the company’s automotive business is seeing strong demand due to the the China government’s stimulative efforts in boosting domestic demand for cars by way of lowering purchase taxes and provision of subsidies. These efforts have resulted in a strong 20-25% growth in China’s automotive market in 1H2009, helping them surpass US as the world’s largest automotive market;

Armstrong is gaining traction via higher volumes from existing customers and products in the automotive market as well as a number of new projects and products such as a new back seat project using a new technology for Volkswagen which provides higher profit margins and a new air flow part that is lower cost but better performing, helping them to boost margins;

the political tension between China and France over Tibet which had negatively impacted Armstrong’s automotive business with Dongfeng Peugeot-Citroen Auto in China last year is water under the bridge as management said that volumes have started to ramp up to normal levels again in 2Q ‘09;

the hard disk drive component business which was negatively impacted late last year and early this year due to severe and sudden cut back in orders is expected to benefit from the strong recovery from Seagate and Western Digital as they rebuild inventories in the channels to meet the strong recovery in demand from the PC and notebook sectors, evident from Intel’s recent stronger than expected results and outlook. Besides, Armstrong’s 2 major customers are expected to continue to gain market share from their Japanese and Korean competitors;

at 6-9x forward and prospective PE, valuation is below its historical average of 10-11x, and its 5-6% div yield and 1x price to book should provide downside support.