Cavico Corporation (CVIC.ob)

With its rapidly developing neighbors in the north (China) and west (India) that have spurred the global economy, South East Asia has taken on a similar phase of growth and development.  In particular, Vietnam looks to sustain its accelerated economic development over the coming years.  In 2007, Vietnam retained a real GDP growth rate of a whopping 8.5%.  Merrill Lynch even suggested that Vietnam might be the fastest growing economy in Asia over the next decade.  Much of this prosperity has come from its growing relationship with border country China and ironic bilateral partnership with the United States.  As of 2007, China accounted for 17.7% of Vietnam’s imports and the United States accounted for 21.2% of its exports.  Over the last decade, Vietnam has publicly committed itself to economic modernization.  In 1995, Vietnam joined the AFTA (ASEAN Free Trade Area) agreement.  In 2001, the US-Vietnam bilateral trade agreement was put into action.  Finally in January 2007, Vietnam was cordially invited into the World Trade Organization (WTO). 

            Despite the amazing economic reform reiterated through the communist country’s clear intentions, Vietnam’s economy has remained relatively untouched by foreign investment.  Enter Cavico Corporation (CVIC.ob), the first Vietnamese investment opportunity to list on the American exchanges.  As the largest private heavy civil construction contractor located in Vietnam, Cavico looks to greatly capture a portion of the growing infrastructure demand found in the developing country.  Dedicated to the construction of hydropower facilities, dams, bridges, roads, mines, and urban buildings, Cavico serves as a diversified developer of the basic necessities in a growing economy.  The Company also boasts a competitive advantage through its ability to nurture a project “from concept through completion.”

Spawned with seed capital of $4 million in 2000, Cavico has since rapidly grown over the last 7 years into a company with $93 million in assets, 3000 employees, and $38 million in annual revenues.   As of December 2007, Cavico retained a backlog of $332 million in awarded contracts.  In January 2008, company press releases indicated that an additional $41.5 million in contracts were awarded to Cavico in the first month alone.  According to the Company’s recently filed 10-K, it also has plans to expand construction activities into Laos and Algeria, and to focus increasingly on Australia while diversifying into other construction and services fields such as steel fabrication and mechanical products/services. 

            Despite the promising successes as a company, the publicly traded stock has also had its own share of disappointing dilemmas as a result of being on the lower exchanges.  The company had a stock symbol mix-up over the last month while it was attempting to uplist to the OTC bulletin board.  Likewise, the share structure was considerably changed over the course of a year with approximately 80 million shares outstanding in 2006 and approximately 130 million shares outstanding as of December 2007.  Nevertheless, we at InvestingPennies.com feel as if this company will be a relatively safer investment having now audited its financials and uplisted off the Pink Sheets onto the OTCBB.

Conclusion:

            With strong company growth in both operations and reputation, Cavico looks to fully exploit an untapped market yearning for an infrastructure boom in light of an economy with an accelerated growth rate.  Carrying new ambitions to excel beyond international borders, Cavico bears the mark of a young company with a multi-national corporation (MNC) outlook.  As the first American investment opportunity into Vietnam, Cavico (in time) will likely yield favorable tilt due to investment “fashion.”  Yet the one critical factor holding back Cavico is its lower exchange stigmata, the very mark that is slowly being overcome through positive steps progressing towards a future listing onto an upper exchange. 

4/21/08:

Price = $0.75
O/S = 131.15 Mil (as of Dec 31, 2007)
Mkt. Cap. = $98.36 Mil