this stock is absurdly underpriced

Australia's main coal testing and superintendance provider CCI Holdings (CHL) at 31c is priced "absurdly low", and is "grossly undervalued" according to comments made by the board when they recently announced RECORD RESULTS FOR 2006.

The company earned 2.53cps which at the current price puts the stock on a P/E ratio of 12.6 times FY 06 earnings.

However in a boardroom radio interview, Chairman P. Murray points to the fact the company has only had one full year of results free from abnormal writedowns which plagued the 04 and 05 results, and led the shareprice down to the current UNDERPRICED LEVEL. The chairman expects after the Nov AGM to report continued profit growth and show the company's return to profitability as a PERMANENT FEATURE. He expects this will see the company obtain a P/E ratio for CHL in the range of 15-20, bringing it up more closely in line with other stocks in the booming mining services sector.

The company reported EBIT growth of 68%, so EPS for the current 2007 FY should be in the vicinity of 4cps.

This gives a target shareprice range of 60-80c for the 06/07 FY asthe company is re-rated to a more suitable earnings ratio of 15-20.

With the shareprice now at 32c and a 1c dividend due in November, and the expectation for continuing profit and dividend growth to come, and the likelihood of the sharprice more than doubling in the next 12 months there is an awful lot to like about this stock.

Additionally, every Australian coal export port is bringing on capacity upgrades over the course of this current FY. Gladstone is the first to do so. It has just announced a capacity upgrade from 46-67MTPA. The BHP owned Hay point coal terminal brings on its stage 1 expansion next month.

CHL does certification testing for 46% of coal exported from Australia, but the market share it enjoys in QLD is much higher and this is where the bulk of the growth in export tonnages will come from. CCI Holdings bottom line profits are sensitive to the VOLUME of coal exports because they get paid for their certification testing on a PER TONNE BASIS.

With coal volumes now ramping up sharply the company can enjoy higher revenues without incurring higher coasts as the process of certifying coal is AUTOMATED. This will mean higher profit margin and very strong profit growth.

It's no doubt why CPB have made an initial t/o offer of 31c. Of course this offer has been a total flop and the expectation is for higher offers leading up to the November AGM.

It's all good news for the smartmoney invested in CHL. Why not join the party, because it's only just started.