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    Stock Alert for Xinde Technology Co. (WTFS)

    Xinde Technology Co. (WTFS) engages in the design and manufacture of internal combustion engines and parts mainly for the $100 billion diesel engine and parts market in China. It operates in three primary product segments: fuel injection system products, diesel engine products and generator products. WTFS offers a broad range of products, including non-vehicle diesel engines, diesel generators, injection pumps, injectors and three-coupling components, agricultural machinery and construction machinery. WTFS generated $123 million in revenues for its fiscal year 2010 and its production volume has been growing about 30% annually.

    Share Statistics (06-July-11)

    FY 

    2009

    FY 

    2010

    %  

    Chg

    Q1 

    2010

    Q1 

    2011

    %  

    Chg

    Symbol WTFS Revenue, $Mn 78.83 123.31 156.4% 26.84 27.60 2.8%
    Current price $0.18 Gross marg. 13.6% 12.1% -11.0% 19.6% 21.3% 8.7%
    52wk Range: $0.09-$1.40 Oper. margin 7.9% 16.2%
    Avg Vol (3m): 1,496,780 Net margin 7.4% 16.1% 117.6% 12.2% 13.2% 8.2%
    Market Cap. 42.82M
    Shares Outstanding 240.00M EPS, $ 0.03 0.10 233.3% 0.01 0.02 100.0%

    Source: Reuters.com, SEC Filings.

    Recent News

    WTFS shares have rallied after the Company announced that a new performance enhancing design breakthrough it developed has been tested thoroughly in cooperation with Tianjin University. The Company said the performance enhancing breakthrough is being incorporated in its 6CT/6LT series of four cylinder and six cylinder diesel combustion engines.

    WTFS president and CEO Dianjun Liu commented in the release: “We are very pleased with the enhanced performance of our diesel engines, based on another internally developed technological breakthrough.  We see the technical strength at Xinde as the greatest strength of the Company, and the main force propelling our product growth. Further, where we can offer a pricing advantage, it typically is a by-product of our technological success.  We believe our ongoing focus on innovative technology provides a strong underpinning for continuing near and longer term growth.”

    Late last month, the Company said it has independently developed the DG-T2 digital electronic speed regulator for diesel generators, which is aimed at optimizing diesel generator power on China’s farms. In addition to providing powerful, precise and flexible closed loop control of engine speed, DG-T2 is said to offer a significant initial cost advantage.

    Shares of WTFS pulled back on Thursday, dropping nearly 20% to $0.17 by midday yesterday, on above-average volume of 4.44 million shares.  WTFS has been moving within a range of $0.09 – $1.40 over the past 52-weeks. It is currently trading below its 50-day moving average of $0.47 and below its 200-day moving average of $0.81.

    Financial Summary

    WTFS posted revenues of $27.60 million for the quarter ended March 31, 2011, a 3% increase from the comparable quarter a year ago, reflecting increased sales of diesel engines as a result of product structure adjustment to introduce more products with higher gross margins and reduce the production and sales for products of older style diesel engines and generator sets with lower gross margins.

    Net income for the quarter came in at $3.63 million, compared with $3.28 million in the prior-year. The Company attributed the increase to bad debt recoveries of $137,324 and a decrease of $60,388 in sales commission.

    Financial Strength (06-July-2011) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 2.20 2.78 1.29 0.71
    Current Ratio (MRQ) 2.77 3.41 1.61 1.04
    LT Debt to Equity (MRQ) 0.00 16.43 47.17 136.84
    Total Debt to Equity (MRQ) 4.33 27.77 68.18 182.30
    Interest Coverage (TTM) 57.14 0.28 0.21 18.17

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    No consensus recommendations data available.

    Technical Analysis

    Source: http://stockcharts.com

    WTFS is below its 20-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

    WTFS’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility.

    The MACD for WTFS currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.

    Comparative Analysis

    No direct competitor comparison.

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    2 Responses

    1. It would be helpful to know the performance enhancement of this new development in terms of percent. Say, 25 to 100 % would be meaningful. Anything less would not have an effect until oil reaches $200+/ barrel.

    2. With outstanding report & progress of this WTFS.OB co it ould ave been in $20 to $25 range. Why with all this good news about this stock and price is so low and still going down $.13 (cent). I do not under stand. May be I do not know what is going on with secrect in this co. or not getting real news about the co.

      Please response.
      Thank you

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