Read My EPS Expectations for SKBI
Press Release
Source: Skystar Bio-Pharmaceutical Company
On Tuesday July 14, 2009, 7:00 am EDT
Skystar Bio-Pharmaceutical Company (NASDAQ:SKBI - News) ("Skystar" or the "Company"), a China-based producer and distributor of veterinary medicines, vaccines, micro-organisms and feed additives, today announced its business expansion plans and growth expectations following the Company's recent common stock listing on the NASDAQ Capital Market.
Skystar's veterinary healthcare and medical care products cover the major segments of the animal farming industry through its four product lines: veterinary medications, micro-organisms, feed additives and veterinary vaccines. The Company has a robust portfolio of over 170 products, as well as over 40 products under development for which the Company expects approval this year. Skystar has a strategic sales and distribution network of more than 1,128 agents and 400 direct customers. Skystar's distribution network covers all 29 farm producing provinces in China. Skystar is currently the only China-based veterinary supply company that is listed on a U.S. stock exchange.
"At this stage in our corporate development, we are pleased to increase our visibility by listing on the NASDAQ Capital Market," Weibing Lu, Skystar's Chairman and Chief Executive Officer, stated. "We are competing in a young and fragmented industry where demand exceeds supply. We hold a significant competitive advantage by offering four product lines that address key segments of the animal farming industry, whereas most of our competitors offer only one or two products. We also strive to deliver higher quality and more effective products, with lower prices and better service than our competitors. We are leveraging our extensive distribution network and solid customer base by adding an estimated 40 products currently under development. In addition, we are seeking to increase our manufacturing capabilities as well as exploring acquisition opportunities in our industry.
"We are in the process of completing our vaccine manufacturing facility, which is expected in the fourth quarter of this year," continued Mr. Lu. "Once completed, this facility is expected to increase our vaccine production capacity by 2,300%, from 250 million units to 6 billion units, with a projected increase in revenue of $14 million with gross margin of $8.4 to $9.8 million in 2010. We also expect to complete our micro-organism and feed additives facility in the fourth quarter of this year, which is anticipated to increase our micro-organism and feed additives production capacity by 48.7%. Once completed, the micro-organism facility is expected to add $2.7 million in revenue with gross margin of $1.9 million in 2010."
For fiscal 2008, Skystar reported $25.6 million in total revenues and net income of $5.6 million, compared with revenues of $15.1 million and net loss of $2.0 million for fiscal year 2007. For fiscal 2003 through 2008, Skystar has achieved a compound annual growth rate of 84.39% for revenues and 84.36% for gross margins.
Skystar Common Stock
Skystar common stock began trading on June 26, 2009 on the NASDAQ Capital Market. A public offering of 1.61 million shares of common stock at $12.98 per share was completed on July 8, 2009 for gross proceeds of $20.89 million.
About Skystar Bio-Pharmaceutical Company
Skystar is a China-based developer and distributor of veterinary healthcare and medical care products. Skystar has four product lines (veterinary medicines, micro-organisms, vaccines and feed additives) and over 170 products, with over 40 additional products in the developmental stage. Skystar has formed strategic sales distribution networks covering 29 provinces throughout China. For additional information, please visit http://www.skystarbio-pharmaceutical.com.
To be added to the Company's email distribution for future news releases, please send your request to skystar@tpg-ir.com.
Forward-looking Statements
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.
Contact:
ContactsThe Piacente Group, Inc. (Investor Relations Counsel)Kristen McNally(212) 481-2050Email ContactSkystar Bio-Pharmaceutical Co., Ltd.Scott CramerDirector - U.S. Representative(407) 645-4433Email Contact
Get super-trades.com Free Email Blog Alerts!
Tuesday, July 14, 2009
Tuesday, June 30, 2009
SKBI at Higher End of Range - Free to Scream
Will it gap down first or gap up? I don't know. Don't know don't care. I would buy a gap down if it even happens (today may have been it). I just have learned that low floats and EPS like this (rare) usually attract strong interest from momentum/value funds/traders. Whether it be tomorrow, Thursday into the holiday weekend, or next week, I think momentum/value funds/traders/investors will come for this stock. Read my analysis below.
SKBI priced known secondary in accordance with NASDAQ listing tonight at $12.98 , 63%higher than the original $8 range! In my opinion this speaks to the strong demand and the fact that trailing 12 months EPS is $3.39 and Trailing P/E is only 5 at a share price of $18 See Link. Read my DD why I think at current run rate this company has potential for $3+ EPS this year and $4+ next year - after this offering. Again, read why I am in this stock (the purpose of this blog is to post my ideas only) and do not chase any stock or buy it because I am in it.
I have been buying and blogging SKBI (was SKBO.OB prior to Friday) since the $11 range See Blog Post. Well as expected the Company moved to the NASDAQ this last Friday and closed at $20 per share. This week I expect them to complete a known share sale as part of the move to NASDAQ and to fund amazing expansion capabilities for their business.
Updated Float Analysis: Skystar has approximately 1.869m shares outstanding pre-secondary. On page 38 of the most recent S-1 Read S-1, it states that between management and two funds there are approximately 1.5m shares held. On page 7 it states management is locked up for six months from the date of the secondary. That would put SKBI at a float of approximately 369k pre-secondary if my calculations are correct. When the 1.6m shares are sold this week, I would guess that not many are going to flip this stock for $5-$10 dollars with this EPS potential. Depending on how many hold these shares, SKBI could have a float range of approximately 369k to 1.769k (Mid-point is 1.1m).
Lastly, according ot this article out last week, SKBI is on the naked short list (have not confirmed) Read Article
Updated EPS Analysis: In 2008 (see the presentation and the S-1 they did $3.07 EPS on the shares outstanding), Skystar had $5.6m of net income that included $1.1m of non-recurring expenses, or $6.7m adjusted net income.
Skystar had approximately 1.869 shares at the beginning of FY2009. They will sell 1.6m shares this week, however those shares will only be outstanding approximately six months of FY2009. So fully diluted weighted average shares for FY2009 should be approximately 2.769 (1.869 + half of 1.6m).
If I divide the FY 2008 adjusted net income by the new post-IPO share count of approximately 2.569m, I get EPS of $2.51. Skystar would only have to grow net income by approximately 20% in 2009 to have EPS of $3. However, in the first quarter of 2009, net income was up 72% YOY! It is easy for me to see how this Company could potentially do over $3 EPS for FY2009. Lastly, as discussed in my original blog post, in FY2010 expansion sales give the potential for approximately another $1 EPS. So I also see that potential for this Company to do over $4 EPS in FY2010.
The expected price range of the share sale this week is $9-$11 ( I would guess the high end and personally question if they could get more)? The stock could either pullback creating what I would consider a nice opportunity to buy or gap up as it is already on the NASDAQ now.
One thing is for certain, considering the P/E of approximately 24 that recent IPO DGW is trading at as of last week, combined with my calculations of $3-$4 EPS potential and the ultra low float of SKBI, it is easy for me to be very excited of what SKBI potentially could do.
I am long SKBI with an average of approximately the $12 range.
SKBI priced known secondary in accordance with NASDAQ listing tonight at $12.98 , 63%higher than the original $8 range! In my opinion this speaks to the strong demand and the fact that trailing 12 months EPS is $3.39 and Trailing P/E is only 5 at a share price of $18 See Link. Read my DD why I think at current run rate this company has potential for $3+ EPS this year and $4+ next year - after this offering. Again, read why I am in this stock (the purpose of this blog is to post my ideas only) and do not chase any stock or buy it because I am in it.
I have been buying and blogging SKBI (was SKBO.OB prior to Friday) since the $11 range See Blog Post. Well as expected the Company moved to the NASDAQ this last Friday and closed at $20 per share. This week I expect them to complete a known share sale as part of the move to NASDAQ and to fund amazing expansion capabilities for their business.
Updated Float Analysis: Skystar has approximately 1.869m shares outstanding pre-secondary. On page 38 of the most recent S-1 Read S-1, it states that between management and two funds there are approximately 1.5m shares held. On page 7 it states management is locked up for six months from the date of the secondary. That would put SKBI at a float of approximately 369k pre-secondary if my calculations are correct. When the 1.6m shares are sold this week, I would guess that not many are going to flip this stock for $5-$10 dollars with this EPS potential. Depending on how many hold these shares, SKBI could have a float range of approximately 369k to 1.769k (Mid-point is 1.1m).
Lastly, according ot this article out last week, SKBI is on the naked short list (have not confirmed) Read Article
Updated EPS Analysis: In 2008 (see the presentation and the S-1 they did $3.07 EPS on the shares outstanding), Skystar had $5.6m of net income that included $1.1m of non-recurring expenses, or $6.7m adjusted net income.
Skystar had approximately 1.869 shares at the beginning of FY2009. They will sell 1.6m shares this week, however those shares will only be outstanding approximately six months of FY2009. So fully diluted weighted average shares for FY2009 should be approximately 2.769 (1.869 + half of 1.6m).
If I divide the FY 2008 adjusted net income by the new post-IPO share count of approximately 2.569m, I get EPS of $2.51. Skystar would only have to grow net income by approximately 20% in 2009 to have EPS of $3. However, in the first quarter of 2009, net income was up 72% YOY! It is easy for me to see how this Company could potentially do over $3 EPS for FY2009. Lastly, as discussed in my original blog post, in FY2010 expansion sales give the potential for approximately another $1 EPS. So I also see that potential for this Company to do over $4 EPS in FY2010.
The expected price range of the share sale this week is $9-$11 ( I would guess the high end and personally question if they could get more)? The stock could either pullback creating what I would consider a nice opportunity to buy or gap up as it is already on the NASDAQ now.
One thing is for certain, considering the P/E of approximately 24 that recent IPO DGW is trading at as of last week, combined with my calculations of $3-$4 EPS potential and the ultra low float of SKBI, it is easy for me to be very excited of what SKBI potentially could do.
I am long SKBI with an average of approximately the $12 range.
Sunday, June 28, 2009
Skystar on the NASDAQ with Huge EPS and Low Float
I have been buying and blogging SKBI (was SKBO.OB prior to Friday) since the $11 range See Blog Post. Well as expected the Company moved to the NASDAQ this last Friday and closed at $20 per share. This week I expect them to complete a known share sale as part of the move to NASDAQ and to fund amazing expansion capabilities for their business.
Updated Float Analysis: Skystar has approximately 1.869m shares outstanding pre-secondary. On page 38 of the most recent S-1 Read S-1, it states that between management and two funds there are approximately 1.5m shares held. On page 7 it states management is locked up for six months from the date of the secondary. That would put SKBI at a float of approximately 369k pre-secondary if my calculations are correct. When the 1.4m shares are sold this week, I would guess that not many are going to flip this stock for $5-$10 dollars with this EPS potential. Depending on how many hold these shares, SKBI could have a float range of approximately 369k to 1.769k (Mid-point is 1.1m).
Lastly, according ot this article out last week, SKBI is on the naked short list (have not confirmed) Read Article
Updated EPS Analysis: In 2008 (see the presentation and the S-1 they did $3.07 EPS on the shares outstanding), Skystar had $5.6m of net income that included $1.1m of non-recurring expenses, or $6.7m adjusted net income.
Skystar had approximately 1.869 shares at the beginning of FY2009. They will sell 1.4m shares this week, however those shares will only be outstanding approximately six months of FY2009. So fully diluted weighted average shares for FY2009 should be approximately 2.569 (1.869 + half of 1.4m).
If I divide the FY 2008 adjusted net income by the new post-IPO share count of approximately 2.569m, I get EPS of $2.61. Skystar would only have to grow net income by approximately 15% in 2009 to have EPS of $3. However, in the first quarter of 2009, net income was up 72% YOY! It is easy for me to see how this Company could potentially do over $3 EPS for FY2009. Lastly, as discussed in my original blog post, in FY2010 expansion sales give the potential for approximately another $1 EPS. So I also see that potential for this Company to do over $4 EPS in FY2010.
The expected price range of the share sale this week is $9-$11 ( I would guess the high end and personally question if they could get more)? The stock could either pullback creating what I would consider a nice opportunity to buy or gap up as it is already on the NASDAQ now.
One thing is for certain, considering the P/E of approximately 24 that recent IPO DGW is trading at as of last week, combined with my calculations of $3-$4 EPS potential and the ultra low float of SKBI, it is easy for me to be very excited of what SKBI potentially could do.
I am long SKBI with an average of approximately the $12 range.
Updated Float Analysis: Skystar has approximately 1.869m shares outstanding pre-secondary. On page 38 of the most recent S-1 Read S-1, it states that between management and two funds there are approximately 1.5m shares held. On page 7 it states management is locked up for six months from the date of the secondary. That would put SKBI at a float of approximately 369k pre-secondary if my calculations are correct. When the 1.4m shares are sold this week, I would guess that not many are going to flip this stock for $5-$10 dollars with this EPS potential. Depending on how many hold these shares, SKBI could have a float range of approximately 369k to 1.769k (Mid-point is 1.1m).
Lastly, according ot this article out last week, SKBI is on the naked short list (have not confirmed) Read Article
Updated EPS Analysis: In 2008 (see the presentation and the S-1 they did $3.07 EPS on the shares outstanding), Skystar had $5.6m of net income that included $1.1m of non-recurring expenses, or $6.7m adjusted net income.
Skystar had approximately 1.869 shares at the beginning of FY2009. They will sell 1.4m shares this week, however those shares will only be outstanding approximately six months of FY2009. So fully diluted weighted average shares for FY2009 should be approximately 2.569 (1.869 + half of 1.4m).
If I divide the FY 2008 adjusted net income by the new post-IPO share count of approximately 2.569m, I get EPS of $2.61. Skystar would only have to grow net income by approximately 15% in 2009 to have EPS of $3. However, in the first quarter of 2009, net income was up 72% YOY! It is easy for me to see how this Company could potentially do over $3 EPS for FY2009. Lastly, as discussed in my original blog post, in FY2010 expansion sales give the potential for approximately another $1 EPS. So I also see that potential for this Company to do over $4 EPS in FY2010.
The expected price range of the share sale this week is $9-$11 ( I would guess the high end and personally question if they could get more)? The stock could either pullback creating what I would consider a nice opportunity to buy or gap up as it is already on the NASDAQ now.
One thing is for certain, considering the P/E of approximately 24 that recent IPO DGW is trading at as of last week, combined with my calculations of $3-$4 EPS potential and the ultra low float of SKBI, it is easy for me to be very excited of what SKBI potentially could do.
I am long SKBI with an average of approximately the $12 range.
Friday, June 19, 2009
Review of 3 Chinese IPO's- Week of June 22nd
1) DGW - Duoyuan Global Water Inc. - NYSE Listing
What They Do :
We are a leading China-based domestic water treatment equipment supplier. Our product offerings focus on addressing the key steps in the water treatment process, such as filtration, water softening, water-sediment separation, aeration, disinfection and reverse osmosis. Founded in 1992, we offer a comprehensive set of more than 80 complementary products across the following three product categories:
• Circulating Water Treatment Equipment
• Water Purification Equipment
• Wastewater Treatment Equipment
Links :
F-1 Filing
Road Show Presentation
The Numbers :
- Float will be 5m. Outstanding will be approximately 21m. (Each ADS represents 2 ordinary shares. There will be approximately 42m ordinary shares outstanding after this deal).
- Revenue growth 40% 2008 vs 2007 and 39% Q109 vs Q109. Net Income growth 63% 2008 vs 2007 and 92% Q109 vs Q109.
- They did 19.5m of Net Income in FY 2008.
- Expected Pricing $13-$15
super-trades summary : This is perhaps one of the sexiest sectors that exists. Water is a scare resource, especially in China. China is predicted to lead the world out of this recession. When I take the 19.5m of net income divided by the post-IPO ADS shares outstanding of 21m I get .93 trailing EPS with the company growing revenue and net income in Q109 by 39% and 92%, respectively. At $15 pricing that is about a 16 trailing P/E. Mix in a 5m float and I expect this IPO to generate strong interest. Only question is how high does it gap up. Under $20 I will try some shares.
Sympathy plays :
CLWT - Small cap play on this IPO similar business. Due to release annual report in June. I am sure those that like lower priced stocks come for this in a sympathy trade.
RINO.OB - Similar business with much better EPS and priced at what I consider to be ridiculously cheap. (Currently P/E of 4-5) Read why I think RINO.OB is a much better play than DGW. Applying the 16 P/E on RINO.OB recent EPS run rate would make it a $32 stock. Read Blog Post
2) CPC - Chemspec International - NYSE Listing
What They Do :
We are a leading China-based contract manufacturer of highly engineered specialty chemicals. In particular, we are the largest manufacturer of fluorinated specialty chemicals in China based on sales with a share of approximately 21% and 25% of the Chinese market in 2007 and 2008, respectively, according to a commissioned report prepared by Frost & Sullivan. We manufacture specialty chemicals, which are typically highly engineered chemicals used as building blocks in the manufacture of more advanced chemicals or to enhance the performance of the end products manufactured by our end users in various industries including electronics, pharmaceuticals and agrochemicals.
Links :
F-1 Filing
Road Show Presentation
The Numbers :
- Float will be 8.1m. Outstanding will be approximately 36m. (Each ADS represents 60 ordinary shares. There will be approximately 2.1B ordinary shares outstanding after this deal).
- Revenue growth 60% 2008 vs 2007 and 23% Q109 vs Q109. Net Income growth 34% 2008 vs 2007 and -44% Q109 vs Q109.
- They did 45.9m of Net Income in FY 2008.
- Expected Pricing $7-$9
super-trades summary : China is predicted to lead the world out of this recession. When I take the 45.9m of net income divided by the post-IPO ADS shares outstanding of 36m I get 1.28 trailing EPS. The company grew revenue by 23% in Q109, yet net income declined by 44% due to lower margins and increased R&D expenses. They also mentioned a slowdown due to the global recession that they gradually see recovering. I am sure that affected the pricing range. At $9 pricing that is about a 7 trailing P/E. I need to see how well this is received, but I think a 10 P/E range would not be unreasonable for this Company. It could get a higher one if they convince investors that net income growth will continue. Would try some around the pricing range or 10% above but will not chase unless I sense it is getting interest.
Sympathy plays :
CPC may not have enough interest to push some sympathy plays. However if this IPO is well received, then NOEC and SDTH are two small cap sympathy trades to watch.
3) SKBO.OB - Skystar Bio-Pharmaceutical Company - Nasdaq Listing
What They Do :
Skystar is a China-based developer and distributor of veterinary healthcare and medical care products. Skystar has four product lines (veterinary medicines, microorganisms, vaccines and feed additives) and over 170 products, with over 40 additional products in the developmental stage. Skystar has formed strategic sales distribution networks covering 29 provinces throughout China
Links :
S-1 Filing
Company Presentation
The Numbers :
- Float will be approximately 1.5m. Outstanding will be approximately 3m. Company currently trades on the OTCBB and will do an IPO on the Nasdaq with the placement of 1m shares.
- Revenue growth 70% 2008 vs 2007 and 42% Q109 vs Q109. Net Income growth 63% 2008 vs 2007 and 73% Q109 vs Q109.
Mind Boggling Numbers - In the S-1 filing, Skystar reported $3.07 EPS for FY 2008 and $0.57 EPS for First Quarter 2009. Revenue was up 70% in FY 2008 vs. FY 2007. Revenue was up 42% and Net Income was up 73% in the First Quarter of 2009.
More Mind Boggling Growth - From the S-1 "Manufacturing Facilities. We intend to complete a vaccine manufacturing facility with approximately $2.5 million from the net proceeds of the offering. Under our current plans, this facility is expected to be completed by the fourth quarter of 2009 and obtain GMP certification in late 2009. Once completed, we believe that this facility will increase production capacity by 6 billion units, or 2,300.0% from 250 million units, with a value of $14.0 million in projected revenue at a gross margin rate of 60-70%.
Additionally, we are planning to construct a new production facility for micro-organism and feed additives with approximately $1.5 million from the net proceeds of the offering. Under our current planning, the annual production capacity of this production facility will be approximately 4,000 metric tonnes, an increase of 48.7% from our current capacity of 8,200 metric tonnes. We anticipate construction to complete in the fourth quarter of 2009."
By my calculations, with the addition of these two facilities the Company will have the potential to add up to $14m additional revenue at 60-70% gross margin rate from vaccines and approximately $3m in feed additives (facility increases capacity by 49% and they did $5.9m in this category in 2008 at a 65% blended gross profit margin - see Presentation). If they can produce and sell this extra capacity I calculate that as an additional $10m in gross profit. In Q1 2009 the Net Income margin was around 28%. So this extra capacity (if produced and sold successfully and at these same margins) could add another $1 EPS in 2010 by my calculations.
In 2008 (see the presentation and the S-1 they did $3.07 EPS on the shares outstanding), Skystar had $5.6m of net income that included $1.1m of non-recurring expenses, or $6.7m adjusted net income. If I divide that by the new post-IPO share count of approximately 2.9m, I get EPS of $2.31. Now, in the first quarter of 2009, net income was up 72% YOY. If the Company hypothetically can even grow net income by 30% for all of 2009 over 2008, that $2.31 would go to $3.00 EPS with the new shares offered.
In 2010 if they have these new facilities in place and produce and sell with the above assumptions from the S-1 that would calculate to another $1 EPS. Going by my calculations, I see a scenario where if all falls into place perfectly this company could do $3+ EPS in 2009 and $4+ in 2010. (Not to mention potential growth from the many products they have awaiting approval) You can use your imagination with a 10-20 P/E ratio. Again, this is what I see as potential when I look at their numbers and information, not a prediction or guarantee.
Lastly, according to the Company website, they are also working on an Avian flu vaccine for the birds themselves. "While larger international companies are focusing on vaccines to prevent people from catching avian flu, Skystar's focus is on vaccines to be administered to farm chickens and other poultry to prevent them from catching H5N1 Avian Influenza. This type of vaccine is well within Skystar's current scope and expertise and could potentially prevent an epidemic/pandemic by controlling an outbreak at the source (the poultry)." See Website
super-trades summary : This is perhaps one of the most exciting scenarios I have seen in sometime. If the Company can do $3+ EPS in 2009 then this is pricing at a P/E of 3! If DGW ends up with a P/E of 20+, applying that to $3 EPS would be a stock price of $60. With this float and amazing EPS and low valuation, if the momentum/valuation crowd shows interest, I can see this stock being one of those rare stocks that runs to the $30-$50 range like EFUT did in 2006. Read Blog Post
Sympathy plays :
Any low float China stocks with great EPS and low valuations.
I am long SKBO.OB. This blog is my opinion and not investment advice or a prediction of future prices.
What They Do :
We are a leading China-based domestic water treatment equipment supplier. Our product offerings focus on addressing the key steps in the water treatment process, such as filtration, water softening, water-sediment separation, aeration, disinfection and reverse osmosis. Founded in 1992, we offer a comprehensive set of more than 80 complementary products across the following three product categories:
• Circulating Water Treatment Equipment
• Water Purification Equipment
• Wastewater Treatment Equipment
Links :
F-1 Filing
Road Show Presentation
The Numbers :
- Float will be 5m. Outstanding will be approximately 21m. (Each ADS represents 2 ordinary shares. There will be approximately 42m ordinary shares outstanding after this deal).
- Revenue growth 40% 2008 vs 2007 and 39% Q109 vs Q109. Net Income growth 63% 2008 vs 2007 and 92% Q109 vs Q109.
- They did 19.5m of Net Income in FY 2008.
- Expected Pricing $13-$15
super-trades summary : This is perhaps one of the sexiest sectors that exists. Water is a scare resource, especially in China. China is predicted to lead the world out of this recession. When I take the 19.5m of net income divided by the post-IPO ADS shares outstanding of 21m I get .93 trailing EPS with the company growing revenue and net income in Q109 by 39% and 92%, respectively. At $15 pricing that is about a 16 trailing P/E. Mix in a 5m float and I expect this IPO to generate strong interest. Only question is how high does it gap up. Under $20 I will try some shares.
Sympathy plays :
CLWT - Small cap play on this IPO similar business. Due to release annual report in June. I am sure those that like lower priced stocks come for this in a sympathy trade.
RINO.OB - Similar business with much better EPS and priced at what I consider to be ridiculously cheap. (Currently P/E of 4-5) Read why I think RINO.OB is a much better play than DGW. Applying the 16 P/E on RINO.OB recent EPS run rate would make it a $32 stock. Read Blog Post
2) CPC - Chemspec International - NYSE Listing
What They Do :
We are a leading China-based contract manufacturer of highly engineered specialty chemicals. In particular, we are the largest manufacturer of fluorinated specialty chemicals in China based on sales with a share of approximately 21% and 25% of the Chinese market in 2007 and 2008, respectively, according to a commissioned report prepared by Frost & Sullivan. We manufacture specialty chemicals, which are typically highly engineered chemicals used as building blocks in the manufacture of more advanced chemicals or to enhance the performance of the end products manufactured by our end users in various industries including electronics, pharmaceuticals and agrochemicals.
Links :
F-1 Filing
Road Show Presentation
The Numbers :
- Float will be 8.1m. Outstanding will be approximately 36m. (Each ADS represents 60 ordinary shares. There will be approximately 2.1B ordinary shares outstanding after this deal).
- Revenue growth 60% 2008 vs 2007 and 23% Q109 vs Q109. Net Income growth 34% 2008 vs 2007 and -44% Q109 vs Q109.
- They did 45.9m of Net Income in FY 2008.
- Expected Pricing $7-$9
super-trades summary : China is predicted to lead the world out of this recession. When I take the 45.9m of net income divided by the post-IPO ADS shares outstanding of 36m I get 1.28 trailing EPS. The company grew revenue by 23% in Q109, yet net income declined by 44% due to lower margins and increased R&D expenses. They also mentioned a slowdown due to the global recession that they gradually see recovering. I am sure that affected the pricing range. At $9 pricing that is about a 7 trailing P/E. I need to see how well this is received, but I think a 10 P/E range would not be unreasonable for this Company. It could get a higher one if they convince investors that net income growth will continue. Would try some around the pricing range or 10% above but will not chase unless I sense it is getting interest.
Sympathy plays :
CPC may not have enough interest to push some sympathy plays. However if this IPO is well received, then NOEC and SDTH are two small cap sympathy trades to watch.
3) SKBO.OB - Skystar Bio-Pharmaceutical Company - Nasdaq Listing
What They Do :
Skystar is a China-based developer and distributor of veterinary healthcare and medical care products. Skystar has four product lines (veterinary medicines, microorganisms, vaccines and feed additives) and over 170 products, with over 40 additional products in the developmental stage. Skystar has formed strategic sales distribution networks covering 29 provinces throughout China
Links :
S-1 Filing
Company Presentation
The Numbers :
- Float will be approximately 1.5m. Outstanding will be approximately 3m. Company currently trades on the OTCBB and will do an IPO on the Nasdaq with the placement of 1m shares.
- Revenue growth 70% 2008 vs 2007 and 42% Q109 vs Q109. Net Income growth 63% 2008 vs 2007 and 73% Q109 vs Q109.
Mind Boggling Numbers - In the S-1 filing, Skystar reported $3.07 EPS for FY 2008 and $0.57 EPS for First Quarter 2009. Revenue was up 70% in FY 2008 vs. FY 2007. Revenue was up 42% and Net Income was up 73% in the First Quarter of 2009.
More Mind Boggling Growth - From the S-1 "Manufacturing Facilities. We intend to complete a vaccine manufacturing facility with approximately $2.5 million from the net proceeds of the offering. Under our current plans, this facility is expected to be completed by the fourth quarter of 2009 and obtain GMP certification in late 2009. Once completed, we believe that this facility will increase production capacity by 6 billion units, or 2,300.0% from 250 million units, with a value of $14.0 million in projected revenue at a gross margin rate of 60-70%.
Additionally, we are planning to construct a new production facility for micro-organism and feed additives with approximately $1.5 million from the net proceeds of the offering. Under our current planning, the annual production capacity of this production facility will be approximately 4,000 metric tonnes, an increase of 48.7% from our current capacity of 8,200 metric tonnes. We anticipate construction to complete in the fourth quarter of 2009."
By my calculations, with the addition of these two facilities the Company will have the potential to add up to $14m additional revenue at 60-70% gross margin rate from vaccines and approximately $3m in feed additives (facility increases capacity by 49% and they did $5.9m in this category in 2008 at a 65% blended gross profit margin - see Presentation). If they can produce and sell this extra capacity I calculate that as an additional $10m in gross profit. In Q1 2009 the Net Income margin was around 28%. So this extra capacity (if produced and sold successfully and at these same margins) could add another $1 EPS in 2010 by my calculations.
In 2008 (see the presentation and the S-1 they did $3.07 EPS on the shares outstanding), Skystar had $5.6m of net income that included $1.1m of non-recurring expenses, or $6.7m adjusted net income. If I divide that by the new post-IPO share count of approximately 2.9m, I get EPS of $2.31. Now, in the first quarter of 2009, net income was up 72% YOY. If the Company hypothetically can even grow net income by 30% for all of 2009 over 2008, that $2.31 would go to $3.00 EPS with the new shares offered.
In 2010 if they have these new facilities in place and produce and sell with the above assumptions from the S-1 that would calculate to another $1 EPS. Going by my calculations, I see a scenario where if all falls into place perfectly this company could do $3+ EPS in 2009 and $4+ in 2010. (Not to mention potential growth from the many products they have awaiting approval) You can use your imagination with a 10-20 P/E ratio. Again, this is what I see as potential when I look at their numbers and information, not a prediction or guarantee.
Lastly, according to the Company website, they are also working on an Avian flu vaccine for the birds themselves. "While larger international companies are focusing on vaccines to prevent people from catching avian flu, Skystar's focus is on vaccines to be administered to farm chickens and other poultry to prevent them from catching H5N1 Avian Influenza. This type of vaccine is well within Skystar's current scope and expertise and could potentially prevent an epidemic/pandemic by controlling an outbreak at the source (the poultry)." See Website
super-trades summary : This is perhaps one of the most exciting scenarios I have seen in sometime. If the Company can do $3+ EPS in 2009 then this is pricing at a P/E of 3! If DGW ends up with a P/E of 20+, applying that to $3 EPS would be a stock price of $60. With this float and amazing EPS and low valuation, if the momentum/valuation crowd shows interest, I can see this stock being one of those rare stocks that runs to the $30-$50 range like EFUT did in 2006. Read Blog Post
Sympathy plays :
Any low float China stocks with great EPS and low valuations.
I am long SKBO.OB. This blog is my opinion and not investment advice or a prediction of future prices.
Tuesday, June 16, 2009
RINO.OB - Amazing Growth - Compare to Coming DGW IPO
There is an exciting IPO scheduled to trade the week of June 22nd. Duoyuan Global Water (DGW) They are a provider of water treatment equipment in China. China has a water scarcity issue so this is one of the hottest sector to me. Water and Air industry in China. By my calculations DGW would have done approximately $1 EPS with the post-IPO share count for 2008. The IPO is expected to price at $13-$15 for a 13-15 p/e and I would guess this gaps open much higher. The problem with hot IPO's in many cases is they gap so high that the only people that make money are the people who were able to participate in the IPO shares. I think I found a much better stock.
RINO.OB - RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited and Dalian Innomind Environment Engineering Co., Ltd., its contractually-controlled affiliate, Dalian RINO Environmental Engineering Science and Technology Co., Ltd. ("Dalian Rino") and Dalian Rino's wholly-owned subsidiaries, Dalian Rino Environmental Engineering Project Design Co., Ltd. and Dalian Rino Environmental Construction & Installation Project Co., Ltd., is a leading provider of environmental protection equipment for the iron and steel industry in China. Specifically, RINO designs, manufactures, installs and services proprietary and patented wastewater treatment, flue gas desulphurization equipment, and high temperature anti-oxidation systems, which are all designed to reduce either industrial pollution and/or improve energy utilization.
This Company has amazing numbers:
Fiscal Year 2008 Sales Increase 119.8% to $139.3 million, **Adjusted Net Income Increases 119.9% to $39.0 million with EPS of $1.56 -- Reaffirms 2009 Guidance: Revenues expected to exceed $176.5 million Read 2008 Press Release
Q1 Net Sales Increased 87.0% to $35.6 Million while Net Income Increased 148.5% to $12.5 Million with EPS of $.50 vs. $.20 Read Q1 Press Release
"The first quarter represents a very strong start in 2009 as we made significant improvements in all of our key financial metrics," stated Mr. Zou Dejun, President and CEO of RINO International, "Our business continues to be driven by a number of fundamental factors all centered around China's desire to ensure that iron and steel manufacturers properly protect the environment, specifically the water and air. By collecting a significant portion of our receivables we ended the quarter with $47.9 million cash and cash equivalents on our balance sheet. This generated significant cash flow from operations, and puts us in an excellent position to capitalize on our growth opportunities for the balance of 2009. We ended the quarter with a backlog of approximately $61.8 million, which represents 8 desulphurization, 5 wastewater treatment and 1 anti-oxidation projects which will be implemented during the next two quarters. We are very confident that we will continue to provide incremental and robust top-line and bottom line growth for our Company".
There is one analyst that has estimates for RINO on yahoo that expect over $2 EPS. It does not look like they were updated for the recent Q1 results. See Estimates
If DGW is going to trade at a P/E of 20 or higher, it is easy to see why a Company like RINO seems extremely undervalued to me at current prices. If RINO is currently near or above a $2 EPS run rate with impressive growth and backlog, then a P/E of 13-15 like DGW is pricing at would be a $26-$30 stock.
Lastly, the Company stated in the 2008 year end conference call that they have applied to list on the Nasdaq. Listen to Conference Call
The float is 7.1m and outstanding shares are 25m according to Bloomberg Bloomberg
I am long RINO.OB
RINO.OB - RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited and Dalian Innomind Environment Engineering Co., Ltd., its contractually-controlled affiliate, Dalian RINO Environmental Engineering Science and Technology Co., Ltd. ("Dalian Rino") and Dalian Rino's wholly-owned subsidiaries, Dalian Rino Environmental Engineering Project Design Co., Ltd. and Dalian Rino Environmental Construction & Installation Project Co., Ltd., is a leading provider of environmental protection equipment for the iron and steel industry in China. Specifically, RINO designs, manufactures, installs and services proprietary and patented wastewater treatment, flue gas desulphurization equipment, and high temperature anti-oxidation systems, which are all designed to reduce either industrial pollution and/or improve energy utilization.
This Company has amazing numbers:
Fiscal Year 2008 Sales Increase 119.8% to $139.3 million, **Adjusted Net Income Increases 119.9% to $39.0 million with EPS of $1.56 -- Reaffirms 2009 Guidance: Revenues expected to exceed $176.5 million Read 2008 Press Release
Q1 Net Sales Increased 87.0% to $35.6 Million while Net Income Increased 148.5% to $12.5 Million with EPS of $.50 vs. $.20 Read Q1 Press Release
"The first quarter represents a very strong start in 2009 as we made significant improvements in all of our key financial metrics," stated Mr. Zou Dejun, President and CEO of RINO International, "Our business continues to be driven by a number of fundamental factors all centered around China's desire to ensure that iron and steel manufacturers properly protect the environment, specifically the water and air. By collecting a significant portion of our receivables we ended the quarter with $47.9 million cash and cash equivalents on our balance sheet. This generated significant cash flow from operations, and puts us in an excellent position to capitalize on our growth opportunities for the balance of 2009. We ended the quarter with a backlog of approximately $61.8 million, which represents 8 desulphurization, 5 wastewater treatment and 1 anti-oxidation projects which will be implemented during the next two quarters. We are very confident that we will continue to provide incremental and robust top-line and bottom line growth for our Company".
There is one analyst that has estimates for RINO on yahoo that expect over $2 EPS. It does not look like they were updated for the recent Q1 results. See Estimates
If DGW is going to trade at a P/E of 20 or higher, it is easy to see why a Company like RINO seems extremely undervalued to me at current prices. If RINO is currently near or above a $2 EPS run rate with impressive growth and backlog, then a P/E of 13-15 like DGW is pricing at would be a $26-$30 stock.
Lastly, the Company stated in the 2008 year end conference call that they have applied to list on the Nasdaq. Listen to Conference Call
The float is 7.1m and outstanding shares are 25m according to Bloomberg Bloomberg
I am long RINO.OB
Bought some lottery calls on VRX
Bought some June calls that expire on Friday on VRX. $25 strike at $0.10.
In case stock gets play on this news today. This is an all or nothing trade for me. Small speculative position.
Common skin cancer drug smoothes wrinkles -study
Mon Jun 15, 2009 4:00pm EDT
By Julie Steenhuysen
CHICAGO, June 15 (Reuters) - A cream used to treat the early signs of skin cancer may erase wrinkles and leave behind younger-looking skin, U.S. researchers said on Monday.
They said Valeant Pharmaceuticals' (VRX.N) cream Efudex, which is used to treat actinic keratoses, a precancerous form of squamous cell carcinoma, improved the appearance of skin, smoothing out rough spots and wrinkles, improving skin color, and erasing brown spots.
Sachs said the cream appears to be causing a wound healing response that leads to an increase in collagen production, which is improving the appearance of wrinkles.
Read Article
In case stock gets play on this news today. This is an all or nothing trade for me. Small speculative position.
Common skin cancer drug smoothes wrinkles -study
Mon Jun 15, 2009 4:00pm EDT
By Julie Steenhuysen
CHICAGO, June 15 (Reuters) - A cream used to treat the early signs of skin cancer may erase wrinkles and leave behind younger-looking skin, U.S. researchers said on Monday.
They said Valeant Pharmaceuticals' (VRX.N) cream Efudex, which is used to treat actinic keratoses, a precancerous form of squamous cell carcinoma, improved the appearance of skin, smoothing out rough spots and wrinkles, improving skin color, and erasing brown spots.
Sachs said the cream appears to be causing a wound healing response that leads to an increase in collagen production, which is improving the appearance of wrinkles.
Read Article
AIM Great News the Day After Great Earnings
Aerosonic Chosen as Key Supplier to AleniaSIA for the AleniaAermacchi M-346 Trainer Aircraft
On Tuesday June 16, 2009, 8:00 am EDT
CLEARWATER, Fla.--(BUSINESS WIRE)--Aerosonic Corporation (NYSE Amex: AIM), a leading supplier of precision flight instruments and systems for commercial, business and military aircraft, announced today that it has signed a Long Term Supply Agreement (“LTSA”) and received an initial production order from AleniaSIA to supply its Integrated Multi-Function Probe (“IMFP”) and related equipment for the production of AleniaAermacchi M-346 aircraft FBW Flight Control System. The deliveries to AleniaSIA will begin in March of 2010. Based on current forecasts, Aerosonic expects this program to generate up to $10 million in revenue over the next 4 years
Read Article
AIM - super-trades.com started off the week with a buy/alert on AIM at $4.20 today Read Blog Post. It hit $6.45 for a one day gain of 54%! This situation reminds me eerily of my recent stock pick MRM Read Blog Post, which I called at $6.40 on a similar earnings and EPS turnaround and hit a high of $13.38, or 109% from the original alert. While AIM may pullback, I think it has much higher to go based on what appears to be a potential EPS run rate of well over $1+. Now with a new contract I like it even further for a continued move. I am long AIM from $4.20.
On Tuesday June 16, 2009, 8:00 am EDT
CLEARWATER, Fla.--(BUSINESS WIRE)--Aerosonic Corporation (NYSE Amex: AIM), a leading supplier of precision flight instruments and systems for commercial, business and military aircraft, announced today that it has signed a Long Term Supply Agreement (“LTSA”) and received an initial production order from AleniaSIA to supply its Integrated Multi-Function Probe (“IMFP”) and related equipment for the production of AleniaAermacchi M-346 aircraft FBW Flight Control System. The deliveries to AleniaSIA will begin in March of 2010. Based on current forecasts, Aerosonic expects this program to generate up to $10 million in revenue over the next 4 years
Read Article
AIM - super-trades.com started off the week with a buy/alert on AIM at $4.20 today Read Blog Post. It hit $6.45 for a one day gain of 54%! This situation reminds me eerily of my recent stock pick MRM Read Blog Post, which I called at $6.40 on a similar earnings and EPS turnaround and hit a high of $13.38, or 109% from the original alert. While AIM may pullback, I think it has much higher to go based on what appears to be a potential EPS run rate of well over $1+. Now with a new contract I like it even further for a continued move. I am long AIM from $4.20.
Subscribe to:
Posts (Atom)
DISCLAIMER
