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Dutton Associates Announces Investment Opinion: China Direct Strong Buy Rating In Update Coverage By Dutton Associates

Posted on: Wednesday, 21 November 2007, 12:00 CST

Dutton Associates updates its coverage of China Direct (AMEX:CDS) raising its rating to Strong Buy and a higher $15.52 price target. The 16-page report by Dutton senior analyst Stanley Ng is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals.

China Direct recently announced a very strong set of financial results for the nine months ended September 30, 2007, with total revenue of $116 million and total net income of $7.1 million. In 3Q 2007, China Direct recorded revenue of $44.6 million, up just 10% from $40.5 million in 2Q 2007 but net income surged 31% to $3.0 million from $2.3 million in the corresponding period. The financial results were above our revised estimates in our update report released in August. Looking ahead into 4Q 2007 and the year 2008, we see strong sustained growth at China Direct's consulting and magnesium divisions, which will be the core earnings drivers of the Company in the coming few quarters. China remains a major destination for many international investors and there are still ample opportunities for mergers and acquisitions ahead to help drive the consulting and magnesium divisions' prospects. We have significantly increased our net income forecasts for 2007 from $8.2 million to $10.5 million and those for 2008 from $14.1 million to $19.0 million. Our estimates for revenues for 2007 and 2008 have been raised from $157.9 million to $174.6 million and $294.7 million to $332.2 million respectively. Our diluted EPS estimates are now $0.60 in 2007 and $0.97 in 2008, up strongly from our previous estimates of $0.47 in 2007 and $0.67 in 2008. We have raised our 12-month target price from $12.00 to $15.52, and change our rating on the stock from a Strong Speculative Buy to Strong Buy.

About Dutton Associates

Dutton Associates is one of the largest investment research firms in the U.S. Its 30 senior analysts are primarily CFAs, and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.

The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. Dutton Associates received $35,000 from the Company for 4 Research Reports with coverage commencing on 5/15/2007. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.

Source: Business Wire

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