Orlando, FL 12/12/11 (StreetBeat) -- www.InvestorIdeas.com, a global investor research portal for independent investors, reports on companies in the interior tile industry in China, featuring microcap company, China America Holdings (OTC.BB: CAAH). Despite headlines of slowing growth in China, a key factor that is helping to boost sales is the emergence of a middle class consumer in China.
Both China America Holdings (OTC.BB: CAAH) and its larger competitor, Ceramics Co., Ltd. (NASDAQ: CCCL) reported strong revenue growth in the third quarter, up 38.7% and 38.4% respectively from third quarter 2010.
If you speak to anyone who has been in China recently, there is no feedback of slowdown as they report rapid growth and consumer spending in some of the growing cities across China.
According to a report from McKinsey research, “The Chinese have taken to consumerism with ease, embracing thousands of new products, services, and brands -- including a decided taste for luxury. By 2020 and within the course of one decade, real consumption will have doubled to $4.8 trillion and China will then be the world’s second-biggest consumer market after the United States. “
With headlines of China’s inflation concerns, the report also notes, it “finds Chinese consumers to be resilient in the face of inflation.”
China America Holdings (OTC.BB: CAAH) reported “The increase in revenue was driven by a shift in sales mix toward our higher priced premium polycrystalline porcelain floor tiles in 2011 as compared greater unit volume of our lower priced porcelain floor tiles in 2010. The premium polycrystalline floor tile series, launched in the fourth quarter of 2010, is priced approximately 50% higher than our patterned polished porcelain floor tiles. Revenue in the third quarter of 2011 was also boosted by sales of our newest product series, interior porcelain wall tiles, which we launched in August of 2011. Gross profit in the third quarter of 2011 reached $4.4 million, up 39.8% from gross profit of $3.2 million in the third quarter of 2010. For the first nine months of 2011, gross profit climbed to $10.6 million, up 25.7% from $8.4 million recorded in the same period in 2010. Gross profit margins for the third quarter were 37% and 36% for the first nine months of 2011, and were consistent with the comparable 2010 periods. Our gross profit margins thus far in 2011 remained flat due to higher margins from sales of our polycrystalline floor tile series being offset by increases in cost of sales due primarily to increases in costs for raw materials, wages and benefits for manufacturing employees, and fuel.”
Third quarter and first nine months of 2011:
•Revenue Reaches $12 Million in 3rd Quarter of 2011, Up 38.7% from the $8.7 Million Recorded in the 3rd Quarter of 2010
•Operating Income Climbs to $3.7 Million, Up 36.5% from the $2.7 Million Recorded in the 3rd Quarter of 2010
•Net Income for the 3rd Quarter of 2011 reaches $3.1 Million, Up 42.3% from Net Income of $2.2 Million in the 3rd Quarter of 2010
How is the industry doing?
Larger competitor Ceramics Co., Ltd. (NASDAQ : CCCL) a leading Chinese manufacturer of ceramic tiles used for exterior siding and for interior flooring and design in residential and commercial buildings, reported financial results for the third quarter ended September 30, 2011 .
Third Quarter 2011 Highlights
•Revenue was RMB 406.9 million (US$ 63.4 million), up 38.4% from the third quarter of 2010;
•Gross profit was RMB 119.1 million (US$ 18.6 million), up 27.5% from the third quarter of 2010;
•Gross profit margin was 29.3%, down 2.5% from the third quarter of 2010;
•Net profit was RMB 75.8 million (US$ 11.8 million), up 19.9% from the third quarter of 2010;
•On a quarter-to-quarter sequential basis, revenue was up 9.3%, gross profit was up 5.0% and net profit was up 4.7%;
More about CAAH;
China America Holdings, Inc. (OTC.BB: CAAH) is a holding company which owns 100% stake in Ziyang Ceramics Co., Ltd. based in Zhucheng city of Shandong Province in China. Ziyang Ceramics Co., Ltd. manufactures porcelain tiles used for interior residential and commercial flooring and sells through a distribution network of more than 150 distributors across 10 provinces concentrating on major second and third tier cities located primarily in Eastern and Central China
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