Even though China is outpacing other nations in terms of vehicle sales, there is still tremendous room for growth. According to estimates from JP Morgan, the per capita ownership of cars in China is roughly 1/20th that of Europe, or 1/40th that of the United States. J.D. Power and Associates forecasts that sales of passenger vehicles in China will increase from 8.7 million vehicles in 2009 to 13.5 million vehicles by 2015, an increase of more than 55%. With numbers like these, it seems safe to say that the outlook for China’s auto industry is quite positive.

As car sales have grown in China, sales of electrical micro-motors have increased as well. Micro-motors control a wide variety of features in a car, from windshield wipers to power door locks and power windows. According to the China Electrical Equipment Industry Association, total sales of electrical micro-motors in 2008 increased 28% year-over-year to $9.6 billion. Global demand is poised to grow at an average rate of 12% annually for the next five years, attributed primarily to growing Chinese demand for consumer goods such as automobiles and household appliances.

China Electric Motor, Inc. (NasdaqGM: CELM) has established a strong presence in the Chinese electric micro-motor market with its “Sunna” brand of motors. CELM’s products are used in automobiles, home appliances, and digital equipment. The Company caters to the needs of small and medium enterprise (SME) customers, which are not met by larger competitors who focus on higher-priced motors and long-term contracts. Sunna brand motors have a reputation as low-noise, low-vibration, energy-efficient, and highly reliable micro-motors.

CELM has enjoyed rapid growth over the past five years due to expanding sales volume and increased focus on the fast-growing Chinese original equipment manufacturer (OEM) market, which produces higher margins than distributor-led sales. Revenues increased at a compound annual growth rate of 77% between 2004 and 2009. Net profit grew at a CAGR of 81% over the same period.

The Company’s manufacturing plant operated at 106% of capacity in 2009, and the Company is currently constructing new production equipment with a capacity of 24 million motors per year to meet high customer demand. In July, CELM leased a new factory in Zhejiang, the second largest micro-motor manufacturing hub in China. The Zhejiang factory will give CELM approximately 21.6 million units of new capacity for AC motors and approximately 43.2 million units of new capacity for coreless motors. The Company recently reported earnings for the quarter ended June 30, 2010, highlighted by a 13.3% year-over-year increase in revenues and a 93.2% YoY increase in net income. With China’s vast appetite for cars and other consumer goods driving the electric micro-motor market, CELM has a green light for continued growth.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

One company expanding its European presence is Worldwide Energy and Manufacturing, USA, Inc. (OTCBB: WEMU), a U.S.-based manufacturing company that derives the majority of its revenues from solar module sales, marketed under the “Amerisolar” brand. In the company’s second quarter operating update released just over a week ago, WEMU revealed that of its 15 new clients this quarter, the majority are located in Germany, France, Italy, and the UK. This news builds on WEMU’s first-quarter distributor agreement with UK-based Ardenham Energy and the eligibility of its solar modules for the British government’s Low Carbon Building Program, Feed-In Tariff, and Code for Sustainable Homes projects, both of which have given it a strong foothold in the UK market.

Sales to new European customers have helped WEMU amass an order backlog currently exceeding $100 million, the great majority of which are solar module orders to be fulfilled this year.

WEMU’s solar division delivered more than $35 million in orders during its second quarter, according to last week’s operating update. Thus, in the first half of the year WEMU has made at least $61 million in solar sales, an impressive 325% increase over the first half of 2009. Based on preliminary first half solar revenues, the division is functioning at an annual run rate in the range of $120 million to $125 million for 2010, compared to actual solar revenues of $47.8 million in 2009. At this rate of growth, WEMU could easily see revenues from its Amerisolar brand increase 150% or more from fiscal 2009 to 2010, especially considering the relative historical strength of its fourth quarter. Coupled with evidence of improving industry conditions, this could be just the beginning of three quarters of solid growth for WEMU.

Shares in the industry leaders in the solar sector such as First Solar (Nasdaq: FSLR), Trina Solar (NYSE: TSL), and Suntech Power (NYSE: STP) have been trending up as much as 30% since early June. First Solar reported strong 2Q earnings just this morning, beating analyst EPS estimates by 14%, and WEMU is all but certain to follow the trend when it reports earnings in a few weeks.

With a strong cash balance (as of March 31, WEMU had $16.1 million in cash reserves and has a history, both short- and long-term, of consistently growing its cash position over time), positive operating cash flow (WEMU generated $1.2 million in 1Q operating cash flow), and upward momentum in solar peer comparable stocks, this stock is on track to shine for the remainder of 2010.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Worldwide’s impressive first quarter growth was largely driven by increased sales of the Company’s AmeriSolar brand of photovoltaic modules. The solar division posted record sales of $26.21 million, an increase of approximately 280.4% from $6.89 million in the first quarter of 2009. Gross profit for the solar division was $2.80 million in the first quarter of 2010, an increase of approximately 184.3% from $0.99 million in the same period of 2009. Solar is one of the fastest growing sectors of the clean tech industry. Despite a recent solar industry slowdown, Worldwide’s solar division has continued to grow. The division’s backlog currently stands at approximately $82 million dollars.

First quarter highlights include:

• Revenues for the first quarter of 2010 were $30.33 million, an increase of 195% compared to $10.28 million for the first quarter of 2009.
• Net income for the first quarter totaled $1.95 million, up 195% from $0.67 million in the same quarterly period of 2009.
• Basic and diluted net income increased 105% to $0.39 per share, compared to $0.19 per share for the first quarter of 2009.
• Gross profit increased to $3.79 million from $1.72 million, representing an increase of 120.6% for the same period a year ago.

Although the solar division accounts for the bulk of sales, Worldwide’s global customer base also includes the industries of wireless telecommunications, aerospace, automobiles and medical equipment, representing a $60 billion market in the U.S. alone. Fortune 500 clients include GE, GM Shanghai, Tyco, Danaher, Flextronics, Smith Industries, and Andrew.

In their May 18th earnings call, Worldwide President Jeff Watson stated that the Company expects 2010 to be another record year. Worldwide plans to release guidance for the full year after releasing their second quarter earnings in August 2010. The Company also anticipates acceptance to a senior exchange in the near future.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

One company contributing to and benefiting from the rapid development of China’s growing textile industry is China Linen Textile Industry, Ltd. (OTCBB: CTXIF). Engaged in the business of production and distribution of various types of linen products, CTXIF ranks among the country’s leading manufacturers in the industry (CTXIF sells 40% of its product within China and the rest overseas to various parts of Europe).

Earlier this week CTXIF released very positive annual results with net revenue increasing 31.2% year-over-year and net income jumping nearly 63% to $6.02 million or $0.30 per share compared to 2008. This growth trend can be attributed to a recipe of a growing consumer base, continued R&D and expansion, and a brand name just beginning to emerge into the mainstream market. CTXIF expects its brand name to gain even more consumer loyalty from increased quality in its products due to the new Heilongjiang Research and Development Center.

Clearly the markets have not factored in the expected double digit growth in 2010 into the company’s current share price, currently just $1.75. With a pending NYSE Amex uplisting, CTXIF is well positioned to provide investors considerable upside.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

The kosher food market is a growing and globally expanding market as the number of kosher food consumers worldwide is now eclipsing 10 million. A staggering statistic which bodes well for G. Willi- Food International LTD. (NasdaqCM: WILC), an Israeli-based company specializing in high-quality, great-tasting kosher food products. The Company is a dominating force in the still growing kosher food industry in Israel and has now set its sights on the U.S. market.

As one of Israel’s leading food importers, WILC markets and sells its food products to over 1,500 customers in Israel and around the world including large retail and private supermarket chains, wholesalers and institutional consumers. In 2008 the Company sold 80% of their products in Israel, with the remaining 20% being split equally between the U.S. and Europe. However, looking forward CEO Joseph Williger sees WILC’s global presence altering dramatically with a goal for 2011 of 50% of products being sold in Israel and the remaining 50% being split between Europe and the United States.

Many Americans might think kosher foods are sold mainly to Jews or vegetarians, but surprisingly the largest consumers of kosher products are the one in five people who are of Muslim faith. Furthermore, as Americans become environmentally sensitive in a time of “label reading,” an increasing number of people of non-muslin decent are now turning to kosher food products. Only about 15% of people who buy kosher do it for religious reasons, according to Mintel, a research group that last year produced a report on the kosher food explosion. The top reasons cited for buying kosher? Quality, followed by general healthfulness.

Even with market data revealing a $200 billion kosher food industry growing at 15% year-over-year (Market Trend, 2008) the majority of the food industry has yet to realize the profits to be made by converting their food to kosher, giving WILC the opportunity to dominate the market both in the U.S. and Europe.

With continued growth and expansion into the U.S. market, WILC should generate revenue and earnings growth of a minimum of 25% in 2010. Since RedChip began coverage in mid-December 2009 WILC has had an impressive 35% rally to the upside from $5.09 to a January 19 close at $6.87.

With a game-changing geographic expansion underway and deals with major U.S. retail chains in the works, WILC is well positioned to benefit from a growing Kosher market where it has the advantages of experience and financial strength.

Disclosure: G. Willi-Food International, Ltd. is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Internet protocol television (IPTV) is digital television supplied through secure networks operated by carriers. Although still very similar to traditional cable and satellite services, IPTV carries distinct advantages to traditional cable platforms including the ability to play music, interactive audio and video, video on demand (VOD), games, and access to e-mail systems all through one IPTV set-top box connected to TV.

In China, which is currently the world’s largest cable market with over 172 million users, there are four million IPTV subscribers. From 2007-2008, China’s IPTV market grew 100%.

In 2007 the Chinese Government launched a rural outreach subsidy program in an effort to bring more home appliances to rural areas. With the new program, farmers may receive subsidies of up to 13% for new televisions, washing machines, and other household appliances previously inaccessible to them, thus unlocking a whole new consumer base in products like digital television. Much of Henan Province is rural, and rural incomes have been increasing steadily for the last 11 years. With an immense consumer base emerging, ZSTN’s 62% of the IPTV market in Henan Province is likely to grow over the coming years.

ZSTN’s revenues for the nine months ended September 30, 2009 grew nearly 71% year-over-year to $70.1 million with diluted earnings per share of $0.60.

Aside from supplying an IPTV product, ZSTN is diligently expanding into new product areas. In 2009 the company launched a new line of business manufacturing, selling, and providing services for a global positioning satellite (GPS) system. GPS represents an underpenetrated market in China, with less than 10% of motor vehicles carrying GPS, compared to 20%-60% in developed nations. ZSTN will target fleet vehicles for its GPS units and offers a 24/7 call center to handle service and support.

ZSTN has already signed its first GPS contract with Xing Yang Security Service for 4 million RMB or approximately $585,000 USD, plus 0.5 million RMB each year for continued service. The GPS business line should have immediate impact on revenues due to a higher margin revenue stream. The company also intends to negotiate a reseller agreement with China Unicom in order to sell its GPS units at China Unicom retail stores, thus receiving another share of subscriber revenue.

ZSTN’s business lines represent the future of China’s technology adoption. A new high margin GPS product coupled with a dominant position in the Henan IPTV Set-Top box market has research analyst Amit Dayal of Rodman and Renshaw initiating coverage of ZSTN with a market outperform rating and $14 price target. Currently trading at a P/E of less than 10x we expect the stock to gain momentum when Q4 numbers are released giving us a first glimpse into the effect of GPS sales on the company’s financial results.

Disclosure: ZST Digital Networks, Inc. is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

In a recent news release on their new abrasives line, the Company reported: 

“Two series of high-end fine precision abrasives, sized GC3000 and GC4000, were tested and approved by seven potential polishing customers, who have applied our products in the process of grinding and polishing surface of high-precision instruments and items.”

Already China’s market leader in producing monolithic refractory products for the steel industry and experiencing solid sales from its fracture proppant products used by top-tier oil & gas producers, CHGS expects their fine precision abrasives segment will become the next driver of business growth. Produced under the Gengsheng(TM) brand using a patented production process, CHGS’ fine precision abrasive products have great potential to replace traditional abrasive substances such as white-fused alumina and diamond powder due to their lower production costs and improved effectiveness.

According to RedChip analyst, Rick Grubbs, CFA, writing in the initial research report published December 10, 2009:

“Supplying precision abrasives to the surging solar industry offers new growth potential for CHGS in 2010 with the potential to double the Company’s revenue within three years. With its abrasives production line completed and its first shipment expected to be delivered in the fourth quarter of 2009, we see significant upside potential if the Company can build upon this initial order. The initial order, to a Taiwanese company in the magnitude of 3,000 to 12,000 tons per year, could already add between $12 million to $51 million in annual revenue. Additionally, CHGS’s current manufacturing capacity of 20,000 mmt per year allows for approximately $88 million in annual revenue at current sales prices, an opportunity that can be capitalized on by delivering a quality product, on time, and efficiently. Better still, gross margins of 50% or better are expected for the new abrasives product compared to margins in the 20% and 30% range for the Company’s legacy products.”

Third Quarter 2009 Highlights for the Company include:

• Sales revenue grew 16.0% year-over-year to $14.9 million
• Net income attributable to Company’s stockholders grew 39.5% to $1.67 million from the same period 2008
• Diluted EPS was $0.07 compared to $0.05 in 3Q08
• Cash on hand was $1.9 million at September 30, 2009

CHGS is expecting a strong fourth quarter and is bullish on demand from the steel and oil sectors in China. With a strong track record – revenue growth has averaged 35% each year from 2006 to 2008 – a solid reputation, capable management and stellar customers base, they present a compelling opportunity for growth-oriented investors. RedChip Visibility has initiated coverage of China Gengseng Minerals with a Buy rating and a 12-month price target of $4.50.

To receive a complimentary copy of the full report, visit CHGS Visibility Initial Research Report.

Disclosure:  China Gengsheng Minerals, Inc. is a client of RedChip Companies, Inc.  RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.