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EVK COULD HIT 7.99 SOON
last time went from $3.5 to $4.5 so we look for $5USD this next year.
Thank you for the response here. I will keep this lil hidden gem on my watchlist too see how it goes from here. I hope ur wrong too about the inflation but if something doesnt change soon were going to be in tough shape in the coming yrs
Take care my friend
Hi Mr.OTC. I just happened to be cruising by tonight and saw your post. Yes, it's been well over a year since I did all this work on the EVK board. I once was excited about a few Chinese micro-caps.
I still think this company probably has potential, however a few things have changed my way of thinking about the markets and the economy since the summer of 2010.
I turned very bearish about a year ago. Many folks did not listen to me at the time. I was a little early... However it turns out I was basically right to be a bear. I won't get into all the reasons why I think it is a bad idea to buy ANY stocks right now.
Much of my reasoning has to do with a poor economic recovery and my fears of high inflation coming in a few years. IMO, the only thing that has been lifting the market for the last year or so is quantitative easing from the Fed. Or in other words, massive helicopter drops of currency!
This so called stimulus is not working like it has in the past. The Fed can't lower rates much more, all they can do is print more currency. The short term effect of all this 'money printing' is holding up stocks and giving us a very mild economic recovery. However, the long term effect of these monetary policies will most likely bring on massive inflation. It's like a missile heading our way.
So, anyways, EVK may be a good buy right now but I would not buy any paper assets in this environment. I personally am buying gold and silver for the coming inflation and I am hoping and praying that I am wrong.
Sorry I get a little long winded, I really love this stuff. What ever you decide to do, good luck to you my friend...
Nice post, think this is a buy now @ current PPS? Can u look back and see if the growth rate is still 24% or not here as well from last time u looked at it?
TIA
Thanks bud, but I cheat a little. I have a good source of great ideas for micro cap investing. Then I do a little of my own DD to find the ones I like best. These waters are extremely risky, you have to try to find the best of the best, and then be willing to lose it all. I will be extremely happy if 4 or 5 out of 10 of my investments pan out. Hopefully a few of them will dominate.
So much work to do, I have dozens of small companies to look at over the next several months. Will keep ya posted on what I find.
Have a good eeevening!
So be it on CIWT, and will check out EVK and
ABAT as well. Your DD is second to none Sharkie.
CIWT and EVK are two of my favorite Chinese stocks. There are others like ABAT for one, but I really like these two.
Revenues, and more importantly, earnings should keep increasing the next few years. Earnings will eventually bring more investors.
Congrats! We are among the earlier investors looking at these companies.
Notice I like to find smaller companies who already have a profitable business plan and are near the beginning of their growth cycles. Even better that they are relatively unnoticed.
Might they never become noticed? Maybe, that's part of the risk I guess. But I am confident that earnings will eventually tell the story...
Keeping my eye on this one. By the way
I found a sleeper you got to know about...CIWT
See this news, is ridiculous
Briboy
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Found the next sleeper, like ATWT..is CIWT
This might take time, but look at the financials
and the revenues...this is ridiculous, and once
it makes a little more noise people will be all
over it. Am watching it and going to get is this
puppy
Briboy
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China Industrial Waste Management Announces 2010 Second Quarter Financial Results 4:15p ET August 12, 2010 (PR NewsWire)
China Industrial Waste Management, Inc. (OTC Bulletin Board: CIWT) ("China Industrial Waste Management" or the "Company"), a leading environmental services and solutions provider in China, today announced its results for the three and six months ended June 30, 2010.
Second Quarter Highlights
-- Revenues increased 100.8% to $4.9 million compared to the second quarter of 2009
-- Gross profit increased 93.9% to $3.1 million
-- Operating income increased 242.6% to $1.8 million
-- Operating margin increased to 37.3% from 21.9%
-- Net income increased 178.3% to $1.2 million, or $0.07 per diluted share,
compared to $0.4 million, or $0.03 per diluted share for the same
period last year
-- Operating cash flow was $0.9 million versus negative cash flow from
operations of $1.0 million in the prior year period
-- New solid waste treatment facility ("Expansion Project"), which will
double existing capacity, is 70% complete and scheduled to open by the
fourth quarter of 2010
"China Industrial Waste Management had a strong second quarter as we again delivered robust growth with strong increases in revenue and earnings," said Mr. Jason Dong, Chief Executive Officer. "Sales continued to rise as our customers increased their manufacturing production in the wake of the global recovery. Our Dongtai Organic business remained a meaningful contributor to our revenues, and our sales and margins for recycled commodities grew in an environment where prices were significantly higher than last year. We are pleased with our performance and believe it is a testament to the high level of services we provide for our customers and our leadership position in the fast growing industrial waste management market in China."
Second Quarter 2010 Results
For the three months ended June 30, 2010, revenues were $4.9 million compared to $2.5 million in the same period last year, an increase of 100.8%.
Revenues from service fees, which consist of service fees generated from industrial solid waste treatment, sewage treatment and sludge treatment, were $3.2 million, or 65.5% of revenues, compared to $1.6 million, or 67.0% of revenues, in the same period last year. The 96.4% increase in revenues from service fees is mainly attributable to an increase in the Company's solid waste treatment business, as production volumes from the Company's industrial customers continue to recover from the lows of early 2009 and sales from Dongtai Organic, the Company's sludge treatment business, which began generating revenues in the first quarter of 2010. Dongtai Organic generated $1.0 million in revenues in the second quarter of 2010.
Sales of recycled commodities were $1.7 million, or 34.5% of revenues, compared to $0.8 million, or 33.0% of revenues, in the same period last year, representing an increase of 109.5%. As China's economy continues to recover from the global recession, prices for many raw materials have been increasing gradually, including for Dalian Dongtai's main products, cupric sulfate, iron, plastic and nonferrous metal. To capitalize on this situation, Dalian Dongtai has selectively sold some of its recycled commodities, including commodities that had been inventoried during 2009 due to the then prevailing low sales prices.
Gross profit was $3.1 million compared to $1.6 million in the same period last year, an increase of 93.9%. Gross margin was 62.0% compared to 64.2% last year. The 220 basis point decrease in gross profit margin is primarily attributable to the additional overhead imposed by sludge treatment operations, a recently-added business line which has not yet reached full capacity.
Income from operations was $1.8 million compared to $0.5 million in the prior year period, an increase of 242.6%. Operating margin increased to 37.3% from 21.9% in the prior year period. The increase in operating margin is primarily due to the Company's higher level of sales and operating leverage.
Net income increased 178.3% to $1.2 million from $0.4 million in the same period last year. Diluted earnings per share increased 141.5% to $0.07 from $0.03 in the same period last year.
First Half 2010 Results
For the six months ended June 30, 2010, revenues were $$9.0 million compared to $4.1 million in the same period last year, an increase of 121.9%. Revenues from service fees, which consist of service fees generated from industrial solid waste treatment, sewage treatment and sludge treatment, were $6.2 million, or 68.4% of revenues, compared to $2.8 million, or 69.9% of revenues, in the same period last year, an increase of 117.3%. Dongtai Organic generated $2.0 million in revenues in the first half of 2010. Sales of recycled commodities were $2.8 million, or 31.6% of revenues, compared to $1.2 million, or 30.1% of revenues, in the same period last year, representing an increase of 109.5%.
Gross profit was $5.7 million compared to $2.5 million in the same period last year, an increase of 133.1%. Gross margin was 63.5% compared to 60.5% last year. Income from operations was $3.4 million compared to $0.7 million in the prior year period, an increase of 373.0%. Operating margin increased to 37.7% from 17.7% in the prior year period.
Net income increased 188.6% to $1.8 million from $0.6 million in the same period last year. Diluted earnings per share increased 151.0% to $0.10 from $0.04 in the same period last year.
Financial Condition
As of June 30, 2010, the Company had accounts receivable of $4.9 million compared to $2.0 million as of December 31, 2009. The 140% increase is primarily due to Dongtai Organic, which had service fees due from the local government for sludge treatment services rendered and sales of methane gas and from Dalian Dongtai's increase in sales as its customers ramped up their production levels and produced more waste.
As of June 30, 2010, the Company had cash and cash equivalents of $4.8 million compared to $11.4 million as of December 31, 2009. The decrease is mainly due to the repayment of bank loans. As of June 30, 2010, the Company had a working capital surplus of $2.9 million compared to a surplus of $1.7 million as of December 31, 2009. During the first half of 2010, operating cash flow was $0.9 million versus negative cash flow from operations of $1.0 million in the prior year period.
Recent Developments
In August 2010, China Industrial Waste Management signed a major waste management contract with a national petrochemical firm located in Liaoning Province (the "Customer"). Under the terms of the contract, beginning on September 1, 2010, Dalian Dongtai will treat and dispose of the industrial waste sludge and slag generated by the Customer's production over the next 30-months, which the Customer estimates will total approximately 40,000 tons. Based on this expected volume, Dalian Dongtai anticipates it will generate an additional $3.65 million in revenues from this Customer over the life of the 30-month contract.
In July 2010, China Industrial Waste Management was approached to lead the oil waste management operation following China's largest recorded oil spill off the coast of Dalian City. The Company was asked to handle oil waste generated by the effort, including oil skimmed off the ocean surface and oil-saturated equipment and refuse such as used absorption felts.
In July 2010, the Company received a government subsidy of RMB 5 million (approximately $0.7 million) to complete its capacity expansion project for a centralized hazardous waste treatment facility (the "Expansion Project") in Dalian, Liaoning Province, China. This subsidy is the second installment of a series to be disbursed by the government as the Expansion Project progresses.
Business Outlook for 2010
Mr. Dong added, "As we enter the second half of 2010 we are proud of the progress our business has made and optimistic about the future of our company. Our core Dalian Dongtai solid waste treatment business has rebounded strongly from the lows of last year as our customers' production volumes continue to recover and we see this trend continuing at least through the end of 2010. To further bolster our capabilities in this market we are currently building one of the most advanced one-stop service centers for industrial solid waste treatment in China. The construction of this Expansion Project is now 70% complete and we expect it to become operational in the fourth quarter of this year. Once fully ramped up, this new facility will provide us with 114,000 tons per annum of industrial solid waste treatment capacity, which is double the capacity of our current plant.
"We are also excited about the prospects for our Dongtai Organic sludge treatment business. Dongtai Organic operates the first sludge treatment plant in China and uses anaerobic fermentation technology. This is a build-operate-transfer or 'BOT' project with a 20-year franchise period. During this period, this sludge-to-energy plant is expected to dispose of the sludge derived from all of the sewage treatment plants located in urban Dalian City. This plant has a designed capacity of 600 tons per day and is expected to generate approximately 11,000 cubic meters of methane gas once it reaches its full capacity, which is expected to happen within two years. The project has generated revenues for us since January 2010 from service fees paid by the local government and from the sale of methane to the Dalian Gas Company. As first movers in this space in China, we believe we are well positioned to operate other BOT projects across the country and our long-term goal is to see 30-40% of our revenues being provided by sludge treatment, a business that is characterized by stable revenues and strong cash flows and is in-line with the Chinese government's goal of encouraging sustainable and environmentally friendly development.
"Overall, as we look at our business going forward, we believe we have laid the groundwork for future growth. We have invested considerable resources in expanding our capacity and capabilities, and we are seeing the early rewards as we execute against our plan. Dongtai Organic's sludge processing facility and our soon-to-open Expansion Project are among the most advanced in China, and our other engineering projects demonstrate our considerable expertise and abilities. We believe our strong quarterly and first half results are evidence that we are on a compelling and profitable path in what we believe is a very attractive growth industry in China."
Conference Call
The Company will host a conference call at 9:00 a.m. Eastern Time on Friday, August 13, 2010, to discuss its financial results for the second quarter of 2010.
To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (877) 331-5105. International callers should dial +1 (631) 865-5293. The Conference Pass Code is 92701295.
If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Friday, August 13, 2010, at 10:00 a.m. Eastern Time. To access the replay, call (800) 642-1687. International callers should call +1 (706) 645-9291. The Conference Pass Code is 92701295.
About China Industrial Waste Management, Inc.
China Industrial Waste Management, Inc. is engaged in the collection, treatment, disposal and recycling of industrial wastes principally in Dalian and surrounding areas in Liaoning Province, People's Republic of China through its 90%-owned subsidiary Dalian Dongtai Industrial Waste Treatment Co., Ltd. ("Dalian Dongtai") and other indirect subsidiaries. Dalian Dongtai treats, disposes of and/or recycles many types of industrial wastes, and recycled waste products used by customers as raw material to produce chemical and metallurgy products. In addition, Dalian Dongtai treats or disposes of industrial waste through incineration, burial or water treatment, and provides environmental protection services, technology consultation, pollution treatment services, waste management design processing services, waste disposal solutions, waste transportation services, onsite waste management services, and environmental pollution remediation services. For more information, please visit the Company's website (http://www.chinaciwt.com ).
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We can someday if you want. I think that would be a lot of fun.
I am getting some experience moderating this board first. It's a good starter, not much action!
Glad you have a board bro. I thought you and I were
going to start one though?
Hey Bri, welcome to my new board.
I am trying to buy some today. It's been hard to buy, it's like they keep moving up the ask every time the bid creeps up.
Not sure if the supply is tight or someone just playing games, don't know. Will keep trying, I really like this stock.
By the way, this stock is probably not very good for short term trading. The liquidity is really bad. That makes it a little more risky, it may be hard to sell.
I like it only for a long term investment.
Thanks for swimming by and saying hi!
What is a good price for this stock?
There are currently no analysts covering this company and is very thinly traded on most days. It is very difficult to put a valuation on such a small company with no professional opinions to help out. But fools rush in where Angels fear to tread, so I will give it a shot.
I have posted 10 years of financial data up on the I box for you to follow along with my attempt at a valuation. Please remember I could be way off the mark. I am going to try to be conservative with my figures.
Here goes... First notice the incredible improvement in the numbers after 2004. The most important numbers start on top with
ROIC, return on invested capital. All are important, but ROIC, book value per share, and earnings per share are arguably the most important.
To put a value on this stock we must estimate future earnings the best we can. Book value growth, believe it or not, is probably the best indicator of future earnings per share. Notice book value per share and earnings skyrocketed between 2005 and 2007! Over 100% a year book value growth!
These numbers are just not sustainable for any company. As the company matures they will probably settle into a more stable and reasonable growth rate. How can we get a reasonable estimate of growth?
There are some clues. Edward Kang, the CEO of Ever-Glory, has stated that they plan to open as many as 1,000 La Go Go outlets by 2015. Let's say they have about 200 now for ease of calculation.
We can use the rule of 72 to help us out a little here. The rule states that if you know how many years your money will double, divide the number of years into 72 to get a growth rate.
So, in about 5 years they expect to open up about another 800 outlets. Let's do the math. Starting with 200 stores, double once to 400. Double again to 800. That is two doubles in 5 years. I know 1000 stores is the mark, but let's be conservative.
That means they need to double their number of outlets about every 2.5 years. Seventy two divided by 2.5 is about a 29% growth rate. I don't know if they can do it, but if they continue with that growth rate they will be as big as Polo Ralph Lauren in ten or 15 years!!
Anyway, call it 30% because the goal is 1000 stores by 2015. Remember they also have a wholesale business as well. Even with the spectacular numbers in the recent past, I am not comfortable with a 30% growth rate in earnings for the next ten years. They might pull it off, but I want to be conservative.
If they can grow at 24%, earnings will double about every 3 years. Rule of 72 again...
This is only a 40 million dollar company with a lot of room to grow and a good business model that has been proven to work. I think I am comfortable with a 24% growth rate in earnings for the next 10 years.
That was the hard part! Now to put a value on this company we need a few more numbers. We need to estimate a PE ratio. The average historical PE for this industry is about 18.
A fairly valued company will have a PE equal to it's growth rate. Again, I want to be conservative. I am uncomfortable with a higher PE. After all, there is a lot more risk buying this stock over Polo Ralph Lauren! Speaking of which, I would love to buy that stock for $30 a share...
Okay back to EVK. I have seen a few different numbers out there for the TTM earnings. I have seen .35 and .38 a share. Let's use .35 for the TTM earnings.
Finally, we have some useful info here. We have an estimate for growth, and PE ratio, and the TTM EPS. Now let's get to the fun stuff!
At 24%, the earnings should just about double every three years. Starting at .35 how many doubles in ten years?
First double .70
2nd double 1.40
3rd double 2.80
That is three doubles in 9 years. Close enough. In ten years EVK, if our estimates are close, will be earning $2.80 a share. Given that PE of 18, the stock could be priced about $50.40 in ten years.
Okay, that's great, but what should we pay for it now? Now we factor in the discount rate of 15%. This is the discount rate many great investors use all the time. What it means is that if we buy the stock today, we want to make 15% compounded over the next ten years. At least 15%.
Many people get confused about discount rates and the such, and I think I can see your eyes glazing over, but I will show you a little trick. If you can estimate the stock price in ten years and you want to know what price to buy it today and make 15% compounded a year, simply take the future price and divide by 4.
It works every time! Very cool little trick I learned from reading Phil Town's most excellent books. In fact, I would highly recommend reading Rule #1 and Payback Time by Phil Town.
Sorry, back to EVK. So if we can estimate in ten years this stock could be priced at about $50, to get a 15% return we need to buy at $12.6. That is $50 divided by 4.
It would be a little naive to figure on EVERYTHING going right for the next ten years. There are numerous risks and things just way beyond our control. So maybe we should buy this with a margin of safety.
A margin of safety is simply trying to buy a $1.00 worth of value for $.50. We want to buy this on sale big time! Simply take our price of $12.60 and divide by 2 to get our margin of safety price.
If my estimates are worth a bowl of beans, buying this stock for $6.30 is an attractive price. Currently EVK is trading for $2.75. Can you say, load up the truck?
Should you buy this stock?
This post is only my opinions and should not be taken as investment advice. My analysis of this stock could be way off the mark.
First things first. Should you even buy this stock? I have been swimming around I-hub now for about 4 years or so and see many new investors putting way too much of their hard earned capital into very risky propositions.
I will not get into all the reasons why I think it is unwise to buy about 95% of all micro-cap or "penny stocks". I have see too many investors lose it all on such wagers. I think you would have better luck in Vegas, and they give you free drinks!
Does that mean that I think this particular stock is a sure thing? No, but I do think Ever-Glory is a very high caliber micro-cap company. That said, this is still a high risk investment. I personally would not put any retirement capital into this stock.
But if you have some 'Mad Money' laying around and you think skydiving or perhaps surfing in shark invested waters is a fun way to spend a Sunday afternoon, then I absolutely think EVK is a worthy pick. I believe this company has a high probability of long term success.
From what I have read in the annual report and from what I have seen in the numbers the last 5 or 6 years, I believe this to be a very well run company with good management. They are building a successful brand and have plans of expanding their retail stores into many more locations around China in the next several years. They also have a successful wholesale business with many customers around the world.
If this is such a great stock, then why is it so cheap?
Lately, there has been much chatter about accounting problems with many Chinese companies. That indeed is part of the risk. Also the speculation that China's economy is slowing down could be another reason so many of these stocks are down in the dumps.
It is my opinion that China will lead most of the rest of the world into economic recovery. The Chinese consumer base will continue to grow and in the future will be a major force in the economy. Much like the American consumer has been for the last several decades.
As far as accounting fraud in Chinese companies... I think it is a problem. Remember Enron? Oh wait...Enron was an American company! Get my point? No matter where the company does business, accounting fraud will always be a risk. I really believe that many Chinese companies are trying their best to present their numbers honestly. Maybe I am naive, but that is what I believe.
If you like the story and you have a place in your portfolio for a high risk possible high reward stock, then you should consider value and price in the next post.
There, that is much better.
The I-box was terribly boring before. This is a very fine company and deserves to be honored with a better I-box.
I'm no computer expert, but i did my best...
Notes from 10k
Filing date 03/31/2010
We classify our businesses into two segments: wholesale and retail. Our wholesale business consists of wholesale-channel sales made principally to famous brands, department stores and specialty stores located throughout Europe, U.S., Japan and the People’s Republic of China (the “PRC”). We have a focus on well-known, middle-to-high grade casual wear, sportswear, and outerwear brands. Our retail business which consists of retail-channel sales directly to consumers through full-price retail stores located throughout the PRC.
Although we have our own manufacturing facilities, we currently outsource most manufacturing to our strategic alliances as part of our overall business strategy. Outsourcing allows us to maximize our production capacity and maintain flexibility while reducing capital expenditures and the costs of keeping skilled workers on production lines during low season. Our management oversees the long-term contractors and inspects products manufactured by them to ensure that they meet our high quality control standards and timely delivery. Our annual production capacity including outsourcing orders is in excess of 12 million pieces.
The primary business objective for our wholesale segment is to expand our portfolio into higher class brands, expand our customer base and improve margins
The business objective for our retail segment is to further establish a leading brand of women’s apparel and to build a nationwide retail distribution channel in China. As of December 31, 2009 we operated 185 stores. During 2009 we opened 100 stores and closed 8 stores. We expect to open an additional 80-100 stores in 2010.
Total sales for the year ended December 31, 2009 were $89.9 million a decrease of 7.8% from the year ended December 31, 2008. Although sales in our retail business increased significantly during 2009, sales in our wholesale business decreased 18.4% due to the global economic slowdown.
Sales generated from our retail business contributed 14.7% or $13.2 million of our total sales for the year ended December 31, 2009, an increase of 276.3% compared to $3.5 million for the year ended December 31, 2008. We had 185 LA GO GO stores at December 31, 2009, compared to 93 LA GO GO stores at December 31, 2008. In 2009 we opened 100 new LA GO GO stores and closed 8 stores
Sales in their wholesale business decreased due to the economic downturn. Nothing really surprising about that. What got my attention is growth in the company's retail business. It appears they may be building a brand name right in the middle of a recession!
The Company’s revenues for the three months ended March 31, 2010 and 2009 were earned in the following geographic areas:
2010 / 2009
The People’s Republic of China $ 7,505,237 / 3,349,050
Germany 5,773,464 / 6,714,002
United Kingdom 3,709,221 / 3,273,036
France 3,191,889 / 948,490
Europe-Other 1,111,431 / 301,930
Japan 2,776,857 / 4,689,704
United States 2,071,447 / 1,231,610
Total 26,139,546 / 20,507,822
Revenue increases for the first quarter of 2010 versus the first quarter of 2009 does show an improvement. It seems the world may be slowly coming back from recession. Most notable is the improvement in China.
This is only revenue numbers from one small company in one industry, but it is interesting to see the improvement or lack of improvement in different countries around the world. In this incredibly small sample of data, China seems to be leading the way back to economic recovery.
A market cap of about 40 mil as of now in late July of 2010.
About 14.7 mil OS and a tiny float of 4.8 mil.
A small company with a nice share structure. What gets my attention is the TTM earnings of 0.38 a share...
Does anybody out there follow this stock?
It's a sleeper. Does not seem to be much interest in it.
That is interesting to me...
What is the reasonnning on the stock price not skyrocketing as soon as it got on Amex?
I believe time is what is going to help us,
ESaum
Since there are no message board on yahoo Finance, we can talk about the company here. :)
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