"China will account for about 40% of cement consumption in 2010," says Konrad Kuhn. In The Kon-Lin Letter, he looks at China Advanced Construction Materials (Other OTC: CADC).

"China has been referred to as the world's largest construction site, using mor than 50% of the world's cranes. It accounts for half of all building activity in the world.

"The Chinese government's continued efforts to modernize the country's infrastructure is exemplified by such massive projects as the South-North Water Diversion, designed to redirect water to the northern plains from Central and South China. 

"This project alone will account for cement consumption of over 1 million metric tons per year; this project will take an estimated 40 years to be completed.

"Much of China's $586 billion stimulus package is allocated towards infrastructure projects, a key focus of China Advanced Construction.

"The company produces and supplys advanced ready-mix concrete materials for large scale projects including roads, railways, airports, bridges, tunnels, skyscrapers and dams. It is now involved in 6 high-speed railway project.

"The company has become a leading materials provider to some of Bejing's prestigious projects including the new CCTV broadcasting site, the Beijing-Tianjin rail and railway station, the Olympic Park stadium and Swimming Cube and the Beijing Capital Airport.

"As architectural designs have become more complex, the need for CADC's high-end specialty concrete products has been accelerating.

"China's concrete market has maintained an average annual growth rate of 25% over the past 10 years and its 2007. The company's revenues for the first nine months of fiscal 2009 rose 27% to $25.2 million, with earnings of $0.46 per diluted share vs. $0.43 for the same period in the prior year.

"A current backlog in excess of 1.5 million cubic meters of concrete (through June '09) provides visibility to future revenues and earnings. The company maintains a healthy balance sheet with working capital of $8 million and no long term debt.

"Much of China's $586 billion stimulus package is allocated towards infrastructure projects, a key focus of CADC, which is now involved in 6 high-speed railway project. As architectural designs have become more complex, the need for CADC's high-end specialty concrete products has been accelerating.

"The stock recently broke out to the upside and rose to $3.85 before pulling back. We now have a first price objective for the stock of 5 to 5 1/2."