China Auto Logistics (NASDAQ:CALI)

On May 15, 2012, China Auto Logistics Inc. (the “Company”) received notification from the Nasdaq Listings Qualification Department (“Nasdaq”) that for the previous 30 consecutive business days, the bid price of the Company’s common stock (the “Common Stock”) had closed below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1).

The letter states that the Company will be provided 180 calendar days, or until November 12, 2012, to regain compliance with the minimum bid price requirement. In accordance with Rule 5810(c)(3)(A), the Company can regain compliance if at any time during the 180-day period the closing bid price of the Common Stock is at least $1.00 for a minimum of 10 consecutive business days.

TIANJIN, CHINA--(Marketwire - May 21, 2012) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, reported today it received a letter from the Nasdaq Stock Market stating that for 30 consecutive business days prior to May 15, 2012, the bid price of the Company's common stock closed below the minimum $1.00 per share requirement for continued inclusion on Nasdaq pursuant to Nasdaq Marketplace Rule 5450(a)(1) (the "Minimum Bid Price Rule").

The Nasdaq letter has no immediate effect on the listing of the Company's common stock. In accordance with Nasdaq Rule 5810(c)(3)(A), the Company will be provided 180 calendar days, or until November 12, 2012, to regain compliance with the Minimum Bid Price Rule. The Company may regain compliance with the Minimum Bid Price Rule if the bid price of the Company's Common Stock closes at $1.00 per share or more for a minimum of 10 consecutive business days at any time prior to November 12, 2012.

The Company intends to actively monitor the closing bid price of its Common Stock and will consider all available options to regain compliance with the Minimum Bid Price Rule.

Undervalued Shares

Mr. Tong Shiping, Chairman and CEO of the Company, commented further, "We believe that with our outstanding record of sales growth -- including a year over year increase of 75% in 2011, and a 32% year over year increase in our first quarter sales this year -- as well as a PE ratio of only 1.6x 2011 earnings, and a continuing growth outlook for luxury auto sales in China, we believe our shares are very significantly undervalued. Going forward, as we continue to focus on growing our business, we believe investors will recognize our strengths and CALI shares will be valued more appropriately."

First Quarter 2012 Results

• Revenues in 2012, benefitting from the continuing strong demand in China for luxury vehicles, rose 31.7% to $107.45 million compared with $81.57 million a year earlier.
• Net income of $1,581,477, or $0.07 per share in this year's first quarter, from $2,077,134 or $0.11 per share in the first quarter of 2011.

Regrouping At a High Level of Achievement

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "While I would have liked to continue the long string of quarterly profit gains we achieved in recent years, we have paused to regroup at a very high level of achievement with an aim to grow more strongly and steadily in the future, utilizing our web platforms." He added, "Of particular note, our quarterly revenues now exceed the annual revenues we had when we went public in November 2008. We also have dramatically expanded our web presence from a sole focus on auto importers, in a single city, to the full spectrum of China's auto buying public, with a presence in 50 cities across the country. Additionally, we have developed very strong banking relationships that should serve us well in future expansion efforts, while continuing to make strides in developing new high margin on-line services."

Outlook

"A relaunch of our bottom line growth has taken a bit longer than originally anticipated, but one indication of our continuing potential is that even with the first quarter 85% revenue decline in web-based advertising, revenues in the quarter of $3.1 million for our higher margin web-based advertising, financing services and automobile value added services combined, were only $200,000 lower than the approximately $3.3 million combined figure a year earlier," Mr. Tong noted.

"We also are encouraged by the continuing strong double digit growth outlook for luxury cars in China even in a slowed economy," he continued, "as growth in luxury auto sales provides the underpinning for growth in most of our current services."

"Longer term," Mr. Tong added, "we still see new web-based auto related services for domestic and imported auto drivers and dealers as the key drivers of CALI's bottom line growth and are working hard to bring some of these new services to fruition at the earliest possible time."

Cooperation Agreement with Five Leading Auto Insurers

The Company reported it has now concluded cooperation agreements with five of the leading auto insurance providers in China under which the Company will be qualified to offer automobile insurance to purchasers of automobiles in its auto mall, the largest imported luxury auto mall in Tianjin.

"Auto insurance is particularly important to buyers of the luxury cars we sell," stated Mr. Tong Shiping, CEO and Chairman of the Company, "and we now will be able to offer the very best insurance packages to our customers. We see this as an excellent addition to the 'one stop services' we currently provide and further expect it will attract new customers and help boost our luxury auto sales in this very strong market." Mr. Tong noted discussions regarding final details on how to best execute the agreements with each insurer are in progress and the new service is expected to be launched shortly.

Increased Support from Three Leading Banks

The Company also announced an expansion of its cooperation with three leading Chinese banks which it expects will lead to the further strengthening and growth of its auto-related services.

• Under an agreement reached with Bank of China (BOC), one of China's four largest state-owned commercial banks, the Company will soon offer its luxury auto customers the option of installment buying.
• Through an agreement developed with China Merchant Bank (CMB), the Company will soon establish an electronic payment platform which, among other things, will help the Company manage cash flow more efficiently.
• Agricultural Bank of China has agreed to grant the Company a credit line of RMB 960 million (approximately $152 million) which by itself would represent an approximate doubling of the Company's current aggregate credit line with several domestic banks.

Second Quarter 2011 Results

• Net revenues increased 130% to $126.2 million compared with $54.8 million a year earlier, led by a 133% jump in sales of imported luxury autos to $123.1 million;
• Net income attributable to shareholders grew 23% to $2.3 million, or $0.12 per share on 19.2 million weighted average shares, compared with $1.9 million or $0.10 per share on 18.1 million weighted average shares in the 2010 second quarter

Over the past several quarters since becoming a publicly traded Company, I believe CALI has clearly and openly demonstrated that not only is it on an exciting growth track, but that management is very capable of developing well grounded growth strategies and successfully executing them," Mr. Tong stated. He continued, "As we enter the second half of 2011, it may well be looked on as the beginning of one of the most exciting new chapters in the Company's history, as we take another giant step forward, this time into the very large and growing domestic auto market in China. The opportunity is there for us and we intend to seize it, first with the acquisition and development of the domestic mall, and then with the further rapid expansion of our web-based auto-related services serving the full spectrum of auto sector buyers, dealers and drivers."

"As we move ahead," Mr. Tong added, "we will continue to be fully transparent and firmly believe we will be among the top Chinese companies to emerge strongly from this period of investor uncertainty."

TIANJIN, CHINA--(Marketwire - Jul 7, 2011) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), one of China's leading developers of automobile-related websites, a top seller in China of imported luxury vehicles and a leading provider in China of automobile-related services, announced today it successfully closed the sale on July 1 of three million unregistered common shares to accredited individual investors at an above market price of $1.75 per share, raising a total of $5.25 million for general corporate purposes.

For its first quarter ended March 31, 2011, the Company reported:

• Net revenue grew 50% to $81.2 million compared with $54.1 million in the same period last year;
• Net income attributable to shareholders increased 36% to $2.1 million, or $0.11 per share, on 19.2 million weighted average shares outstanding, compared with $1.5 million, or $0.08 per share on 18.1 million weighted average shares outstanding a year earlier;

"I am very pleased with the continuing outstanding results thus far in 2011 on the heels of our record setting results last year," stated Mr. Tong Shiping, CEO and Chairman of the Company. He continued, "A key focus in the period was the successful integration of our recently acquired www.goodcar.cn site into ourwww.cali.com.cn portal. During the quarter revenues generated by services offered on this highly popular consumer site were a significant contributor to the revenue growth and profits of our web-based advertising business, and expansion of the site will remain a continuing management focus."

Year End 2010:

• 2010 net income attributable to shareholders grew to $8,006,640, or $0.44 per share, a 44.11% gain over $5,548,686, or $0.31 per share, in 2009.
• The key contributor to the year over year increase in 2010 net income was the $5,097,853 in net operating income generated in 2010 by web-based advertising sales, which surpassed the $4,262,990 contribution to 2010 net operating income from sales of automobiles.
• Revenues in 2010 grew 19.75% to $257,681,456 compared with $215,188,081 a year earlier. Approximately 96.24% of 2010 revenues, or $247.9 million, came from automobile sales which grew 18.17% compared to 2009. While unit sales of 2,778 imported autos in 2010 was about flat with prior year results, average unit prices grew to $89,272, up 16.74% from 2009, reflecting the Company's increased focus on sales of imported high-end luxury vehicles. Luxury imports in China are growing faster than overall auto market sales growth and also represent an opportunity to achieve higher margins.

GeoTeam Note: Fourth Quarter 2010 vs. 2009 was $0.13 vs. $0.08.

"2010 was another outstanding year for CALI," stated Mr. Tong Shiping, CEO and Chairman of the Company, "as we plainly saw the bottom-line benefits once again of our strategic decision to rapidly expand our auto related web-based services. In pursuit of this strategy, we greatly broadened the potential audience for our websites with the introduction of our www.cali.com.cn portal at the Beijing Auto Show in April 2010. We included on the portal both our foreign and domestic auto sites and our new www.goodcar.cn site aimed at China's rapidly growing automobile driver population. In November we completed this acquisition and consequently added approximately $480,000 to 2010 revenues from the site. During the year, we also added over $800,000 in sales from our new auto mall management services managing the Tianjin Mall as of March 1. Most significantly, by year end 2010 we greatly expanded the cities covered by our new portal from 15 to 35 on our way to planned coverage of 60 cities by the end of this year, which we estimate will permit us to reach 70% of China's auto buying population."

Rodman & Renshaw on CALI                             01/11/2011

CALI: Terminating Coverage 

Termination of Coverage: Effective immediately, we are discontinuing research coverage of CALI to better allocate resources within our coverage universe. Effective upon the termination of coverage any of our prior financial projections on this stock should not be relied upon. Our last rating on CALI was Market Perform.

Company Description 

China Auto Logistics Inc. operates http://www.cali.com.cn, which rapidly has become one of the leading automobile portals for car dealers and consumers of vehicles and auto-related services throughout China. The Company also a seller of luxury imported cars as well as a developer of websites for buyers and sellers of imported and domestic automobiles. Recently initiating auto-related services for dealers and purchasers of domestic autos, it is a "one stop" provider of logistical services and financing to imported car dealers nationwide and manager of the large imported auto mall in Tianjin.

3Q10 Results 

CALI reported 3Q10 revenue and net income of $67.5 MM and $2.22 MM, with diluted EPS of $0.12, compared to our expectations of $68.5 MM, $2.15 MM, and $0.12, respectively. Top-line grew by 27.7% Y-o-Y and 23.2% sequentially. Gross profit stood at $3.7 MM or 5.6% in gross margin, compared to $2.8 MM or 5.3% in margin in 3Q09 and $3.0 MM or 5.5% in margin in 2Q10. CALI generated $3.1 MM in EBIT, implying an EBIT margin of 4.6%, compared to 4.3% and 4.7% in 3Q09 and 2Q10. Net income was $2.22 MM, a Y-o-Y increase of 38.3% from $1.6 MM in 3Q09. Diluted EPS was $0.12, compared to $0.09 in 3Q09 and $0.10 in 2Q10. CALI ended the quarter with $4.2 MM in cash while receivable in financing service and inventory stood at $20.1 MM and $27.8 MM. Working capital was $34.08 MM as of September 30, 2010. During the quarter the company generated $2.2 MM of free cash flow.

Valuation 

We assigned a Market Perform rating on CALI primarily because we viewed the company as still being in the early stages of transitioning towards a service oriented business model. Web and financing services still only contribute less than 5% of revenues and margins in the business are susceptible to imported auto sales. We believe the surge in auto sales in China should drive demand for derivative services such as those being provided by CALI. We believe CALI should be on the investor radar as an opportunity for exposure to China’s auto services industry.

Investment Risks 

a) Cyclical nature of the imported luxury automotive market; b) significant business concentration; c) highly competitive nature of the market; d) substantial ownership control with a single stockholder; and e) significant government


Notice Regarding Privacy and Confidentiality: 


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman & Renshaw

CALI: 3Q10 Earnings Update

Overview: CALI reported 3Q10 revenue and net income of $67.5 MM and $2.22 MM, with diluted EPS of $0.12, compared to our expectations of $68.5 MM, $2.15 MM, and $0.12, respectively. Top-line grew by 27.7% Y-o-Y and 23.2% sequentially. Gross profit stood at $3.7 MM or 5.6% in gross margin, compared to $2.8 MM or 5.3% in margin in 3Q09 and $3.0 MM or 5.5% in margin in 2Q10. Net income was $2.22 MM, a Y-o-Y increase of 38.3% from $1.6 MM in 3Q09. Diluted EPS was $0.12, compared to $0.09 in 3Q09 and $0.10 in 2Q10. CALI ended the quarter with $4.2 MM in cash while receivable in financing service and inventory stood at $20.1 MM and $27.8 MM. Working capital was $34.08 MM as of September 30, 2010. During the quarter the company generated $2.2 MM of free cash flow.

Legacy Business Grows By A Healthy 26.2%: Imported car sales generated ~$64.9 MM in revenue, growing robustly by 26.2% Y-o-Y from $51.4 MM in 3Q09, given a continued strong demand for luxury passenger cars in China. Total shipment volume in the quarter reached 670 units, slightly down from 697 units in 3Q09 and 681 units in 2Q10. However the average selling price rose by 31.4% Y-o-Y to $96,853/car from $77,736 in 3Q09 as the company’s focus on high-end luxury vehicle sales.

Web Advertising Business Accelerates: Web Advertising business generated $1.7 MM of revenue, an increase of 77.3% from 3Q09. Although revenue contribution is insignificant, compared to Imported Car Sales, Web Advertising accounted for roughly 44% of CALI’s total gross profits during the quarter, with imported car dealership only delivering 33%. Management indicated that CALI currently has more than 200 paid subscribers in its Web Advertising services, aided by its rapid expansion into 29 cities in China. The company aims to have footprints in 35 cities by year end 2010 and 60 cities by the end of 2011, eventually catering to approximately 70% of Chinese car buyers.

Expect Imported Car Sales To Remain Revenue Driver: We are confident that the overall demand in China for high end luxury cars should continue to remain healthy in the coming 2011 and 2012 given the rapidly growing population of Chinese high net-worth. In the near-term we believe CALI’s top-line should be still driven by the growth of imported cars, due to the fact that 96% of total revenue was contributed by this segment, and it is delivering a strong Y-o-Y growth. As global luxury car markers i.e. BMW, Mercedes-Benz all reported phenomenal sales record in China this year, we believe CALI is well positioned to benefit.

Our Estimates: For 4Q10 we expect revenue and net income to be $68.4 MM and $2.29 MM, with diluted EPS of $0.13. This implies full year revenue, net income, and diluted EPS of $244.9 MM, $7.9 MM, and $0.44. For FY11, our estimates are $280.2 MM, $11.3 MM, and $0.62, respectively. We are maintaining our Market Perform rating on CALI.
 

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Results published on November 15, 2010

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "In the 2010 third quarter our broad spectrum 'auto living' websites again led the strong growth we achieved and, in fact, all of our auto-related services posted higher results in the quarter, which led to another sequential improvement in our overall gross margin." He added, "With our recently completed acquisition of www.goodcar.com.cn and plans to expand coverage of our sites to 35 cities by year end on track, I'm very confident of continuing strong growth in this segment going forward, and another record year for the Company in 2010."

Commenting on the outlook for the remainder of the year, Mr. Tong stated, "On the heels of our pending acquisition of www.goodcar.cn, and our very successful introduction at the end of April of the CALI portal -- which we have followed with a major media campaign still in progress -- the excitement and optimism about the unique space we are carving in what is now the world's largest automobile market pervades our entire management team. We are still at the very earliest stage of effecting our growth strategy, and the results are exceeding our expectations. On our agenda for the year, we continue to anticipate adding and growing new web-based services, utilizing the growing scope of our sites and new portal. We do not anticipate any effect from a possible slowdown in the Chinese auto market where we see continuing growth at a healthy level. I am very confident this will be another year of substantial progress on many fronts and new records in sales and earnings."