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Sitting at my desk on the left side of the Atlantic, my work day begins about mid-day London time. Often, but not always, that means that some of my colleagues, like Tom Frew, have already churned out most of the leading stories of the day. Let’s just say that his writing has been prolific over the past two days, so I am left with the crumbs from his table, so to speak. Given that he has already written articles about nearly every mining company possible, one would think that I would jump on the story about Aberdeen’s acquisition of Scottish Widows, but that is too front page. Everyone already knows about it. So today I have chosen to discuss a rather small AIM-listed company whose share price increased by a dramatic 152.53% today. That company is China New Energy Ltd (LSE:CNEL).
China New is an investment holding company that was formed in 2006 in Jersey as a conduit for funding for Guangdong Zhongke Tianyuan New Energy Technology Co. Ltd. (ZKTY), and other companies in the Peoples Republic of China. Whilst the company has several areas of operations, its primary focus is on the goods and services that it provides to the “primary producers and users of bioenergy.” In other words, ZKTY’s products are used in the production of bioethanol and biobutanol, an industry that is on a growth path worldwide – path encouraged by the United Nations Agenda 21.
CNEL showed a fair amount of interest when it was initially floated on the AIM on 23 May 2011, debuting at just over 12.0 pence, but it has been pretty much downhill from their, with the share price languishing at or near a somewhat scary one pence for most of 2013. But that changed significantly this morning, when China New announced that they had been awarded contracts in Hungary to build two biorefinery projects. The contracts are valued at £60 million over a period of four years. That’s an average of £15 million per year, which is in excess of the total revenue generated by CNEL in two of the last three years. Production of the plants can begin as soon as the CNEL is given the word to proceed, as all of the design work has been completed as a part of the bid tenders. Once constructed, these refineries will be two of the largest of their kind in the world. That is what makes this stock far more interesting that the charts indicate (except for today’s of course). CNEL’s share price rose to 6.03 pence today, with a high of 6.88.
The growing emphasis on the refining of biofuels and other biochemicals will drive the growth of those who have been engaged early on. Relatively unknown to investors, China New is positioned to become a world leader in the market, especially with the awarding of these contracts and their eventual completion. I am not making any kind of recommendation here, but I am suggesting that, based on the big picture, China New might be a company to watch.
