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Over the past months, China Energy
Recovery (CGYV) has had a mighty strong wind at its back, and yesterday
afternoon's news might be the gust that finally blows open the door of
opportunity for investors.
 CGYV
announced that a private investor is financing $5 million in shares of
its stock at $1.80. Think about what a huge vote of confidence this is
for CGYV. In order for the financer to make a single penny, the
stock needs to be worth much more when conversion time rolls around.
This tells me that the financiers
who cut the deal know what they're doing and believe in CER; they know
what spending $5 million on developing China Energy Recovery's new manufacturing
plant will mean for the company's bottom line. CGYV expects phase one to
be completed in mid-2010.
It certainly tickled Mr. Qinghuan
Wu, Chairman and CEO of China Energy Recovery. "We are very pleased
to see there are investors who can see our potential growth power, share
our vision and believe in our execution capabilities in this challenging
period."
Well said, Mr. Qinghuan Wu.
It's a win-win situation for China
Energy Recovery - the leader in waste heat recovery for the worst energy-wasting
nation on the planet - and investors.
This news - just one in a series
of tailwinds behind China Energy - makes me think the stock has plenty
of upside looking forward.
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A
Quick Reminder |
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Just to recap the past couple months,
you'll recall that at the end of April, CER announced it had received record
backlog orders for 2009. The $32.7 million value of these contracts was
86% greater than the orders the company had a year earlier.
 CER
says the energy recovery systems under these backlog orders, upon completion,
are expected to generate nearly 174MW of power-something a new manufacturing
plant will certainly help with.
At the beginning of May, CER announced
that it had won a large order for three sets of waste heat recovery systems
for a large nickel mine project in Papua New Guinea.
The $4.85 million contract represents
a significant order for the company since total revenues generated in 2008
amounted to $23.2 million (a 96% improvement over the previous year).
Net income last year increased by
73% to $1.1 million, and it would surprise me if China Energy failed to
improve on that total this year given the increasing interest in its technology
and mounting orders from customers.
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Technically
Speaking |
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Since the beginning of the year,
CGYV has managed to clean up much of what appears to have been aggressive
selling volume. Does this suggest the stock has plenty of upside in
the coming months? I believe so.
 From
a technical perspective here's what I'm seeing... noted by my circle of
what I call a "Wash & Rinse" in the chart shown here, you can
see shares of CGYV traded with some significant volatility in February
to the downside only to snap back within a few short days back above its
previous level.
A "Wash & Rinse" is a technical
term I use to explain the phenomenon of a stock shaking out weak hands
before heading for higher levels. As you can see, after this volatile move,
the stock pulled back nicely and continued upward above its 50 day moving
average.
This is where we're at now. With
support of the 50 day moving average currently intact, I believe yesterday's
news could very well be the catalyst the stock needs to test the overhead
resistance of $2.00 or so.
After failing four times at blowing
through the $2.00 level, I believe a classic "persistence breaks down resistance"
is what we may be experiencing in the coming months ahead. Should CGYV
break above the $2.00 resistance level, there could likely be nothing stopping
it from reaching previous levels of $2.50 - $3.50.
This would yield an excellent return
for those with the foresight to take a shot here. Now that much of the
selling volume has been chewed up, I think we've got much smoother sailing
ahead for a stock that obviously has yet to trade to its full fundamental
value.
We're starting to get very excited
about CGYV on a go-forward basis.
| Press Release Source:
China Energy Recovery, Inc.
China Energy Recovery
Announces a Financing Transaction of $5 Million
SHANGHAI, May 26 /PRNewswire-Asia/
-- China Energy Recovery, Inc. (OTC Bulletin Board: CGYV, ISIN: US16943V2060;
"CER"), a leader in waste heat energy recovery and industrial energy efficiency,
today announced it has recently closed a financing transaction and issued
a two-year 9.5% Unsecured Convertible Promissory Note in the principal
amount of $5 million, which may be converted into common stock at a conversion
price fixed at $1.80 per share, to an accredited private investor. The
net proceeds from the financing will be used to start the development of
CER's new manufacturing plant.
"We are very pleased
to see there are investors who can see our potential growth power, share
our vision and believe in our execution capabilities in this challenging
period," commented Mr. Qinghuan Wu, Chairman and CEO of China Energy Recovery.
"With this funding, we will soon start the development of our new state-of-the-art
manufacturing plant which will be tailor-designed to make large to mega
sized energy recovery systems. Upon its anticipated completion of Phase
One around the middle of 2010 and further phases in later periods, we believe
the new plant will largely strengthen our manufacturing capability and
ensure the required capacity to support our future growth. Coupled with
our strong engineering capability, we believe the new plant will enhance
our unique leadership position in the global energy recovery markets in
which both the size and level of sophistication of systems have kept increasing."
For more detailed information
about this financing transaction, please refer to CER's 8-K filed with
the Securities and Exchange Commission on May 26, 2009.
What is Waste Heat
Energy Recovery?
Industrial facilities
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 heat energy or electricity, dramatically lowering energy costs.
Energy recovery systems are also capable of capturing harmful pollutants
that would otherwise be released into the environment. It is estimated
that if energy currently wasted by all the U.S. industrial facilities could
be recovered, it could produce power equivalent to 20% of U.S. electricity
generation capacity 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 designing, manufacturing and installing waste heat energy recovery
systems which provide facilities with greater energy efficiency. The company's
primary focus is 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, Korea, Vietnam and Malaysia.
CER focuses on numerous industries in which a rapid payback on invested
capital is achieved by its customers, including: chemical, paper manufacturing,
refining (including methanol refining), etc. 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 CER 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, CER's ability to execute on its business plan and strategies
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 Securities
and Exchange Commission, including CER's Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 30, 2009.
For more information,
please contact:
Media:
Sean Mahoney
Phone: +1-310-867-0670
Investor Relations:
Jim Blackman
Phone: +1-713-256-0369
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