China Growth Stocks

[BiotechValues]

TBOW(Trunkbow International Holdings) basic Due Diligence

Web site: http://www.trunkbow.com/

Share structure
36.8M shares issues and outstanding
Float: 17M
Shares Short: "No Short Interest" per Nasdaq.com
3,700 shares short per ShortSqueeze.com

8% of float held by institutions

2011 audited eps = .46
2012 guidance of eps = .62 (forward pe under 2 as of today’s close)
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TBOW provides Mobile Payment Solutions (“MPS”) to telecom operators in China

The mobile "PayPal of China", (thanks GlobeTrade for that apt description)

Founded by former Silicon Valley engineers with extensive experience in the telecom industry.

First to market with MPS application platforms, and is the third largest revenue contributor for China Mobile.
100 R&D professionals led by a seasoned senior management team with extensive experience in the telecom industry.

19 "significant revenue generating patents" granted (they hold over 200 patents), and multiple patents pending

There are 864 million mobile subscribers in China, most of whom do not have a credit or debit card. For many subscribers, the mobile phone will be their first experience with a payment method other than cash.
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TBOW's customers are the "Big 3" telecoms: China Mobile, China Unicom, and China Telecom.

Partnerships with Cisco, Hewlett Packard, Telecordia, Oracle.

Verifone invested $5M with TBOW last year.
http://www.verifone.com/2010/verifone-invests-in-chinese-mobile-payments-company.aspx

TBOW was an IPO in Feb, 2011 (that was made immediately following a reverse merger). I'm still trying to find out why they did an IPO after having done a reverse merger, but it might have been to gain market credibility as an IPO. At any rate, they were vetted more thoroughly as an IPO. Had they started out down the IPO path and then decided to simply reverse merge with a shell company, I would see that as a huge red flag. However, TBOW chose to do the opposite and was successfully vetted as an IPO after some of the more significant frauds in the China space had already become public. I see this as a positive.

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Auditor: Marcum Bernstein & Pinchuk (MB&P)
This auditor is tenacious and demanding from their clients. They are third in China in terms of companies they represent, and they are selective in who they take on. I believe this is an auditor who really is on “our side”.

CNBC Video: Drew Bernstein (TBOW’s auditor) regarding fraud in China
http://video.cnbc.com/gallery/?video=1708048404

“Sometimes we have to go to extremes to get Chinese company officials to understand the ramifications of shoddy auditing and accounting. Instead of bowing to the intransigent company chairmen or boards, we explain that if they don't cooperate and own up to problems, we will be forced to tell the local authorities of alleged fraud, therefore making it a Chinese problem." Drew Bernstein

This is the auditor for TBOW.
No wonder there is zero short position.


More from TBOW’s Auditor:

“Come What May, MBP Won’t Be Giving Up Its Seat at the Table”
(July, 2012)

http://chinabusinessknowledge.com/industry/professional-services-member-profile-marcum-bernstein-pinchuk-llc

and


TBOW’s auditor: “There Are no Shortcuts to Reliable Numbers” (March 2012)
http://www.chinadaily.com.cn/usa/weekly/2012-03/02/content_14737130.htm

TBOW’s market is growing strong, hence their eps growth projected for 2012, even during a 7.6% overall economic growth rate slowdown in China.

Mobile Payment Volume up 74% to 1 Trln Yuan in '11
http://english.iresearch.com.cn/news/4155.html


I believe TBOW is "the real deal" China growth story: An IPO with a damn good auditor who is on "our side" when it comes to fraud, and a growth rate that's real. I also believe the share price will reflect these things in time, and that the stock will begin trading at a more realistic, non-fraud valuation.


CSP