China Direct to focus efforts on management side of its business

China Direct Inc. (Amex: CDS), a management and consulting company based in the United States, has historically focused more attention on the consulting side of its business. Given favorable traction in the Chinese market and a better financial position, though, company management said it will soon begin focusing its efforts on the management side of its business.

“The consulting business will be the biggest driver of business [currently], but that pendulum is continuing to swing the other way and there’s going to be a point in time, whether it’s late in 2008 or 2009, when that will shift the other way,” said Richard Galterio, executive vice president of China Direct, in an interview at the 20th annual Roth OC Growth Stock Conference this week in Dana Point, Calif.

On the management side of the company’s business, within its portfolio of Chinese companies that operate within the natural resources sector, China Direct’s magnesium companies could be a major driver behind earnings and revenue growth for the company.

“You can’t talk magnesium without talking China Direct,” Galterio said. “The whole magnesium industry could be a catalyst for us. The price of magnesium has increased dramatically in 2007; should that environment continue and magnesium prices continue to increase, it could help us dramatically in 2008.”

From a gross margin perspective, management says Chang Magnesium was a break-even business when China Direct first took over. Now it’s $4 million business.

“If that trend continues into 2009, magnesium will probably be the largest single driver of China Direct’s earnings,” said Galterio. He sees this happening sometime in the next 12 months.

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