I am updating my staus.
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Tiancheng's drilling utilization rate is currently at capacity in the 2009 fourth quarter and we have existing drilling contracts that will carry over into 2010.
Q3 they did $20 Million drilling revenues...
Q4 they estimated $13 drilling revenues....
This is what I was waffling on about... it just made no sense given the time of year, the ordering of new rigs etc. My bet would be nearer $20 M than $13 M.
If they do $13 in drilling then I'm thinking around $0.32 or $0.23 if I apply my wet-blanket, pretend to take 2102's 40% of the oil.
If they do $20 in drilling then I'm thinking around $0.39 or $0.30 if I apply my wet-blanket figures.
Anyway, up and I figure that this is a $10 stock for me while we wait on the final numbers
rich
Something along the lines of 'We hope to close it within X and Y dollars'
That won't help negotiations. If the other party heres the range then it's going to be >= Y. Even getting 11 million onto balance sheet will affect negotiations as the other party will think PUDA going to fork out more.
They are in discussions to buy the TING mine as well in the next couple of months, as per their presentation.
Missed that... had a look again, do you mean Tian Ri & Tian Long?
SGZH - tens of millions of cash on their balance sheet and nothing to do with it.... I hope they have a plan.
rich
ckuratz, Great post... I will work through it and square the circles with my numbers ...
cheers
rich
NEP shares O/S....
Ok, I keep seeing different numbers everywhere.. and got myself confused.
Q2 I have 21898245 diluted. Then they did 4,800,000 deal... so I've got them as having diluted of 26,698,245?
Anyone disagree?
rich
BSPM... Yup, I should have put in 2011, helps project and give a value. Hmm... have you noticed that except for the Hep B... nothing else has grown? Everything else if totally flat. Your better off modelling by guessing growth of Xin Aoxing Oleanolic Acid Capsule - as the rest of the business is totally flat as a pancake.
What about the downsides of dilution? Might need another few million injection to keep going? I'll throw that brick up there.
I'll stretch the numbers out to 11 I'll, maybe, guesstimate a growth on Xin but the rest of the business remains flat.
rich
http://www.sec.gov/Archives/edgar/data/1418133/000118518509001139/biostarpharm-10q093009.htm
BSPM Overview and Valuation
BSPM is a biotechnology firm based in china. They have a number of successful drugs and one in particular, Xing Oleaonic Acid Capsule, is, by Chinese standards, a potential block buster.
The presentation below [1] is worth a read for all new investors but the essence is that Hepatitis B afflicts 10% of the Chinese population, 130 million, there is no cure, viruses are notoriously difficult to cure, but by taking medication you can limit the damage. If you look at the report [2] you will see that not only is this the only drug that will be available over thecounter (OTC) in China but PRC is not issuing anymore OTC hepatitis licenses - this is a significant moat to protect BSPM's business.
They recently got financing which will be used to grow the business. In doing so they set certain provisions that they were comfortable with.
They said they would aim to do $16M ish Income from operations - which should work out around $12 ish net Income and using 26 Million shares that works out around $0.46.
In 2010 the make good provision is $21.1 M and assuming the same margins and tax rates works out around $0.61.
Another, way of valuing the company is the growth in outlets - during 2009 the percentage of revenue from outlets has been increasing.
Outlets by end:
April '09 1320
Sept'09 3512
Dec '09 5000
By 2011 10,000.
In 2009 with the last numbers available, start of November [3], they were doing $13 ish a day in revenue per outlet. If these are replicated for the rest of the year and next year we will see:
Outlet Revenue
2009 $11.6 Million
2010 $36 Million
Meanwhile the rest of the business in 2009 was around $40 Million. So, if the rest of the business doesn't expand in 2010 $40 + $36 = $76 M revenues which at 23% net margins and same diluted shares gives $0.68.
So, management guidance and rough back of an envelope calculations suggests that $0.60 + is very possible from 2010. So a reasonabe valuation by the end of 2010 might be.
P/E 10 $6
P/E 15 $9
P/E 20 $12
P/E is largely dependent on ongoing growth - we have no guidance beyond end of 2010 - that I am aware of.
Upsides:
- Uplisting - the company has plans to uplist within the next few months and this usually results in companies holding higher multiples.
- As outlets are opened longer it's possible they become better known and do more customers.
- New drugs have a ready distribution chain
Downsides:
Most of the revenue will be coming from Xing Oleaonic Acid Capsule - although they seem to be the only ones allowed to sell this in China - clearly losing this monopoly or losing the license would be a large blow from BSPM.
Conclusion
The company is still holding a cheap valuation. The risk comes from being overly reliant on one drug, however, the drug has a considerable moat - unless it loses it's ability to sell or has, somehow, gets significant competition.
[1] http://www.hcinternational.net/pdf/BSPMInvestor%20Presentation.pdf
[2]http://geoinvesting.com/companies/bspm_biostar_pharmaceuticals/research/special_situations/0023354
[3] http://finance.yahoo.com/news/Biostar-Pharmaceuticals-Inc-prnews-260900339.html?x=0&.v=55
BSPM Overview and Valuation
BSPM is a biotechnology firm based in china. They have a number of successful drugs and one in particular, Xing Oleaonic Acid Capsule, is, by Chinese standards, a potential block buster.
The presentation below [1] is worth a read for all new investors but the essence is that Hepatitis B afflicts 10% of the Chinese population, 130 million, there is no cure, viruses are notoriously difficult to cure, but by taking medication you can limit the damage. If you look at the report [2] you will see that not only is this the only drug that will be available over thecounter (OTC) in China but PRC is not issuing anymore OTC hepatitis licenses - this is a significant moat to protect BSPM's business.
They recently got financing which will be used to grow the business. In doing so they set certain provisions that they were comfortable with.
They said they would aim to do $16M ish Income from operations - which should work out around $12 ish net Income and using 26 Million shares that works out around $0.46.
In 2010 the make good provision is $21.1 M and assuming the same margins and tax rates works out around $0.61.
Another, way of valuing the company is the growth in outlets - during 2009 the percentage of revenue from outlets has been increasing.
Outlets by end:
April '09 1320
Sept'09 3512
Dec '09 5000
By 2011 10,000.
In 2009 with the last numbers available, start of November [3], they were doing $13 ish a day in revenue per outlet. If these are replicated for the rest of the year and next year we will see:
Outlet Revenue
2009 $11.6 Million
2010 $36 Million
Meanwhile the rest of the business in 2009 was around $40 Million. So, if the rest of the business doesn't expand in 2010 $40 + $36 = $76 M revenues which at 23% net margins and same diluted shares gives $0.68.
So, management guidance and rough back of an envelope calculations suggests that $0.60 + is very possible from 2010. So a reasonabe valuation by the end of 2010 might be.
P/E 10 $6
P/E 15 $9
P/E 20 $12
P/E is largely dependent on ongoing growth - we have no guidance beyond end of 2010 - that I am aware of.
Upsides:
- Uplisting - the company has plans to uplist within the next few months and this usually results in companies holding higher multiples.
- As outlets are opened longer it's possible they become better known and do more customers.
- New drugs have a ready distribution chain
Downsides:
Most of the revenue will be coming from Xing Oleaonic Acid Capsule - although they seem to be the only ones allowed to sell this in China - clearly losing this monopoly or losing the license would be a large blow from BSPM.
Conclusion
The company is still holding a cheap valuation. The risk comes from being overly reliant on one drug, however, the drug has a considerable moat - unless it loses it's ability to sell or has, somehow, gets significant competition.
[1] http://www.hcinternational.net/pdf/BSPMInvestor%20Presentation.pdf
[2]http://geoinvesting.com/companies/bspm_biostar_pharmaceuticals/research/special_situations/0023354
[3] http://finance.yahoo.com/news/Biostar-Pharmaceuticals-Inc-prnews-260900339.html?x=0&.v=55
Coal: Did I imply only 20M? Ok, well, as you say it's 20M extra....
rich
TSTC, Joe: Net Margins 20% - why do they think it will be 20% rather than 15 - 16% earlier in the year? Is it a product mix think?
cheers
rich
TSTC Joe, great DD eom
SD, yes IBD is well followed probably the most followed stock list that I am aware of. It's not a bad list - they apply various metrics to stocks, growth, ROI, RSI etc etc... and filter all the stocks through it and end up with 100 best stocks.
They contend that if you bought the list you would do better than buying S&P, say.
Personaly, I used to read through the list and select the ones I thought were best. However, other people will read the list and many a purchase will be made simply because it's on the list. Consequently, moving on and off the list can cause substatial swings in PPS.
Essentially, if the market thinks TSTC is worth more we'll soon know about it. The only thing I can guarantee is increased volitility as if TSTC needed any more
rich
Indonesian coal: rising demand from China and India
- Indonesia has high quality coal
- Indonesia produces 230 Million tonnes, 190 M exported
- Indonesia has coal fired power stations that will use up 20 Million by 2011
IEA Predicts
- Global demand for coal would increase by 1.9% per year until 2015 - more than any fossil fuel except natural gas
UBS predicts
- Global coal exports going to china will double to 10% by 2012
- Global coal exports to India will go from 5% to 8%.
- Only copenhagen aggreemnt can make any significance to this
http://www.economist.com/businessfinance/displaystory.cfm?story_id=15065525
rich
TSTC IBD100 Pos 20 eom
Excellent Well, it's a simple model and we know it works. Personally, I have my feet back and leaving it to do the business.
rich
Yup... the drilling company added significant earnings to NEP. I cant find a scenario where its worth less than $8 if it hits numbers. $10 equally plausible providing drilling matches last Q's numbers - management are guiding lower numbers but ordering a new driller, who knows
If you look at the graph then you will see the upturn in price since quarters results were released. 10-Q has all the information on the drilling company.
rich
CHTL - if the pipe deal went through... would this be a buy for you? Assuming reasonable terms and buildout is executed?
My understanding is that Tobins owns / manages millions of shares of CHTL.
rich
CHTL - is it a story stock still? Or has there been new information regarding the wireless network?
rich
NEWN, stillstephen - I think your over emphasising the boards reaction. People were kicking the tires of the stock. I think there's a general interest - it's a simple model to understand.
The fact is more messages means interest / clarification - not this is rubbish (which it obviously isn't)
I think that invetors were interested in was how they would end up with $10 M in cash by end of the year... Which I must admit I can't quite fathom... unless the new aquisition was firing on all cylinders and had significant recevables that they can collect on.
I personally, had a look again at NEWN.
Which posting did you feel ridiculed you?
rich
CALI - are they affected by the stimulus package? Seems, to me that it's supercharging the sector... I'm wondering what happens when stimuls removed... do you think it would affect CALI?
I think I'm right in saying they import cars then sell them?
rich
LLFH Uplisting - announced they were going to AMEX then they recanted and said we need to hand in our 10-K first before uplisting. They then did hand in 10-K then they didn't uplist.
Now, they are trying to uplist to NASDAQ, to be honest it looks like they've been forced into it rather than chosen it. The best interpretation I can make of the events is they've made a hash of uplisting.
What reasons might stop a company that otherwise qualifies from uplisting?
rich
NEP, yes 40% only happens in 2012... however, it's like a biotech company with one of it's key drugs nearing patent expirery. The earnings get discounted.
The 20% extra should be discounted, however, I think they will make great usage of the cash.
These are my estimates for Q4
Q4
Net Income from oil if 20% takeoff 4,763,103
Net Income from oil if 40% takeoff 2,289,785
Net Income from drilling 3,770,000
So, to me it's primarly a drilling services company... which does a little oil.
rich
NEP - I've argued somewhat on this point... If you take the base EPS for 2010 your missing the point of the switch over from 20% take off to 40% takeoff in 2012.
That said the drilling was a godsend... Given the management numbers from the drilling... I reckon the stocks worth more like $8. However, given that the winter is the time to drill (summer is too wet) and that they are buying a new rig.. I think they are being cautious on their numbers..
They did 19 Million in rev from driling in Q3 that includes July and August... and they think they'll hit $13 million this quarter... sounds low ball. If they do nearer the 19 million then it's a $10 stock, for me.
If they get a new lease with 20% takeoff for the next 10 years... then NEP is off to the races. Personally, I think they will do some deal or other, it's such a dynamic area and they are so well managed and connected.
rich
All PUDA's business, so far, has been washing coal - in this business the margins have been reduced. Q4 or Q1 2010 they will start to get coal mining revenues.
LLFH's core business is selling coal (can't remember if they also do washing?). Coal's price has been maintained, and indeed, increased during the year - so margins have been maintained, unlike coal washing.
PUDA wants to get where LLFH is already. The downturn has had more affect on PUDA's business - rather than LLFH being necessarily executing the day to to day running of the business any better. What would be fairer to say, perhaps, is that LLFH management was quicker at moving them into the mining business? Which gave them protection during the downturn.
rich
NEP Options Trading....
I can currently own some NEP DZ options 2.50 strike and all the rest.. I'm sure you are aware of these...
Currently they are priced at $3.4 in my account. Add on 2.50 is $5.90 - I assume that this mis-pricing is just a low volume? Fair value should be at 10 cent premium or something? So, assuming an efficient market then $6.10 shares should be available for NEP DZ options for something like $3.70?
Anyway, I can't see an option to excise them.. If I wanted to exercise them do you phone the broker?
rich
Indeed PUDA Y/Y looks terrible but that's a pointless comparison... what you need to look at is Q/Q and you will see that the margins improved and the volumes improved.
People buying the PUDA stock wont really care about Y/Y issues ... The problem has been that smelting factories have reduced inventory and now.. having run out they are starting to order again. The question is going forward can the margins be maintained and can the volume increase?
They were certainly bullish on the volume growth in the PR. I think PUDA is offering a chance to return to the 2008 levels or at least... tending towards them. So that's great upside... PUDA itself is a story stock that is relaint uppon them executing in a new area of commerce.. mining...
LLFH looks a far better planned expansion... or rather.. they have worked with the companies they have bought vs PUDA's forced aquisition.
I would say that LLFH offers a great mid term investment that should, assuming the viability of coal, and they hit their best case numbers could be worth $13 a share at P/E 10 by the end of the financial year ending April.
Personally, I own both and personally I think I own too many coal stocks
rich
PUDAs results were excellent and still fell... but that was more to do with confusion with the warrants... SGZH as we know is a special case...
What we need is good results, continued good gudance... and something along the lines of Coal will be a mainstay of chinese energy for the foreceable future.
To me it feels more like sentiment.. people thinking about environment and not thinking about realistic energy choices available to the Chinese.
rich
CBPO rang NAZ bell pps down eom
There's two things for me
1) Copehagen overhang... but the most likely situation is that coal usage is going to remain stable over next 20 years. IF they can sort out carbon sequestation then it might be viable until coal runs out.
2) Why no uplist?
I hope both of those will be resolved sooner than later.... Anyone else?
The results should be coming out soon... but after CC I can't see they can be anything but good.
rich
Thanks atco for a comprehensive answer eom
rich
Interesting, do you know how much PR costs?
I tried to google PR and costs but didn't get very far...
rich
Is Cameron playing PUDA & LTUS?
http://thetechnicaltrader.net/
rich
BSPM, Drexion noted the situation with the drug being the only allowed HEP OTC, he called it grandfater rule or something or other - it was good to see Geo investing agree but I personally didn't think it was new news - perhaps he only posted this information on BSPM board?
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=43821591
rich
OT ImOuttaHere...
Sorry Mike.. don't have private message... the person who wrote about Rhino at GG really didn't understand it at all - it certainly wasn't a one trick pony. It's a shame you sold out on that advise. I sold out because I throught Q3 was going to be poor What do I know? At least it was my own decision!
rich
I claim no special knowledge on the area, if others know better please advise. I would have thought starting to produce commercially a new item was an important milestone.. but what do I know?
rich
CSGH - is a story stock, it's a good story But the story has gone quiet - without the thread continuing the pps ends up blowing in the wind.
It's the mistake I made with PUDA and CCGY. Until the earnings are in place these story stocks are highly volitile and dependent on the belief in the story. That said this time next year... assuming the story executes and the battery orders come in... these prices will be a fleeting memory.
rich
SKBI, joko, No I didn't listen to the CC... I saw another vaccine company talk about using some of their capacity to target animal vaccines and wondered if their might be, intially at least, overcapacity. I wasn't worried because SKBI had the industry contacts.
However, if what you say is right.. then it's more about getting things started up / education. I've got SKBI as doing $990,000 in vaccine revenues (not sure where number comes from) so it's still a big increase to the $6 Million... But, as you say, it's a big drop for missing Q1, and Q1 is their quietest quarter by a big margin.
rich
atco, thanks for your thoughtful response...
Can you go over what you meant by the folllowing...
But, like all of these small cap, no PRs without triggering SEC requirements.
rich
SKBI, They are low vaccine numbers but you have to work with them - it might be that, for instance, the reduction in vaccine revenue is due to oversupply / increased competition in the market? Which is may be why they are trying a new type of vaccine to increase capacity... I'm not saying that's the case! But without more detailed information it's a question mark.
That said the core of the business looks like it's doing ok. If you can wind all the numbers back ... lower margins.. lower revenues and, hell, take out the vaccine completely you can still make a good case for buying the stock.
rich
SKBID, abh3vt...
sorry reread your posting... I completely agree with what you say. I'm going to update my spreadsheet.. as Joko pointed out..
rich
SKBI, abh3vt,
Hi
Indeed no EPS guidance... hence ish.. I have rebased all the EPS to the new share count. They have done the dilution and have a considerable amount of cash on the books, I have them as around 7,025,343 shares and I've estimated they'll have $13M ish cash.
In this situation the obvious reason for not giving EPS guidance is the range of gross margins... as you know the microbes have higher margins and how this affects the overall mix? Dunno... but assuming they hit the same 50% gross margin then I rasied the EPS by the same percentage amount as revenues.
Anyway, cheap company however you slice it.
rich