CHINA HOT WATER HEATERS HOTTER

China Solar & Clean Energy, Inc. (CSOL) specializes in selling small heating applicances adaptable to local energy sources, solar hot water systems and energy efficiency devices in the remote regions and smaller cities in China. Like China itself, CSOL’s business is growing steadily and surprisingly quickly. (See NEW ENERGY IN CHINA)

From acquisitions of new small product and distribution companies, CSOL’s revenues went from $9.4 million last year to $18.6 million this year.

As the Olympics is making clear to the entire world, China needs all the clean energy it can build. The government has undertaken a major New Energy program and is doing well with it, surpassing goals for new wind and expanding capacity to make solar.

But big wind and solar electric systems are beyond the reach of the 2/3 of China’s 1.2 billion who still live virtually subsistence lives. Cheap, efficient space heaters and small solar hot water systems are things those 800 million are likely to be willing to stretch to get, things that would instantly transform the quality of their lives. That's CSOL’s market: Roughly 800 million people, close to 3 times the ENTIRE U.S. population, who will instantly want what CSOL is selling the moment it becomes available to them. Not a bad company to own stock in.

The large-sized product CSOL sells is used to capture waste heat from coal-fired systems and make it available to heat buildings. Considering how much coal China now uses and how much it will inevitably continue to use in the foreseeable future, there can’t be much doubt about that product’s huge growth potential in China either.

Deli Du, CEO, CSOL: “We believe that, in light of the increasing cost of energy in China and throughout the world, demand for our portfolio of products will continue to grow at a high rate. We think that we are well positioned to benefit from this trend and will continue to aggressively pursue growth in this market.”

Mr. Du has to feel a little bit like oil baron John D. Rockefeller did when Henry Ford started mass-producing the automobile.

For numbers mavens and investment seekers, the article on CSOL has extensive quarterly statistics. Due diligence is always a good idea.

China's New Energy goals are ambitious. (click to enlarge)

China Solar& Clean Energy, Inc. Reports Fiscal Second Quarter 2008…Revenue increases 97.8%…Net income increases 69.5%…
August 15, 2008 (Xinhua/PR Newswire via COMTEX/MarketWatch)

WHO
China Solar & Clean Energy, Inc. (CSOL); Wholly owned subsidiaries (Bazhou Deli Solar Energy Heating Co. Ltd. ("Deli Solar (Bazhou)"), Beijing Deli Solar Technology Development Co., Ltd.); Tianjin Huaneng Group (51% ownership)

WHAT
CSOL’s revenues are up 98% for the year.

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WHEN
- Mid-year 2007: $9.4 million revenue
- Mid-year 2008: $18.6 million revenue
- Mid-year 2007 revenue from solar water heaters: $9.4 million
- Mid-year 2007 revenue from solar water heaters: $10 million

WHERE
CSOL sells its products in the People's Republic of China.

WHY
- CSOL is a manufacturer and distributor of solar water heaters, renewable energy solutions, and space heating devices.
- CSOL’s acquisitions of Tianjin Huaneng and Shenzhen Pengsangpu Solar Industrial Products (SZPSP) are the main reasons for its leap in revenue.
- Revenue from the sale of solar water heater and boiler products: up 6.0% to approximately $10 million.
- CSOL’s new businesses did $5.8 million (heat-pipe revenues) and $2.8 million (energy-saving products revenues) in the first half of 2008.
- Sales for the first half of 2008 over the first half of 2007: Up 117% ($26.9 million to $12.4 million).
- Gross profit, 2Q 2008 to 2Q 2007: Up $2.5 million (131%, $4.5 million to $1.9 million). This is reportedly primarily due to the increase in sales volume of higher-margin acquired Tianjin Huaneng businesses.
- CSOL continues to focus on broadening distribution and enhancing operating efficiencies.

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QUOTES
Deli Du, CEO, CSOL: "We are pleased with our performance in the second quarter of 2008…The heat pipe products division that we obtained via our acquisition of Tianjin Huaneng continued to perform well. Our energy savings product group, obtained via the acquisition of Shenzhen Pengsangpu Solar Industrial Products (SZPSP), also performed well…[W]ith our solar heater and boiler division we believe that we now have a broad, strong foundation of energy-related products upon which we can build significant growth in the future…"