WATG Poised for Growth

Jul 10, 2008 (Zacks Investment Research via COMTEX) -- WATG Quote Chart News PowerRating

-- Wonder Auto Technology, Inc. (WATG) enjoys a strong market share in alternators and starters in China and is strategically positioned in the faster-growing sub-segments in these markets. The acquisitions of Jinzhou Hanhua and Jinzhou Karham are expected to reduce the cost of raw materials and components. However, weak product pricing, high customer concentration and a low tax rate force us to rate the stock a Hold with a target of $8.00. Wonder Auto has a strong share of 14.6% in a growing market. Besides expanding in the fast-growing Chinese market, the company is formulating plans to capitalize on an emerging export market opportunity. After the WTO entry, the automobile demand in China has grown 10-15% annually. The company has the potential to grow globally. Recently, the company developed 12 new models of starters and alternators for small engine automobiles ranging from 1.2 to 2.5 liter displacement. Wonder Auto will supply approximately 800,000 automotive alternators worth $32 million to a Shanghai-registered auto parts procurement centre over the next three years. Wonder Auto also signed a long-term supply agreement with a major European tier one auto parts producer, running through to 2011, with approximately $10 million in committed annual sales. In 2008, the management anticipates total sales revenue to rise 37% from the previous year to $140 million. Net income is expected to be $20 million, up 43% year over year. Read the full analyst report on WATG