CDS

[bjc]

I bought some just before the close.

I get the sense the market is going gaga for these China stocks again.  CHNR and CPSL today...

I figure CDS has just as good of fundamentals as either and there shouldn't be too much downside.  What the heck..give it a whirl. 

If she breaks 50 ma and falls below 8.75 or so I'll cut losses.

[kslifka]

I played CDS during the China craze in early October...and have been looking to get into it since it does seem so undervalued.  But I must admit that scares me...that such an undervalued stock isn't moving faster.  (too good to be true. ). 

Anyway the chart looks good for a big pop after bouncing off the 50dma.

[BigSully1]

It's hard to figure out just what kind of business CDS is actually in. The consulting part Original?) looks like it isn't  panning out and now they are getting (heavily) into mining? David just talked about this the other day (on some other failed Chinese stock) and quoted someone else's  term as "diwersification". Coincidenentally, I think the other company he talked about was also diwersifying into mining.

I looked at a filing  briefly a couple weeks ago and it looked to me like there were probable conflicts of interest in the mining interests. That was as far as I went with it as I already saw red flags. I would say have to say to anyone buying this to be careful, but hope you make lots of dollars with it anyway.

[WallStreetnBio]

Looks like a pennant has formed and the second leg up started today because of the increase in volume. According to the technicals for the pennant the stock should run above $18.00 within 8-12 weeks.

[bjc]

Sully-

Thanks for the heads up.  I may just take a small gain here.  I made such a killing on SOLF, I figured I might gamble on another one...fundamentals look good, and wall street is crazy sometime.  I certainly didn't do the DD I usually would..

[WallStreetnBio]

Sully-

Thanks for the heads up.  I may just take a small gain here.  I made such a killing on SOLF, I figured I might gamble on another one...fundamentals look good, and wall street is crazy sometime.  I certainly didn't do the DD I usually would..

No offense to sully but he didn't do his homework on CDS. The consulting part is not a revenue maker. The consulting part is to strictly convert the chinese companies into Gap audited companies for listing on the american exchanges. CDS buys majority stakes in other companies such as magnesium which is the big income for CDS. CDS eventually wants to spin off IPO's after they teach companies to run on there own.  You should listen to the webcast I posted a couple of days ago.

[bjc]

Wallstreet-

Will do.  I was actually coming to this thread to say I'm going to stick around and ignore digging deeper against my better judgment.  It seems you have done quite a bit of good DD but I'll only feel right after I've done it myself.

Anyway, I was going to point out I'm holding because the chart is just too much to my liking.  I'm a fundamentalist, but I still have a little technician in me.  Nice uptick in MACD and nice volume today.  7% move today not too shabby.  It is trying 10.50 right now...

[BigSully1]

Sully-

Thanks for the heads up.  I may just take a small gain here.  I made such a killing on SOLF, I figured I might gamble on another one...fundamentals look good, and wall street is crazy sometime.  I certainly didn't do the DD I usually would..

No offense to sully but he didn't do his homework on CDS. The consulting part is not a revenue maker. The consulting part is to strictly convert the chinese companies into Gap audited companies for listing on the american exchanges. CDS buys majority stakes in other companies such as magnesium which is the big income for CDS. CDS eventually wants to spin off IPO's after they teach companies to run on there own.  You should listen to the webcast I posted a couple of days ago.

You're right Wallstreet, I didn't dig very deep into it. I stopped when I saw somethings about related parties in the filings on those mining interests.

At any rate, it does look set to move higher, and I might be wrong. Good luck with it.

[bjc]

Keep an eye on CDS with the China euphoria.  It seems all a company needs is China in the name and any kind of impressive fundamentals and the market takes it and runs with it.

CDS  is up about $1 and seems to be in the territory of really being able to take off like a rocket..

Not huge volume though.  Leaving room for the big run tomorrow maybe...

[bjc]

Came back Friday, chart still looks good.  I'd rather not fall below the 50 ma and 20 ema though.  That should act as some pretty strong support. 



Just read those slides and right now I'm listening to the audio.

I'm convinced on CDS.  They are expecting $54-64 mil in Q4 revs.  They are expecting $3.5-4.5 mil in Net Income. 

PERIOD ENDING   30-Sep-07   30-Jun-07   31-Mar-07   31-Dec-06
Total Revenue      44,577          40,453            30,939               13,501

31-Dec-07 Expected...$54-64 million.

PERIOD ENDING                                          30-Sep-07   30-Jun-07   31-Mar-07   31-Dec-06
Net Income Applicable To Common Shares   $2,981         $2,268           $1,871              $557 

31-Dec-07 Expected N.I.....$3,500 TO 4,500

Pretty impressive in my opinion.  I understand that you think it is a bit sketchy Sully, but I believe this story. 

The insiders selling is a bit concerning though.  I'm just going to assume this Stein character needs some cash to buy a big new house. 

[bjc]

Wall Street:

I'm going to exit CDS Monday.

Have you seen how many options these guys have waiting for them?  At least 7 million, which is about 35% of the float.  Now people are going to be more in tune to this upcoming dilution, and I think the share price will weaken. 

This is complete bs in my opinion, I should've done better dd and realized this was the case.

I don't want to deal with continued dilution over the next however long.  Good luck. 

[WallStreetnBio]

did you end up exiting? where did you see that these guys have 7 million in options? they own half the outstanding shares which is about 9 million shares. its in there best interest to increase the stock price. these guys are in this for the long haul. they have plans of building these companies up then spinning off IPO's while holding majority stakes. like EMC did with VMW. this will be the birkshire hathaway of China. its normal for management to exercise options. they have to be rewarded for sending the stock up. if the stock doesn't go up then they dont get to exersice options. i'll be with this stock for the next 4 years. if you can find better growth than this elsewhere let me know. good luck.

[bjc]

Wallstreet, hope you do well with CDS.  I exited this morning near the low of the day at 10.33. 

I'd just rather keep my money somewhere where I'm not going to be diluted.  I agree, the growth is phenomenal, and I was totally hyped about this stock before I found out about the dilution. 

Plenty of other stocks out there for me. But good luck!

[WallStreetnBio]

China Direct, Inc. to Acquire Two Magnesium Companies
Wednesday December 19, 8:28 am ET 
New Joint Ventures to Add 40,000 metric tons of Annual Production Capacity

BOCA RATON, Fla., Dec. 19 /PRNewswire-FirstCall/ -- China Direct, Inc. (Amex: CDS - News), a U.S. company that owns controlling stakes in a diversified portfolio of Chinese entities and assists Chinese businesses in accessing the U.S. capital markets, announced today it has entered into two letters of intent to create two new foreign invested entities in China. The new entities, based in Baotou, Inner Mongolia, China, will manufacture and distribute magnesium. Definitive agreements will be subject to the completion of financial audits, due diligence, and necessary government approvals.

The first joint venture, Baotou Xinjin Magnesium Co., Ltd. ("Xinjin"), will be 51% owned by China Direct. Xinjin currently has annual production capacity of approximately 7,000 to 8,000 metric tons and plans to distribute an additional 8,000 metric tons in 2008. China Direct expects to invest approximately $8.5 million in the form of working capital to increase annual capacity to 20,000 metric tons by the third quarter of 2008.

The second joint venture, Baotou Sanhe Magnesium Co., Ltd. ("Sanhe"), will be 51% owned by China Direct. China Direct expects to contribute approximately $7.5 million in the form of working capital to construct a magnesium facility with an annual production capacity of 20,000 metric tons. China Direct forecasts the facility will have 12,000 metric tons of annual capacity by June 2008 and an additional 8,000 metric tons of annual capacity by June 2009.

Management estimates that the two ventures will be at an annual manufacturing run rate of 32,000 metric tons in the second half of 2008. Management further estimates these two ventures, assuming an average price of $3,000 per metric ton, will contribute annual revenues of approximately $80 million and $130 million in annual revenues in 2008 and 2009, respectively.

Dr. James Wang, Chairman and CEO of China Direct, stated, "We continue to expand our magnesium division as we continue to see industry trends remaining favorable for the foreseeable future. We believe these additional magnesium facilities will possess certain key competitive advantages including the implementation of high temperature air combustion technology, also known as flameless combustion. This technology is designed to reduce furnace gas consumption and improve overall thermal efficiency. As a result, management believes overall production costs could be reduced by as much as 20%."

Dr. Wang concluded, "The acquisitions of Xinjin and Sanhe will increase China Direct's annual magnesium production capacity to approximately 75,000 metric tons by the end of the third quarter of 2008. Furthermore, we expect to distribute approximately 50,000 to 60,000 metric tons of magnesium in 2008. With the addition of Xinjin and Sanhe, we believe our overall magnesium division sales will exceed 100,000 metric tons of magnesium in 2008, solidifying our position as a global leader in this industry."

[WallStreetnBio]

New short data out  1,029,100 shares short. float is 11,650,000. average volume is 223,700 shares.

shorts, good luck covering 1,029,100 shares in a small float when the average volume is only 223,700.  squeeze is near.