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Florida-based research firm RedChip Visibility, a division of RedChip Companies, Inc., has indicated that the core business of bunker supplier Andatee China Marine Fuel Services (ACMF) is 'not being accurately reflected' after announcing that it has initiated coverage on the company.

RedChip Visibility, a company which focuses on “Discovering Tomorrow’s Blue Chips Today”™ , said that the Chinese bunker firm offers a positive risk-reward to potential long term investors, with limited downside.

Aditya Khandekar, CFA, RedChip Research Analyst, commented: "We are initiating coverage of ACMF with a strong buy rating and a 12-month price target of $9.60. Trading at a significant discount to its peer valuations, we estimate 2010 cash per share of $2.85 which represents two-thirds of the share value, which means that the core business is not being accurately reflected. This in our view presents a favourable risk- reward equation to long term investors with a potential of significant upside with limited downside."

Andatee is a China-based premium blended marine fuel service provider engaged in the business of production, storage, distribution and sales of marine fuel to cargo and fishing vessels in Northern China.

Khandekar commented: "ACMF caters to the underserved customer segment of fishing boats and marine cargo vessels, supplying them quality marine fuel blends. This market in China is highly fragmented, with no perceptible leader and characterized by lack of standard products, poor service and quality issues. With net proceeds of over $20 million from its IPO in January, ACMF is well positioned to execute a roll-up of weaker players owning distribution facilities in new markets.

"The company has built its mid- term growth strategy on the platform of a 'One Stop Marine Service Depot' where the Company directly sells the marine fuel oil to the end-customer and provides the convenience of purchasing other value added services and products at a single distribution point. This would help de-risk its business model by having diverse sources of revenues and can reduce seasonal variations in revenues while improving margins and increasing barriers to entry for potential competitors."