CF Energy Corp. (TSXV:CFY), a China-based provider of natural gas and other clean energy solutions, is currently profitable and even pays a dividend
SmallCapPower | December 6, 2019: CF Energy Corp. (TSXV:CFY) could be one of the best-kept secrets in the global microcap energy space. The China-based provider of natural gas and other clean energy solutions has been listed on the Toronto Venture exchange for more than 10 years, is currently profitable, and even pays a dividend, this despite having a market cap of a little more than $44 million.
CF Energy is involved primarily in natural gas distribution and sustainable energy utilization in China, serving residential, commercial and industrial users. The Company’s existing business model comprises four main segments: (1) Pipeline natural gas sales and liquified natural gas (LNG) supply distribution sales; (2) Vehicle refueling; (3) Natural gas direct transmission; and (4) Renewable and smart energy/Integrated smart energy.
China has been rapidly moving towards cleaner energy solutions and CF Energy has, and will likely continue, to benefit from this trend. For example, the Company’s LNG supply distribution agreement in Hebei and Hainan Province is part of the Jing-Jin-Ji economic development zone’s commitment to reducing carbon emissions and steadily phasing out of the usage of coal. LNG demand in China is expected to grow at a compound annual growth rate of 20% from 2017 to 2022 (Source: Frost & Sullivan).
CF Energy has a history of strong and stable cash flow, as it owns exclusive concession rights and right of ways granted by the Chinese government to protect against competition. An example of this is the Company’s exclusive right to provide heat and power to the New Economic Development Zone of Meishan City in Sichuan Province.
During CF Energy’s most recently-reported quarter (Q3 2019), the Company realized revenue that rose 9% year over year to approximately C$61.4 million (CF Energy reports its financial results in Renminbi, or RMB). The Company is projecting 17% year-over-year revenue growth in 2019 as well as a 10% year-over-year increase in 2020.
CF Energy’s profit attributable to its owners during the third quarter of this year surged 69% to about C$5.8 million. This has allowed the Company to pay an expected total dividend of approximately C$0.0602 per common share during 2019, which includes both an annual and special dividend payment.
Shares of CF Energy have produced average annual investor returns of more than 20% during the past five years. CF Energy stock currently trades at a price of $0.68.
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