Empire Building 101
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Meeting revenue guidance after a dismal q3 is definately going to bring attention. While they did not give earnings estimates they did say margins were going to remain in the 30's which is excellent. Todays release will keep the growth rate at 30% intact and key to investor interest. I've been very optimistic here for a long time. Being debt-free certainly is not going to hurt. Oops almost forgot they have (1) more payment due for the cigs.
"We are nearing the end of our most successful year ever. Our profitable growth is accelerating as Chinese consumers and farmers increase their use of our cactus products. Fourth quarter revenue will reach a record $12.2 million. This will represent a revenue gain of 43% over revenue of $8.5 million in 2009."
"Our company generated cash flow from operations for the nine months of $6.9 million. We fully expect this to increase because we completed the $8 million patent payment at the end of August and our operating margins should remain in the 33% range."
Watch as this slowly gains traction and becomes the real deal. I believe management is trustworthy and will act in the best interst of shareholders until proven wrong.
Steve, we finally got a PR that is newsworthy although it would hve been nice to hear about the Kodiak deal and profitibility for Q4. Although it was very encouraging ro see that sales are up very nice this Q. hitting forcast. Absolutely great news IMO. Now hopefully management will shed some light on Kodiak very soon.
Still waiting for a PR!
I would tend to agee that we do require a capital raise at some point. I believe they will do a PR possibly tommorrow. When they foiled the Seaside as undervalued it was done May 3 which was a few days after the expiration.
If we need a raise of capital hopefully they can postpone this until better days. However, they were only doing $1 Mil with Kodiak. The only issue is they absolutely look desperate if this happens sub $1.
Here is something I really don't understand. Many companies within our space have balance sheets which tout millions in cash. They do a secondary with no real need for cash, the stock drops and pops right up.
Here we have a company that spent most of its cash on patents, machinery, cig manufacturer, expansion plans etc. In laymen terms they had the cash and used the cash on hand wisely. Now they possibly need money for expansion and they are treated like an ugly red-headed step-child because they MIGHT dilute.
You would think someone using their own funds internally and building shareholder equity would surely have more legitimacy than these firms that are doing secondaries on a daily basis who supposedly have millions in the bank. CKGT.OB has a plan for the money and gets punished to a PE of 2.
Buffet stayed away from the dotcom's in the early 2000's and saved billions while many were wiped out. His favorite saying was if a person is investing into something and they can't explain what they do within 60 seconds...you should run. I feel the same way about companies that have millions and doing secondaries.
CKGT's Future NEVER looked Brighter. Beverages are worth $2 by themselves next year. IMO, cigs will be spun-off or sold off.
Traderfan any idea how many days? I've e-mailed but no answer as of today. I doubt the need for money has went away but then again the A/R are so high if they just collected maybe the need goes away.
My big concern is they already did the put option and they have been the sellers. However you would think that is material and would have to be PR'd.
The question is how low will the tax selling and dilution bring the price down to. Traderfan will probably see his .75 once again would be my guess.
Steve maybe I was not very clear, Hawk Associates sent me the PR that was released yesterday. They did not do a profile nor a write-up. If my message came off that way...sorry.
I've started to buy more in the last week and could give a rats butt if they PR it or not. I believe a PR costs about $500 and it would be a total waste of money because very few people care for Hawk either.
My #1 concern is the dilution period, as I believe CKGT.OB will once again in 2011 show very positive comps. The only issue IMO would be more dilution especially at these prices. Needing money is one thing but if they were to excersize the put option Kodiak gets lots of shares for .80 or less. If they don't dilute here we should go back to $1.25-$1.50 until we get news of significance.
AS far as the smokes I believe they are going to sell ingrediants to others if the opportunity arises.
What did you make of CKGT's statement that they had "a strong supply of cactus reconstituted tobacco" and in fact enough to "sell its ingredients to other tobacco companies" besides running it's own cig factory at full capacity? They have a lot of stems and waste and are looking to use this as it is free and will go directly to the bottomline.
Steve this is all IMO, and again my concern is how bad they need money. Opposite Pappy I like the fact that they are spending and giving ss much time and talent to the cigs. Being launched in a way that it can reach its true potential and listening to the customer surely is what a successful ccompany reguires.
Steve as far as e-mailing Amy about a PR, Hawk e-mailed me todays report thus it doesn't matter to me whether they PR it or not. Here is Atomic Penny Stock's write-up with more coming. I like the fact that they are NOT compensated...well written I thought.
December 6, 2010 No Comments
China Kangtai Bolsters Cactus Cigarette Offering With New Technology Partnership
by admin
Shares of China Kangtai Cactus, Inc. (OTCBB: CKGT) are down 5.6% or $.054 this morning on news that the Traditional Chinese Medicine (TCM) developer has inked a technology agreement with Shandong Technology Company, the main goal of which is to improve the taste and quality of Kangtai's cactus cigarette product. Sales for CKGT's tobacco-alternative offering totaled $659,609 during the third quarter, representing an impressive 1464% improvement over the $42,162 logged during the 3rd quarter of 2009. While sales for the 3 months ended 9/30/10 did decline nearly $178,143 or 27% from the previous reporting period, the company's Sheng Cao smokes have fallen into favor with China's monstrous population of smokers over the past year and continue to contribute a greater share of its overall sales, which reached $9.5 Million in Q3.
Improvements facilitated by this technology agreement should help increase the popularity for China Kangtai's cactus cigarettes in a market where one quarter of the nation's 1 billion residents are smokers and research forecasts that 1/3 of all young men will die from complications brought on by tobacco if something doesn't change. CKGT aims to be that change and is already gaining a foothold in its domestic marketplace, which boasts a group of smokers roughly the size of the entire U.S. population. Efforts are also being made to build a solid presence of other Asian countries including Taiwan and I'm guessing that some of the region's larger tobacco companies are paying more and more attention as Sheng Cao sales grow and China Kangatai takes steps towards improving its product and boosting public awareness of its benefits.
Although shares have dipped below $1 and the stock doesn't look overly sexy from a technical standpoint, I'm still bullish on CKGT as a company over the long-term. In light of the company's recent financial growth and development of relationships aimed at boosting the sales and quality of its diverse offering, I'm excited about what the future holds for China Kangtai Cactus, Inc.
First off we need to understand what reconstituted tobacco is too fully understand the PR.
Definitions of reconstituted tobacco on the Web:
Paper-like sheets of tobacco comprised mainly of scrap and stems. Reconstituted tobacco is produced by a variety of methods, all of which have a single purpose: to allow cigarette manufacturers to make the most efficient use of their tobacco by utilizing scrap and stems instead of discarding...
Obviously they have already worked with Shandong Yishui Ruibosi Tobacco Ltd. (Ruibosi), a subsidiary of China Tobacco Shandong Industrial Co. Ltd.
Thus I believe they are paying a royalty which will integrate the process with their very own "waste scraps & stems" which would imply and make sense, since nobody else uses tobacco, cactus, honeysuckle, ginkgo and tea leaves. Thus using the process and their own ingrediants were indeed done inhouse with the cooperation of Shandong Tobacco LTD. Remember they had 110K & 45K in R & D in Q2 &Q3 and we were told it was tobacco related. It was me who thought it was for new cig product but obviously it wasn't.
From what I gather from the PR this will help improve the taste and what better way to improve the taste than add some original filler. The complaints I've heard was the cig was to weak. This would directly affect the taste and make it somewhat stronger.
As far as the in-house arrangement I think it would be safe to assume once they go to this technology and it proves itself they will go to this technology as new and improved.
Steve, I think you over-thought this but then again maybe I'm just wrong. With that being said I did buy an additional 3k today.
As far as cig sales up and down qtly it probably has more to do with filling new channels which would ultimately be higher initially until they estabplish a market.
This is all IMO, with my luck they do the put notice tomorrow but I doubt it very much.
Will continue to put my money where my mouth is until something changes fundamentally. Even with sales much lower than anticipated last Q everything appears to be intact.
I need Traderfan's opinion as he undoubtly will set me straight as I still have rosed colored glasses(LOL) and believe in fairy tales and their surely is still a story here.
Pappy I do agree about putting everything into cigs but don't you think that beverage is on automatic pilot and will continue to grow?
This could be good news IMO but surely would like to hear what others have to say. Sounds like they are going to go alone here. Anybody buying here? Here is one of the quotes.
With a strong supply of cactus reconstituted tobacco, the company has the capacity to produce cigarettes in its own plant in Macau as well as sell its ingredients to other tobacco companies.
Mr. Changsen Xue the VP of Ruibosi said, “China Kangtai Cactus is an outstanding company that has shown remarkable growth in the cactus business. We have great confidence in the future sales of Sheng Cao cigarettes, which we believe will have very promising market prospects and growth potential. We have no doubt that consumers will like the taste very much.”
China Kangtai CEO Jinjiang Wang said, “The reconstituted tobacco paper process is extensively used in the industry. We have successfully produced samples and plan to begin full production in May of 2011. Sheng Cao is already a popular brand and we believe this new technology will provide a further boost for our company’s long-term development while it also will be accretive to earnings and will significantly broaden future sales.”
Any thoughts on this as it could be construed very positively. I knewe they were spending money in R & D but thought they were working on new product. Possibly going to sell ingrediants...this could be huge but then again maybe a flop. Here is the quote.
http://finance.yahoo.com/news/China-Kangtai-Cactus-bw-2027933973.html?x=0&.v=1
This could be very good news or an indication they are not selling as good as expected. Regardless it is news.
http://finance.yahoo.com/news/China-Kangtai-Cactus-bw-2027933973.html?x=0&.v=1
According to a poster on Yahoo they have until tommorrow at the EOD to officially send the put notice. Sure would be nice to get some kind of an update today. Looking to add in the event they choose not to dilute as it is just to cheap in lieu of the potential...all IMO.
Anybody know for sure how long they have for the put option? I think they have until next Wednesday Dec. 8 but not 100% sure anybody...
Steven
What were they paid? I thought it was only 5k a month. That certainly did not put any selling pressure on the stock. I believe it was split between stock and cash.
IMO, the whole deal with Hawk is a very good thing. First of all CKGT needed money to pay for the cig plant within a very tight time frame thus a Kodiak deal. As time got closer they dump Hawk and hire Equi-Crap in case another deal is needed. Especially in case the price doesn't rebound and they need to excersize the put option. Remembe3r they already declined a deal in April at $2.32 and called the price undervalued. In the meantime they are dealing with the company they purchased the cig company from for additional time which they received without any penalty per 10Q filing. Thus they no longer need the funds as Q3 & Q4 should be sufficient with great CF. Thus they now rid themselves of Equi-Crap and retain Hawk. This is all IMO, but certainly makes sense.
Hopefully we don't see a put option excersized right after this post(LOL)!
With all ny discust with Q3 ER I will be a buyer once again as it is insanely cheap on any metric.
Amy atleast gets back with people and answers questions. As far as Equi-Crap and Brian Barnes, it really doesn't matter what they were hired for Barnes told myself and several others lies period.
Sure hope this is true. I've got a call in and waiting for answer. From yahoo mb.
Not Even a Press Release 30-Nov-10 05:51 pm Yes, I called Equity Trends Brian Barnes (858-436-3350) who is the man there for CKGT. He said they did not do press releases that that was for the company to do - not sure what Equity Trends role is. Brian was supposed to e-mail me an information package but after 4 requests I have not received anything. I also called Hawk and they supposedly have a new contract for IR with CKGT and yes they do press releases. Hopefully they have dumped Equity Trends.
Looks like we are in the tank with tax selling probably already started and the cash situation. IMO, we will be OK but then who knows anything for sure.
This is possibly good news. This gives them time to pay for the 3rd payment. In essence they are buying time with a good Q4 the need may no longer be their. Esspecially with a high A/R possibly becoming collectible in Q4 no need for a put option. This alone will determine the financial strength or lack of going forward. IMO.
Very disappointed with Q3 but still fundamentally very strong especially if they don't do the put option at this price. Next year will be much easiar comps especially if they don't dilute.
Agreed. I just wrote a letter which will be in Fridays mail. This could be the most pathetic IR firm I've ever seen and I've been around for a long time. I would have rather had them not answer the phone instead of spewing the crap they were going to do and do absolutely nothing. They were going to china end of Oct. and having weekly calls(two a week)and any questions would be promptly answered. I'm going to send the same letter to management. A total friggin waste of 60K. Apparently you live in California maybe you could visit them!
Hard to dispute the facts as Rames was spot on...been very busy licking my wounds. I think we are all clueless here as they have continued to hand feed news in which we are left to make assumptions...very disappointed here and will not buy anymore shares here unless something drastically changes.
Brian will get an earfull with a carefully handwritten letter certified tommorrow. This is by-far the worst firm ever!
With their cash position it would not surprize me if they did the put notice and give them shares for under a buck. Trully pathetic!
They need $11.50 Mil to hit the $35 Mil revenue forcast in q4.
Earnings suck!
It is good for a stock at $1.15 however the Q was not good. They hyped that cigs are going to be 20% of sales next year but incrementally down again from q2. The only plus I see is beverages. Feed sucked considering they gave millions for a patent. What the f was management thinking?
SRRY.OB earnings kind of sucked. Revenue up 19% with earnings up 8%. This is kind of what I expect from ckgt with revenues up 40% and earnings up 15%. Guess we will know very soon.
Beating estimates surely hasn't had many decent outcomes lately. I hardly see us bucking the trend unless we get product release news or uplisting and that probably isn't enough. Hate to say but it looks like next year. Don't see much of a possibility of either of these snenarios as it isbecoming very clear the direct the market is heading.
The biggest negative and it certainly could be a negative is if the company decides to do a put notice at this price. I don't see it but then I've been wrong before.
Prices wise we should not go down with .10 or more for Q but under a dime and we retest lows. Hate to see it but that's the way I see it.
My guess is no earnings till next week. No use calling new IR firm as they do NOT answer questions. Amy always got back with answers unlike these jokers. Who knows they could be getting answers from co. and using the info for the new investors they are soliciting.
Pappy I would be disappointed with $10 Mil for Q3. We did $8.2 Mil last year q3 and that would be a 21% growth not up to snuff to the 30% growth expectations we are accustomed to. In the event margins are increasing from Q2's 38% I will be very happy with the 1st 10 MIl QRT.
However, as I have already said more than once my expectations are for $11Mil for the QRT with earnoings of .138 per share.
I'm also convinced that hog numbers are going to be a complete blowout. If that happens, obviously net income will also exceed my normal optimistic forcasts.
Bottomline, the margins are my biggest concern. They could come down if hog feed and the feed division does as I expect.
Feed will give cigs a run for their money next year and possibly command 30% of sales.
Q4... is gonna be much bigger!
You make some very legitmate concerns but I just don't see how they could give free samples without knowing protocol. They tend to move very slow. However, it certainly is noteworthy and something that needs consideration. They received the cig patent in 2008 thus a lot of time to do all the neccesary leg work. As I've stated I believe it is a go but then again with the recent chnage is the packaging which takes effect in 2012 they very well could have some regulatory problems.
I still expect the cig division to go absolutely beserk.
Also feel that at some point a large Tobbacco company will take notice especially if they can prove that our cig is safer which I do believe.
aiwan Bantianshui has committed to a purchase of 100 tons of China Kangtai’s condensed cactus pulp which consists of a cactus fruit juice extract via China Kangtai’s proprietary technology. Of the 100 tons, Taiwan Bantianshui expects a first delivery of 5 tons by November 30, 2010 and the remaining 95 tons over one year
This is puzzling to me as I thought they were getting out of the Raw & Intermediate Material Division.
Unless this falls into the Nutriceuticals and if so that division may soon be back in the growth mode after stagnating.
My question to the board. With recent qtly's being reported FEED and now CAGC with terrbile earnings that are hog related who is the benefitting?
We may very well be looking at blow/out numbers with hog feed.
Bought my shares back!
How could they pass out samples in the US if they needed FDA approval?
Have you ever seen a drug given out to the general public without being approved?
I believe earnings go up minimum 50% next year on a PS basis vrs 2010. Growth is going to explode and the margins will improve proportionately. cig margins could very well be in the 45-50% range and this is gonna change everything especially knowing they will command 20% of sales and Beverage is more of the same.
This time is gonna be different!!!!!!!!!!!!
Good luck with your answers...still waiting for mine.
Certainly confirms my expectations of expansion.
2011 is gonna be a great year for those willing to hold.
Traderfan after carefully going through the numbers o/s shares and tax increases I believe EPS will be flat to slightly down for 2010. While I expect the N.I. will be higher it is going to be just too much to overcome the higher taxes and share dilution this year. Earliar I had mentioned earnings would be flat to marginally higher. Unless they have a blowout division which is very possible I see NO chance than we can beat last years numbers. Let me also make this clear, this is really possible especially if the 3,000 stores sell product.
After reviewing Q3(09) and the reversal of doubtful accounts of $492K it is going to take much more revenue than I come up with to overcome the forementioned.So I actually believe earnings come in .01 less than last year.
In all reality anything over $10Mil is acceptible and a very legit number for the Q. My blowout revenue number is $12.5 MIl and anything near that and $3.00 will come very quick. I do believe 2011 will be their year barring any dilution that has already been factored in. Gonna hold the shares I have and see what happens. My estimate is for .14 fully diluted and even this could prove high. GLTA
I believe we see our first $1 mil QTR with cigs. If we do $11 MIl total sales this QTR this is gonna fly. Getting back to cigs my guestimate for $1.3 Mil for the Q. This could also prove to be conservative. We are going to see Pappy's revenue explosion prediction come true. $11 Mil for the Q is my low-ball number with the following numbers by division.
1)Beverages-$3.9 Mil
2)Neutraceuticals-$3.4 Mil
3)Cactus Cigs-$1.3 Mil
4)Cactus Feed- $2.4 Mil
5)Misc- .1
Total Revenues $11.1
Beverages will overtake Neutriceuticals in sales.
Also expect over $2.0+Mil in cactus feed.
Gross Margins 40%
Net Income $3,000,050
EPS .138
I would have to concur with you Traderan at this time. They must stay focused on the 3 products that are growing like weeds. This is gonna take resources mainly cash which is not abundant at this time. I don't really know what amount of cash/ people will be required to launch personal care products but would think the manufacture of cigs would be my focus for the next 6 months. Next they have plans on moving out of their old offices. This was told to Zack when he visited the facilities a few months ago.
What would really set this stock off would be as Traderfan has grumbled about many times. NI numbers attached to news. I believe the reason it was not done this year was management knew with higher taxes and conversions the trend would be temporarily broken on a EPS basis. Had they gave an estimate and told of this their credibility would have soared. Another issue would be the last PR where they state that cigs would be 20% of sales. What is the expectation of sales next year? While I believe $50 MIl is in the bag more than likely $65-70 Mil just say what they are period instead of leaving it wide open. IMO, the only logical next product release would be poultry feed as this would piggyback(no pun intended) on top of an existing line with a limited need for capital. Although I do expect product expansion in cigs as that is where all the R & D was spent last Q.
Hang on guys/gals as I expect really good news coming. I know it sounds like a broken record...however, this time is different.
Steven