These China trials however are very much carrots on a stick and more.
If the trials (completing June-August) are immediately converted to contracts (and it is highly possible), it appears that Cardia may be caught high and dry in relation to production - in which case, they may lose the contract before they even get started.
I speculate that there is a lot of high level dialogue going on between the Cardia China team and authorities in relation to the bigger picture - more trials and/or widespread contracts (we are obviously not privvy to any of this very sensitive info at this stage).
I also think that the China facility will be used for China fulfillment - Malaysia for other purposes.
Finally, I am a holder and so I am obviously looking for a positive angle, but I have tried to find a major flaw in my calculations and assuming these trials do turn into contracts, Cardia must be prepared - they cannot afford to stuff up or they may well lose the chance of any future dealings with by far the most lucrative of global markets for this application.
The CR is surely targeting a scale-up of the Nanjing facility well ahead of prior anticipated demand...I believe we are on the cusp of a nice re-rate if the market understands the opportunity; if not now, then come June-August, the market will get a major wake-up call if Chinese contracts get announced.
CNN Price at posting:
0.9¢ Sentiment: LT Buy Disclosure: Held
