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Can this be an OMFG moment?
http://www.dragonite.com.hk/upload/news/1310035692_E%20Resignation.pdf
AND
"For the six months ended 30 June 2010, Ruyan Group (Holdings) Limited's revenues decreased 90% to HK$14.6M. Net loss totaled HK$134.7M, up from HK$6.5M. Revenue reflects a decrease in income from Pharmaceutical products segment and a lower revenue from Ruyan atomizing cigarettes segment. Net loss also reflects decreased gross profit margin, an increase in administrative expenses, and higher finance cost."
I was thinking this could not get worse. We'll see what happens when trading opens.
They hold the patents on the whole e-cig and all of it's components. If we only knew the answer to your question we would be buying or selling. Every time the stock dropped to a new low, we thought it was the bottom. Every time we got news we looked for some rise in the stock. The lack of any sustained interest is puzzling and the reason is unknown.
In the meantime some more light reading:
http://www.hkexnews.hk/listedco/listconews/sehk/20110620/LTN20110620017.pdf
My guess is nothing will happen with this stock for a month.
Some light summer reading:
http://www.hkexnews.hk/listedco/listconews/sehk/20110620/LTN20110620013.pdf
NJOY enjoys a good reputation. It is one of large players. It has also been a leader in the fight. On the other hand, the npro has been on the market for 2 years, is way, way overpriced and only idiots buy pre-filled cartridges. Oh, and yes, their products follow directly from the original Hon Lik patents.
When I posted on an e-cig forum a year ago about Ruyan you could hear the deafening silence. The forums really don't follow stocks. I have never posted anything anywhere about the other e-cig stocks. I will now. As far as other stocks go, play as much as you want but be aware of the high possibility (high probability) of a pump and dump. All of those companies enjoy the same reputation of either crap products, way overpriced goods, scam artists in trouble with the BBB, or products in the pipeline forever. The reputable companies with excellent customer service, helpful advice, competitive prices and excellent products are mom and pop shops that are relatively small.
With this in mind, I can see why you were attacked. Don't take it personally. The e-cig forums are fighting hard for the consumer. That is why when the stocks named in the lawsuits are the ones most mentioned in the news, press releases and high in the Google Search they do get mad. They are not so much narrow-minded as much as focused on getting the truth out on e-cigs.
Dragonite did get their balance sheet in order so that they could raise more funds for whatever action they choose. This may be good news. Even if this is another investment move their fiscal situation and financial statements will show they are in this for the long run. They are regarding the patent lawsuits as an asset, not the totality of the company.
The more I think about this, the more I begin to understand that they are properly putting into action a long term, fiscally responsible strategy that will succeed no matter how the lawsuits play out. This type of strategy cuts off the defendants' possibility of delay, delay, delay.
Overheard at yesterday's general meeting: "Our stock price keeps falling. Here's an idea -750,000,000 shares! See you in a month to vote on it."
Every smoker that turns into an E-Cigarette vaper is a loss for the tobacco industry. The profit to be made on a vaper is nominal compared to a smoker. Big Tobacco would only buy the patents if they could bury it, like Big Oil buried the pill that turns water into gasoline, or Big Auto buried the 100mpg carburetor.
While this now minor threat to their profit exists, they have not attacked them directly. I think the more likely takeover attempt would come from Big Pharma. In the meantime E-Cigarette opponents are Politicians, World health groups, National health groups, Countries, FDA etc.. With all this help Big Tobacco and Big Pharma can sit back and keep lobbying.
At the same time Ruyan/Dragonite may want to sit back for a while until some dust settles. The potential customer base is huge and not going anywhere. The current e-cig companies are fighting the legal battles and the lobbyists. They have a strong balance sheet. They have the patents in court. They are poised to make any move they want. They chose not to move now. This is paradoxically a very strong move. The market has valued the stock low. By keeping all options open they become even more powerful. As investors see this I predict a slow gradual up in price and volume.
"In the early years of automobile development, a group of capital monopolists owned the rights to a 2 cycle gasoline engine patent originally filed by George B. Selden. [4] By controlling this patent, they were able to monopolize the industry and force car manufacturers to adhere to their demands, or risk a lawsuit. In 1911, independent automaker Henry Ford won a challenge to the Selden patent. The result was that the Selden patent became virtually worthless and a new association (which would eventually become the Motor Vehicle Manufacturers Association) was formed. [4] The new association instituted a cross-licensing agreement among all US auto manufacturers: although each company would develop technology and file patents, these patents were shared openly and without the exchange of money between all the manufacturers."
The above is from Wiki entry "open source ". Draw your own parallels.
This move - real estate
Next move - ?
www.VAPEFEST.com
Boooooooooring! Good cash flow, appreciation blah blah blah. Lawyers, Accountants and Realtors oh my!
I was hoping for some pizzazz. Sure, with this move the stock price will go up. Maybe even 100%. Prudent move. But I was hoping for 10X.
With this move they will shore up their balance sheet. This would impress lenders and banks. Fiscal responsibility after years of losses. Not just pie in the sky guesstimated lawsuit proceeds. They then could leverage the income for their next move.
In the last few months they probably have been doing lawsuit discovery. That takes time. While working on their next e-cig move they had all this cash around. The money people had the convincing option of investing some in a solid place while reserving choices for the future. E-cigs are here to stay. The lawsuits are not going to disappear. Hon Lik and Ruyan have enormous goodwill value. There is still no rush.
I presume their next move will be in 4 months. That would coincide with Las Vegas VAPEFEST.
My first impressions of their next move. They don't have a distributor in the US. They could acquire one. They could work some complicated deal with one of the companies they are suing. Or they could acquire a factory that they are on the brink of putting out of business. China just passed a no smoking law this past week. That presages a surge in consumer demand in China. They could also acquire an e-liquid company.
All of the above are good choices moving forward to global domination. Anything else points to a B-school case study in opportunities missed. It would also be an end to all the fun we select few have been having in guessing.
They don't seem to have been listening to us. I would suggest that Ruyan contact us if they have any hesitation in moving forward with global plans. Hon Lik should be readying for a world tour to see how many lives he has personally saved (including mine).
Stick - lawsuit
Carrot - takeover
Acquisitions are probably the most boring of all their alternatives. Maybe the makeup of the new board is risk averse. The tobacco guy who left may have wanted a different strategy. The new board could be looking for a lifetime of slow returns, no drastic actions.
Big volume could mean big boys testing sensitivity of the stock, getting ready to take all of the profit out of any move, up or down, hustling all newcomers, knowing that the stock will eventually go back to level, no matter how big the swing. Rollercoaster, anyone?
Sounds tautologous.
I was wrong. I heard from a reputable source the following; the top two e-cig companies sold one million starter kits last year in the US. If this unattributable estimate is true, I was off on potential lawsuit proceeds by an order of magnitude.
Extrapolation from this one fact, these profits, $20-40 million should be forthcoming from lawsuits. Given that a substantial percentage bought more than one kit, I guesstimate that current market saturation would be under 1%.
I think worldwide, e-cigs will see geometric growth worldwide this year. If, as I believe, Ruyan/Dragonite is coming to market with new models, or at least rebranded tried and true models, the success will not be a coin flip. More like a two headed coin.
As my broker told me, the problem will be when to take profits and bail. With scant information and guesswork I think USD1 is reasonable for the coming year.
The following is total speculation. They reorganized financially. That should more than cover costs of litigation. It would of course cover all accounting and stock reorganization fees. The principals all huddled to decide on a plan of action. They were all asked to ante up for production. The guy with 20 years of tobacco company experience disagreed. That is why he is out. The others bought in for a share. They have placed can order for a product. It could be new. It could be old with new marketing. They will make some statement 4/25/2011.
As to the lawsuits, my feeling is that financial gain will be limited, as their targets have had time to bulletproof themselves financially against lawsuits and any inventory on hand will be minimal.
On the other hand, Dragonite/Ruyan may use their lawsuits as a bulldozer to clear the field for their own product. Financially, this could be the riskiest move. Being out of the market for so long, they may not be hip as to what's hot. In addition, they would then bear the brunt of lawsuits against e-cigs. As long as the vendors were our buddies, we felt that lobbying was right. Would grassroots lobbying coexist with a single, well financed company from China, especially if they try to sue small local vendors?
Good points. However, lawyers might wait to get paid. Suppliers would not, given the history of the company. At the last meeting the board might have decided on a plan of action for production for a new model. By financing from within they might be avoiding public disclosure of their plan of action. Or, banks mighty be leery of loaning money to a firm with such great recent losses. Also they retain full rights to any lawsuit proceeds, their only major asset. More clues will come with 4/25/2011 statements. A new model might take two months before a rollout. Time to place your bets!
The e-cig market is still in infancy. There are several paths they could take. The fact that they don't communicate more articulate plans may indicate they haven't decided which way to go.
If they are planning a model they might be wary of failing and just putting their toe in the water. There are some acknowledged experts out there they should be consulting with. I haven't heard anything. They might be considering a small initial run of, guessing, say 10,000 units. Depending on public reaction, they can choose their next step.
I have just recovered from VAPEFEST 2011 PHILLY. Over 400 attendees from as far away as Canada, Texas and UK, dozen or so vendors and experts in Tobacco Harm Reduction. No sign of Ruyan.
New products abound and usage is growing geometrically. Disposables are a tiny segment.
Ruyan finally declared their inventory a total loss due to poor manufacturing. They have been out of the loop for so long I question whether they have any R&D.
The prime sales now center on tank systems that automatically or manually feed atomizers and cartomizers, combining atomizers and tanks. Ruyan wishes to enter the mid to high markets. If so, Ruyan would be the "counterfeit". The Riva/Ego has proven itself to be the market leader in the middle price range ($45-$80). There is no dominant leader in the $80-$150 range mostly because the end market users have not decided what features they like. The HIGH $200-$400 are just now coming to market. Programmable top feeders with touch controls. Hand carved wood pipes with hand made long acrylic stems. Immense 4000mah batteries with 20 ml bottles (can be used for a week without charging or filling). Oohs and Aahs..
There certainly is plenty of room for Ruyan to enter the market. But they better be right. We are much better informed. The message boards and its members work at high speed.
The companies they are targeting are, by now, bullet-proofed, suit-wise. They might best be served by hiring some of e-cigs reviewers as consultants. Ruyan has the name, founder and patents, but no viable product or presence. Do they even read this board?
Our next National Vapersclub meetup/party will be in October in Las Vegas.
S.it, fan maybe.
Also look at WWW.Vapersclub.com for a meeting near you. The following was taken months ago at the NYC and LI (Long Island) Vapersclub meetings.
I learn something new every day. I can't pm without upgrading. So - public message. I agree that we are waiting for their next move. I saw some large trading this week.
Sang- nice recap. All the players are putting their ..... on the table to show how big they are. A lot of money is at stake in the multibillion dollar cigarette market worldwide. The only thing they agree on is that e-cigs are a big danger to their profits.
Newmedman - cartridges. Not one person I know uses them. Once the juice became available for purchase, everybody started filling their own, using one for days. Then atomizers improved, allowing for direct dripping. Drip a few drops and use, blow out the excess every night. Then cartomizers arrived. They hold more juice than the carts, and they are atomizers. They are a little finicky. The filler (as in cartridges) degrade over time. I only see them used in Wetboxes. The tanks are the latest technology, and are especially good for people with long commutes and long haul truckers.
There are several excellent forums. No charge. Beginners welcome. Really helpful. WWW.e-cigarette-forum.com and WWW.Vapersforum.com.
I personally recommend WWW.Cloudsofvapor.com. I have no stake in the company. I have found their service, quality and guarantees impeccable.
I would recommend the eGO kit. Many thousands of these units have been sold. And they are guaranteed. It comes with filled carts and two complete e-cigs. Buy a bottle of juice and two 510 drip-tips (not metal). Then you'll have to buy a second kit for yourself (ha ha - but true).
Juice can be:
1) Propylene Glycol (present in toothpaste, barbecue sauce etc.), common additive. FDA GRAS (Generally Regarded As Safe for human consumption). A very, very small percentage of people have a sensitivity to this ingredient.
2) Vegetable Glycerin. Pharmaceutical Grade.
3) Some combination of the above.
In the juice is a level of nicotine, also inspected. And favoring is added. Any flavor is possible. Waffle is a favorite of many.
The only toxic component is the nicotine. If someone mixes their own juice using nicotine concentrate, special care must be used. As the bases are available premixed with nicotine, few people deal with the concentrate.
Juice should be kept out of reach of children and pets.
Since a large amount of juice is manufactured in China, there might be some apprehension as to contamination, unknown additives etc. The simplest answer is that all above-mentioned ingredients are so inexpensive and easily available that any contaminant would be more expensive. All the major juice factories are "clean" labs and are inspected.
The containment of the liquid (MAP tank) in my picture is made of LEXAN. You can run over it by a truck, over and over, without damage. Dropping it doesn't even scratch it.
The e-cigar was a flop. The battery did not last, the atomizer died and the juice leaked. It was abandoned as an idea.
The mods I have require little training. They are actually easier and more foolproof than the ones that look like cigarettes. There are only a couple of mods worldwide that are rated expert.
Everybody got into the gadget part. Those who have shop experience and smoked cigs found the early e-cigs wanting. People called modders on their forums discussed (open source) improvements. A great deal of effort has been expended in this effort, more than any one company could pay for. There have been failures. What seems to work in small production sometimes fails in mass production.
Some mod patents have been applied for. One of these might become the Ford.
If you are happy with what you have - great. E-cigs have been proven by orders of magnitude better than smoking. Outside of PG sensitivity, no ill effects have been seen. Considering the large number of users and the prevalence of forums the e-cig bad reports are few and far between.
If you or anybody wants a recommendation PM me.
March 25-27, 2011 VAPEFEST in Philadelphia. Hundreds of attendees are expected, with attendant press coverage.
I think, personal opinion, unsubstantiated, the stock price couldn't go any lower ever. How it got to be so low I can only think of one reason. Management's decision to reorganize while not selling product. The market has been growing by leaps and bounds and they are on the sidelines. Their only public face is the required stock filings. Anybody know the name of the guy who invented the car engine? Not Ford, the guy who held the patent! The guy Ford fought in court for years. The guy won. He made a modest fortune. Draw your own parallels.
Anyway, back to product. I am not aware of SFIO product. Let me be clear on this, I only see their stock up and down, their press releases and their promises. I am not aware of any product they have.
As for Smoke51 and others being sued. Their distribution network, mall kiosks, chain stores etc. These imply a large network. In fact, the models they sell are over a year old and considered 1st generation. Customer satisfaction is low. Profit margins are insanely high. That model is only good for people who smoke 5-10 cigarettes or so a day. The sales force they use is "independent contractors".
The Riva or Ego is perfect for the pack a day smoker. High satisfaction, reasonably priced, made in China. They have not been sued yet. Easily available in the US from distributors.
The mods in my picture are small production. They are more techy but can satisfy a three pack a day, 30 year habit, no problem. Probably too hard to go after in court. If Hon Lik wants $10 license fee from a $100 mod for his idea, speaking for myself, I would pay. These are, relatively speaking, mom and pop shops.
I thought Ruyan only changed the company name to Dragonite (a pokemon character!). The patent is owned by the company. Hon Lik is paid a $1m salary (?) and owns a part of the company.
I thought that when the patent was awarded they would go to press. I thought that when the lawsuit was filed they would publicize. I thought that the media was so biased against e-cigs because of pressure from big Tobacco and Pharma. I was wrong. Dragonite itself is too quiet. In this media age, you have to try hard to be this quiet with this big news. Maybe the stock market distrusted this level of quiet.
Metrics - current estimates of USD100 million seem fair given market saturation at present.1 million users at $100 per worldwide. This amount is low. Most people are buying substandard product from the companies that are being sued. Those designs are even older than Ruyan V8. They are definitely covered by the patent. If Ruyan forces them out of business there will be a vacuum. There is a much better design for the mass market called Ego or Riva. It also is covered by the patent. It is made in China and there are fakes as well. Of course it is harder to enforce a patent in China. I think they would be better off striking a deal and selling them as an authorized e-cig. That design has proven to work dependably. The mods that I showed are made by dozens of small independent companies around the world and are for people who smoked heavily. Total sales at present are estimates since the companies will not work together, will not report sales. If Dragonite has its act together, the next move that they announce could blow the market wide open. While the whole world has seen the e-cigs market grow geometrically, they stayed quiet and got their house in order. Over the last year our local Vapersclub has seen steady growth every month. Several manufacturers and dealers attend every month. I know e-cigs. Ruyan will win. How much depends on their game plan.
The e-cig did not even start in the US until 2 years ago. The buying curve is at present geometric. Sales in US could grow exponentially. The immense pressure against them could fade quickly as more studies are done, published and publicized. How high the stock goes is up to management.
My personal guess is within 5 years there will be at least 10 million US e-cig vapers, or 1 out of 10 smokers. In other words, USD1 billion. How much is Dragonite worth? You do the math.
Respectfully. The mods that I depicted are the most modern. The e-cigs that are on the Ruyan website are over a year old. E-cigs consists of three parts : atomizer, battery and liquid container. The V8 battery is 200mah, charge lasting maybe 2 hours, heavy vaping. The mods I depicted range from 1600mah to 2000mah. The V8 atomizer burns out in 2-5 days. The MAP atomizer lasts 1 month minimum. The V8 contains .5ml liquid, equal to 4-5 cigs. The MAP contains 5.0 ml. These can be built by anybody. Previously, atomizers had to be factory made. Now you can build your own.
The Ruyan models were recalled, payments were refunded, and immense inventory writeoffs were taken. All that is history. With the new patents, officers and funding, they are poised to move forward. The potential market is billions, but is nowhere near there. Resistance to this new technology worldwide is immense. Laws are being passed against them. Cigarette companies and pharmaceutical firms have successfully lobbied the FDA, Governments and International Health groups against them.
I bought stock and exercised my rights. I believe Ruyan will prevail. The stock will rise. I don't know how high. But it could have been the market leader. In my opinion, the market is waiting for their next move.
The items depicted for sale are crap. They are over a year old and considered first generation. They were returned to Ruyan because they were defective and deemed worthless. Hence the large loss on the books. The e-cig market is now fourth generation. Dragonite has not shown any new product, nor any inkling of new product. Management has been upgraded, finances put in order, but there is no sight of product development. If management is to judged on results, they have improved financially. Until they have something for the e-cig market they can only bargain with existing e-cig markers for a portion of their profit. In fact, some e-cigs only use the idea in the patent, and may prevail in court. Hon Lik/Ryan/Dragonite may have started this now US$100 million industry but Hon Lik may end up as a footnote. For comparison, below, the GG mod (left) is made in Greece, the MAP tank is made in the US, and I use juice from China. The middle mod is made in US and is variable voltage. The right mod is made in China.
I found e-cigs 20 months ago after smoking 3 packs of cigarettes a day for decades. I was not trying to quit. I did not want to quit. It just happened. I switched over. It was easy. The hardest addiction to break was in fact simple with e-cigs. This is a very common story.
The Ruyan story is unique. I invested. Down. I held. Down. I watched. Down. Reverse split. Down. I exercised my rights. I have no idea what my investment is worth. I don't care. I just love watching the fun.
My health is better by degrees of magnitude.
There are a few things I know. The ceiling is probably limitless. BUT... While large scale manufacturing is vulnerable, there are many small manufacturers and modders (modification builders). Many forums explain how to build your own with easily available parts. The liquids, propylene glycol (a common food additive), vegetable glycerine and favorings are easily available. Step by step instructions are easily obtained.
While Ruyan e-cigs failed due to poor manufacturing, hundreds of small companies have sprung up. It has been a geek bonanza. While Ruyan is 1st generation, many models in the market are what I consider to be 4th generation, with 5th generations around the corner.
I keep watching and vaping.