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Knowledge is King

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Knowledge is King

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Tuesday, 01/15/2008 9:04:06 AM

Tuesday, January 15, 2008 9:04:06 AM

Post# of 785
nsomniyak challenge...part 1


YaSheng Group (YHGG-1.27), a diversified Chinese industrial conglomerate incorporated in Redwood City, California, operates in hi-tech agriculture, salt chemistry and biological technology businesses. The company's operating categories include: chemical engineering, agricultural production, biotech, pharmaceuticals, textile products, printing and dyeing, commercial trading, beverages and inorganic salt manufacturing. With total assets of approximately $1.5 billion USD and over 15,000 employees, YaSheng Group has 155,097,355 shares issued and outstanding as of December 1, 2007.

Twelve-month trailing EPS is about $.41, giving YHGG a rock-bottom P/E of 3. Revenues-per-share is over $4. Book value is $7.50 (really) and is probably understated -- here's why. According to the company, "YaSheng Group does not consolidate its financial statements with its controlled subsidiary, Gansu YaSheng Industrial (Group) Co., Ltd. (Shanghai:600108.SS), but instead treats its 38.93% ownership (364,995,144 shares) of Gansu YaSheng Industrial (Group) Co., Ltd. as an investment."

Here's the beauty part: each YHGG share represents over two shares of the "controlled subsidiary" Gansu YaSheng Industrial. Gansu trades on the Shanghai http://finance.yahoo.com/q/bc?s=600108.SS&t=5d for about $9! Yep, each YHGG share is worth over $18 of Gansu stock!

The big wart on YHGG is that it's on the pink sheets. However it is fully-filing on pinksheets.com and actually PRs quarterly results. I love the risk/reward in this one. Oh, did I mention that agriculture is a big part of their business. Seems there's currently some interest in Ag stocks...)


First Bank of Delaware (FBOD-2.70) I had this one in PSL7 and the story's the same. I'm surprised this one has gone south since an impressive Q3 earnings report on 10/16/07. FBOD made $.21 vs $.07 in the quarter, net income was up 211%. Nine-month EPS were $.47 vs $.28, with net income up 118%. Book value is $2.75. EPS in the past six quarters have progressed nicely: $.05, $.07, $.08, $.10, $.16, $.21; P/E is less than 5. Holding the stock down in my opinion is real or imagined subprime exposure, and "discussions with the FDIC regarding concerns raised by the FDIC in connection with certain of the Bank's credit card and lending programs." I think FBOD deserves at least a ten P/E, suggesting 100% upside potential. I expect FBOD to report Q4 results late this week or early next.


Opthalmic Imaging (OISI-.58) I was a little early on this one in PSL6 when I picked it at $2.25/share! If I liked it at that price, I must love it now, right?! Well, I don't know if "love" is the right word, but the risk/reward sure seems attractive. OISI makes digital imaging systems for the eyecare market. This one has a very impressive LT track record, with sales of $11.3M in 2004, $13.7M 2005, and $15.8M 2006. Pre-tax income over the same periods was $1.1M, $1.7M, and $2.2M, respectively. 2007 results have stalled however, with nine-months sales and earnings both down slightly.

Nonetheless, 12-month trailing EPS stand at $.13, giving OISI a P/E of less than 5. Book value is right around the current price and cash-per-share is impressive at $.30. Depressing the stock lately is a big seller out of Sweden, Healthinvest. They still have about 834K shares so until that block moves or they stop selling OISI may have trouble making headway. The company is not resting however. In the works is a merger with its parent company, and a recently-announced acquisition http://biz.yahoo.com/bw/080109/20080109005278.html?.v=1. I don't know if it will happen during the contest period, but I look for OISI to double from current levels.


When it comes to P/Es, 7 is the new 14...

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