New Century: Taking Off With the Boeing 787 Dreamliner

June 13, 2007
Volume VIII, Issue 41
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I started buying Commerce Planet again today. There is a comment and a chart in the BLOG for your review. All of a sudden, the stock just looks great to me. It's behaving as if something good is going on. I don't know what, but it is finally showing signs of life back to the upside.

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Here's the second in the series of two "Old Economy" ideas that I'm introducing this week. The numbers and potential growth over the next five years are very compelling for today's idea. This company should have many quarters of growth out in front of it, and the stock is just starting to be discovered. For your consideration:

Boeing Is Back: Check Out the 787

Did you know Boeing (NYSE: BA) used to manufacture about 600 planes annually pre 911? Currently, they are building about 350 per year, but that number is going back to the 600 level in short order.

You are looking at an image of the new Boeing 787 Dreamliner- probably the world's most advanced commercial aircraft. Airlines all over the world will start flying them in 2008.

This bad boy runs a cool $1/4 billion, carries about 250 passengers, has a range of 8,000 nautical miles, is made of 50% composite materials, and is 20% more fuel efficient than any of its predecessors.

Boeing has orders in hand for over 600 of these beasts, and they are going into full production right now. Deliveries start in '08. Production is scheduled out for the next 5 years. 

Boeing (NYSE: BA), who's previous all time high (2001) was $70, hit $100 this year- a new all time high for this titan of aviation. The market believe Boeing has nothing but robust business and growth over the next five years. It's time to look at a company that will ride Boeing's coattails. 

How does this information apply to today's new idea?- read on McDuff, and I'll circle back a few paragraphs down.

New Century Companies (OTC BB: NCNC): An Old Economy Explosion of Growth

Mining Equipment, windmills, oil drilling hardware, aerospace, heavy equipment- these areas are exploding with globalization demand, and California based New Centuries Industries is right in the middle of it. Sales and profits are exploding, and there is nothing but growth ahead for this idea.

Here's what they do, and it's as old economy as it gets- the make stuff round. The take a big piece of metal, make it a smaller piece of metal, and make it round to 1/10,000th of an inch. They make stuff round, and they sell the machines that make stuff round to other component manufacturers.

Find me a big name with big infrastructure and I will find you parts provided by NCNC. Component customers include names like GE, Rolls Royce, Caterpillar, Exxon, Chevron, Apache, etc all use their products.

Anything that is round and needs to spin with precision can be made on their machines. This gigantic Caterpillar (NYSE: CAT; another stock near an all time high) tractor has components made on NCNC machines. The oil rig you see pictured- it has components that spin at a high rate of speed as they drill. This oil rig has pipes and flanges that can go down into the ocean floor over 2 miles deep. Anything that is not perfectly round to 1/10,000th of an inch will stop the drilling process. NCNC machines are making the components found on this rig. 

Here's an interesting alternative energy idea: Windmills. GE is geared up to manufacture about 1500 windmills per year- with world wide demand exploding for alternative energy ideas, the market is closer to 10,000 windmills per year, and GE can't make them fast enough. 

At a recent American Wind Energy Association trade show, there were six new windmill manufacturing companies at the show, ready to compete with GE in a market it has owned. Demand in the US is expected to be about 3,000 units next year- double GE's capabilities. 

Guess who makes the machines that make the round parts that spin at a high rate of speed for all these manufacturers - you guessed it: NCNC.

The Best Part: How Fast Is NCNC Growing?

How's this: almost doubling in size from last year. Here are the numbers:

In Q1 '07, NCNC delivered $3.1 million in revenues- that's up from $1.7 million in the same Qtr in '06. That's an increase of 82%. Very nice growth. On the profit side, there were huge strides as well. NCNC delivered about $800,000 ($.065 per share in profits), which you can derive by subtracting the funny money non-cash expenses, which were one time events.

Here's the most exciting part of the story- there are only 12.2 million shares I&O, and at $.65 the market is only valuing the company at $7.93 million. Against an annual revenue run rate of about $12.5 million, this stock is cheap, cheap, cheap, and under followed.

The stock has enjoyed a pretty good year with the resurgence of old economy stocks. Despite having come up from the $.25 level earlier this year, I believe the recovery phase is just getting underway. The stock spent a fair percentage of 2006 in the $1 range when their corporate performance was far more anemic.

Here's another good chart ready for a move to the upside. The stock made a big move in April, and has since starting drifting down. It is camped on a perfect 38.2% retracement. Time for the next leg up in light of today's news. Read on.

Going to $1 Plus: Here's Why

Aside from organic growth, I believe there is a major catalytic event coming up. It's time to come full circle back to the Boeing 787 Dreamliner. Pictured is a modern jet engine being installed.

The engine in the 787 will be 12 feet in diameter. There are a series of circular pieces of metal that goe around the entire turbine. The giant fan blades of the jet engine spin within those metal rings. The metal rings have to be perfectly round- perfect to within 1/10,000th of an inch. Why- because if it isn't perfect, it will vibrate. If it vibrates it will fall off. It it falls off; well, it just can't fall off. Boeing, the airline, the FAA, and the passengers just wouldn't like that.

There are over 600 787s on order. The Airbus A380 is coming out to compete- same thing- 12 ft diameter engines designed by GE or Rolls Royce. Both use NCNC machines to make the rings.

Also on the horizon is the Boeing 777 freight liner. A long haul cross ocean aircraft with only two engines- this is new in aviation. Until recently, the trans ocean planes were mandated to have 4 engines. More 12 ft engines to be built.

Here's what you need to grasp on this industry. In the past, companies like GE and Rolls Royce would award 5 year contracts to component manufacturers. No more. Now, they order as needed. Much tougher for the manufacturers to gear up, which means much less readily available supply. 

Today, just after the market closed, NCNC announced it has formed a joint venture partnership to manufacture the key component for this jet engine. Boeing is going to need 1200 of them to fill their current orders, and Airbus is coming in right behind.

NCNC is teaming up in a joint venture with WK Machine to manufacture components for the new Boeing 787 and Airbus A380 and A350 aircraft. WK has been manufacturing aircraft parts for thirty years. WK will provide the production, and NCNC will provide specialized machines that can get the work done. 

WK is located in Southern California, a mere 18 miles from where many of these gigantic engines are assembled before shipping on to the aircraft manufacturer. 

Oh- and one more kicker- the annual Paris air show is next week- new plane orders will be announced there as well. This could help NCNC.

If you like an old economy story with some really good numbers and explosive growth for the next five years, own some NCNC. Initial price target $1; SSL $.45. Price target could go up when Boeing orders start to flow.

Here is the complete text of today's release for your review:

Press Release Source: New Century Companies, Inc.

New Century Forms Joint Venture With W K Machine to Manufacture Specialized Jet Engine Components

Wednesday June 13, 4:01 pm ET

LOS ANGELES, CA--(MARKET WIRE)--Jun 13, 2007 -- New Century Companies, Inc. (OTC BB:NCNC.OB - News), a leading manufacturer and re-manufacturer of machine tools, today announced that it has formed a Joint Venture with W K Machine, Inc. to manufacture specialized jet engine components for the Boeing 787 DreamLiner, Airbus A380 and A350 aircraft.

New Century will supply the machining equipment to manufacture large components of the General Electric and Rolls Royce engines slated for use on the new Boeing 787 Airbus A380 and A350 aircrafts. W K Machine will act as the operator of the JV. They have over 30 years of experience in manufacturing jet engine components. W K Machine is well positioned to handle the potential order backlog created by the approximately 1,100 planes which have been ordered by the major airlines.

New Century has developed specialized large vertical turning lathes (VTLs) to handle the components which can measure 12 feet in diameter and are produced to have zero tolerance for error to within 1/10,000th of an inch. The process to manufacture one specific part for the jet engines can take over 85 hours of machine time to produce.

David Duquette, President and CEO of New Century, commented, "We are excited by the opportunity to work with W K on this project. We recognized the potential opportunity in the market to produce the large components being developed for use by the aircraft engine manufactures. The industry currently has a lack of qualified domestic suppliers equipped to handle the specialized work which has provided an entry for our new JV. The timing of the creation of our JV is ideal to capture early market share as deliveries for the new Dreamliner aircraft are scheduled for early 2008. Our new joint venture will create an additional revenue stream for New Century beginning in the late third quarter of 2007. We are excited to be further diversifying our product mix while positioning the Company for future growth."

About New Century Co.

New Century Companies, Inc. is one of the leading U.S.-based makers of machine tools, primarily vertical boring mills and large lathes such as vertical turning centers (VTCs). It specializes in re-manufacturing, starting with existing major castings and fitting them with state-of-the-art, computer-controlled equipment. These products generally cost 40% to 60% less to make than new ones. New Century passes these savings on to its customers, which include such leading manufacturers as General Electric Co., General Dynamics Corp., Siemens AG and Gardner Denver. New Century machines are used to manufacture jet engine components, airplane landing gear parts, power generation equipment, oil and gas production components and construction materials, to name just a few applications. New Century's production facility is in Santa Fe Springs, CA.

Visit New Century's Web site at

This release contains forward-looking statements which involve known and unknown risks, delays, uncertainties and other factors not under the Company's control, which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include results of current or pending research and development activities, actions by the FDA and other regulatory authorities, and those factors detailed in the Company's filings with the Securities and Exchange Commission such as 10K, 10Q and 8K reports.


     Alliance Advisors, LLC
     Mark McPartland
     (910) 221-1827 

Source: New Century Companies, Inc.


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