meet the increased demand for its products and
services. For more information on CER, please visit: http://www.chinaenergyrecovery.com/s/Home.asp.
Information on CER's website does not comprise a part of this press release.
Forward-Looking
Statement Disclaimer
This press release
includes "forward-looking statements" within the meaning of the Securities
Litigation Reform Act of 1995, as amended. All statements, other than statements
of historical fact, included in the press release that address activities,
events or developments that the Company believes or anticipates will or
may occur in the future are forward-looking statements. These statements
are based on certain assumptions made based on experience, expected future
developments and other factors that CER believes are appropriate under
the circumstances. Such statements are subject to a number of assumptions,
risks and uncertainties, many of which are beyond the control of CER and
may not materialize, including, without limitation, the efficacy and market
acceptance of CER's products and services, and CER's ability to successfully
complete orders and collect revenues therefrom. Investors are cautioned
that any such statements are not guarantees of future performance. Actual
results or developments may differ materially from those projected in the
forward-looking statements as a result of many factors. Furthermore, CER
does not intend (and is not obligated) to update publicly any forward-looking
statements, except as required by law. The contents of this release should
be considered in conjunction with the warnings and cautionary statements
contained in CER's filings with the SEC, including CER's Current Report
on Form 8-K filed with the Securities and Exchange Commission on April
21, 2008.
Cautionary
Note About Financial Projections
The financial
projections for future periods contained herein were made with input from
CER's senior management and were not the result of a detailed budgeting
process. These projections are based on management's expectations and numerous
assumptions and CER makes no representations or warranties as to the accuracy
of the projections or the assumptions. This information represents CER's
current estimate of the operating and financial results which CER would
achieve if certain assumptions are realized. These assumptions relate primarily
to CER's ability to successfully complete product orders and collect revenues
therefrom, among other factors. These assumptions may be affected by a
number of risks and uncertainties, many of which are wholly or partially
beyond the Company's control, and, accordingly, there can be no assurance
that any of these assumptions will be realized. These risks and uncertainties
include, among others, those identified within CER's filings with the SEC,
including CER's Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 21. Accordingly, THE PROJECTIONS ARE PROVIDED
FOR ILLUSTRATIVE PURPOSES ONLY, AND THE RESULTS CONTAINED IN THE PROJECTIONS
ARE BY NO MEANS GUARANTEED. As a result, there can be no assurance that
CER will achieve the financial results that are described herein.
Contact:
for China Energy
Recovery, Inc.
Media
Sean Mahoney,
310-867-0670
seamah@gmail.com
or
Investor Relations
Jim Blackman,
713-256-0369
jim@prfmonline.com
Source: China
Energy Recovery, Inc. |
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Updated: 6:01 am PDT (13:01 GMT), September 9, 2010
