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I'd like to use up my last two trades to perform the following:
Trade TBYH.ob for TCLL.ob
Trade ETLT.ob for CPHI.ob
No guts, no glory.....got a lot of ground to make up in a short period of time!
J Sim, TBYH has no IR firm representation at present, and without any PRs, there isn't much to attract new investors. I'm sure that there were a few of the existing investors that sold when it became clear that there wasn't going to be a Q2 PR.....
The pop that CKGT experienced today was directly related to new investors discovering the story. TBYH has some decent appeals, with strong top-line growth of 30% and its exposure to 3G development in 2007. However, its falling margins hurt eps growth in Q2, and that 30% growth only translated to 10% eps growth.
Perhaps margins in Q3 will be better sequentially if they have a higher percentage of new design work (quotes from the Q2 for qtr ending 9/30/06):
"Some of our popular models such as series 9701/9702, 9109, 9110, along with new solution of 9501, are still selling well. A large portion of our royalty fees, which accounted for about 77.1% of our design fee revenue, was generated from these models. Therefore, some of the customers are shifting their new phone design orders to the Oct-Dec quarter when it is the holiday peak season. Extended solutions of these models will be introduced to the market in about 6 months."
and
"On the other hand, during the quarter ended September 30, 2006, we introduced three new design solutions of 9501, 2702, 2708 series to the market place. We have withheld the development of other three new model series because we believe one of our chipset platform providers may shift its business focus from baseband digital signaling business to other products. We have been actively looking for new partners since June 2006 and started cooperation with VIA Technologies Inc. Ltd. to develop mobile handsets for china market. Solutions based on VIA solutions have been completed in October and products will be sold in November 2006.
-----------
Seems to me that some of the higher margin work got pushed into their fiscal Q3. Plus, that time of the year seems seasonally stronger, so that should help sales as well.
Curlews, the early institutional investors in BBC were the following:
The following table sets forth the common stock ownership of the selling stockholders as of April 7, 2006. The selling stockholders acquired their securities through a private placement offering which closed on March 15, 2006.
Name Total
Shares Owned and Issuable Upon Exercise of Warrants Before Offering
Number of
Shares Offered for Sale
Charlemagne Capital (3) 63,047 63,047
Credo Capital plc (4) 55,000 55,000
Eagle & Dominion Euro-American Fund Limited (5) 16,000 16,000
Eagle & Dominion Euro-American Fund Limited Partnership (5) 4,000 4,000
Savoy Investment Management (6) 10,000 10,000
York Capital Management Limited (7) 232,132 232,132
Amaranth Partners L.L.C. (8) 133,333 133,333
* Less than 1%.
------------------------
Amaranth ring any bells? One of their affiliates, Amulet, had another big chunk of shares in BBC: 657k shares at one time, according to my notes.
NOTE: the shares listed above for Amaranth were for warrants attached to a convertible note. The note was paid off by BBC, and I don't believe that Amaranth ever fully exercised those warrants.
They did attract some interest last year from Jeff Vinik's hedge fund, but they sold out during the early summer, if memory serves. Recently Fidelity has been a big buyer of BBC, at least as of Sept 30. However, given the revelations of the past few weeks, I wonder if they didn't sell?
Nice to finally break through that 1.45 ask. Now bidding 1.45...wonder who was selling all those shares? Whoever they were, at least they were patient. Buyers (including me) finally burned through the supply today.
AOB/CSSTF connections. Some interesting participants in the AOB call:
JLF Asset
Pinnacle China Fund
Patara Capital
Brean Murray
Orange Capital
Lotus Partners
------------------
JLF, Pinnacle China, and Patara Capital also have stakes in CSSTF. Brean Murray is an investment bank that has a focus on small cap chinese equities, and they were asking lots of questions on the CSSTF call. JLF and Pinnacle China seem to be savvy hedge funds with pretty good performance track records, from what I have found from limited public info. I'd love to believe that CSSTF is going to be the next AOBO, given the sponsorship and attention they've attracted.
JLF also has a major position in CXTI. Pinnacle China has substantial positions in CSSTF, CBAK, CAGC, and CPHI. All of those stocks have been mentioned here from time to time.
I've tried to follow the "smart money" within the OTC:BB China universe. There seem to be lots of interesting low PEG, strong growth china stocks, but also tons of issues as we've seen with BBC, and CESV. I'm hoping to increase my chances of finding more of the AOBs of this world, which can offer tremendous returns over time.
KIK, Praetorian has been very active in buying up DAAT stock as well:
http://biz.yahoo.com/t/66/6846.html
They control a mind-boggling 30% of the fd shares in DAAT.
Chris Byron out with another critical article on Chinese reverse merger stocks.
http://www.nypost.com/seven/11202006/business/bubble_icious_business_christopher_byron.htm?page=2
He makes mention of CSSTF:
Consider China Security and Surveillance Technology Inc., which was formed out of a reverse merger with Safetech Inc. in 2005. The company sells surveillance cameras and related equipment to schools, banks and commercial buildings in China.
How much gear the company has actually sold isn't clear because this is a foreign company, based in China and incorporated in the British Virgin Islands, which lowers a second veil of obscurity on its activities. Filtered thusly, the company reported $6 million of net income from sales of $22.6 million during the first half of 2006.
It sounds impressive, but when you look at the numbers more closely, that $6 million of reported net income turns out to be nothing but a paper profit that didn't put a dime into anyone's hands.
In reality, the company burned through a bit more than $80,000 in cash during the period, in part because its inventory of unsold surveillance gear was growing twice as fast as the business itself was growing.
In spite of this, with the company hemorrhaging cash, China Security has soared from $2 at the start of the year to $10 by the end of last week, with most of that gain coming in just the last 10 weeks. With a bit more than 29 million shares outstanding, the company boasts a market value of close to $300 million - this for a business that gives its shareholders none of the protections of U.S. law and that might actually be going broke.
--------------------
A couple of comments are in order here. I think Byron did a fantastic job at identifying the shady stock transactions that happened at BBC, but his comments here are a bit off.
Consider:
"How much gear the company has actually sold isn't clear because this is a foreign company, based in China and incorporated in the British Virgin Islands, which lowers a second veil of obscurity on its activities."
--------------------------
Wrong! The company just announced that it has reincorporated in Delaware, and will be a US domiciled corp:
http://biz.yahoo.com/prnews/061114/lntu011.html?.v=1
"The board of directors determined the reincorporation is in the best interests of China Security based on a number of factors, including enhanced credibility, greater flexibility in corporate law, and attractiveness for directors and officers. "
-----------------------------
"the company reported $6 million of net income from sales of $22.6 million during the first half of 2006.
It sounds impressive, but when you look at the numbers more closely, that $6 million of reported net income turns out to be nothing but a paper profit that didn't put a dime into anyone's hands.
In reality, the company burned through a bit more than $80,000 in cash during the period, in part because its inventory of unsold surveillance gear was growing twice as fast as the business itself was growing.
----------------------------
Comment: companies undergoing high rates of revenue growth (and CSSTF's revs are up 247% y/y in Q3 and up 164% ytd through 9 mos) often burn cash during this phase to finance inventory and A/R growth. That's true in the US, and every where else in the world. Having said that, its always good to look at the health of those ratios by examining Inventory Turns (which I measure as CGS/avg inventory), and DSOs (Day Sales Outstanding) which gives investors some idea of how quickly A/R are being collected. Here are some of my numbers through Q3 for CSSTF:
Inventory Turns (higher is better)
------------------
Q1 06: 2.6
Q2 06: 1.8
Q3 06: 2.2
DSO (lower is better)
------------------
Q1 06: 65
Q2 06: 182
Q3 06: 40
Byron's numbers don't reflect the numbers from Q3. Looking solely at ytd through Q2, I can see where he might have some concerns, but the company mentioned on the call that their new accounting company wanted them to be more conservative in rev recognition, so they deferred a lot of rev into Q3. That made the DSO and Inventory Turns numbers look worse than they really were in that quarter, IMO. His fears about inventory levels look a bit out of step given that the company has announced that they had a backlog of 16.3MM; deferred rev of 1.5MM, and announced orders of 10.7MM that will be recognized in Q4. That's a total of 28.5MM in orders that need to be filled, and inventory (at cost) is 19.2MM as of Sept. 30. Doesn't seem to be an issue to me.
Company going broke?!? Cash of 23.5MM, against 4.3MM in total debt. That's about 0.64 cash/share. OCF was slightly below break-even at -1.1MM, and there is very little in the way of int expense here. I'll let the investors here decide what they think of that comment.
We have two analysts following the company. The eps estimates look reasonable, based upon the company's results and the visibility the company has into quarterly results.
http://finance.yahoo.com/q/ae?s=CSSTF.OB
FY06: 0.86
FY07: 1.09
These appear to be fully taxed numbers. (NOTE: the statutory rate in Shenzhen's special economic zone is 15%.) The stock is trading at 9.85, or 11.5x FY06 estimates. The company has indicated that it is now trying to get on Nasdaq, not AMEX, as it had been earlier. If it can, it would be a major boost in credibility. This one just feels different than BBC. They have been conducting investor presentations and just held their first quarterly CC. I would invite all to listen to it and form your own opinion of the growth prospects here:
http://biz.yahoo.com/prnews/061114/cntu014.html?.v=17
I am long the stock, obviously. As far as i can tell, the company has fully disclosed all of its shell owners and early shareholders. The only Form 144 selling has come from shell holders who never hang on to that stock for very long.
Curlews (and Mike), I spoke to Crocker Coulson (IR spokesman) about this issue on Friday. According to him, the 10MM shares were exchanged by these two for rights to a patent that is unconnected to CPHI's business. (Tsui sold the rights to Li) Apparently, the shares were used as currency to complete the deal....
I urged him to get the company to file an 8k about this. It is confusing to say the least. I hope they will follow up and issue that filing.
The only clue to what happened was the Form 4s that were filed. If you look closely you will see the reason given:
For Li:
Explanation of Responses:
1. The shares are purchased in consideration of a patent.
and for Tsui:
Explanation of Responses:
1. The shares are disposed of in consideration of a patent.
True that Cantor has replaced NYGG, however, the slide in BBC shares really accelerated right before they announced the firing of Wey and NYGG. I wonder if that happened here as well?
Guy, I think this is another reason for the drop:
New York Global Securities, Inc. Completes US$2 Million Financing for China Housing and Land Development, Inc.
Tuesday September 19, 8:00 am ET
http://biz.yahoo.com/iw/060919/0164191.html
Guilt by association? They also had an SB-2 filing declared effective a couple of months ago, freeing up a bunch of shares to be sold:
Midsouth Investor Fund LP (3) 320,000 320,000 0 0%
Bhabendra & Shipra Putatunda 20,000 20,000 0 0%
C.K. Hiranya Gowda 20,000 20,000 0 0%
Lyman O. Heidtke 80,000 80,000 0 0%
Heidtke 401 K Profit Sharing Plan(4) 10,000 10,000 0 0%
Antoine De Sejournet 29,990 29,990 0 0%
Coronado Capital Partners LP (5) 182,000 182,000 0 0%
SEI Private Trust Co FAO The JM Smucker 143,000 143,000 0 0%
Company Master Trust (6)
Todd R. Rowley 43,345 43,345 0 0%
New York Global Securities (7) 80,500 80,500 0 0%
TOTAL 928,835 928,835 0 0%
------------- ----------- ------------- -------------
R59, I did some digging into CHID this afternoon. The acquisition of Galaxy View (aka Sono) is masking some disturbing trends in their older business. Here are some numbers (Revenues) that I pulled together from various filings:
--------Sono------E'Jenie-----Total
Q1 06: ...88.......3184.......3272
Q2 06: .2491.......3029.......5520
Q3 06: .1816.......2216.......4032
===================================
Total proforma revenue(9mos):12,824
- This checks with the proforma disclosure in the Q.
E'Jenie only rev comparison:
Q1: 3184 v 2908 +9.5%
Q2: 3029 v 3316 -8.7%
Q3: 2216 v 3405 -53.7%
E'Jenie rev is falling off a cliff, and Sono has big swings and looks unpredictable quarter to quarter. They show 0.07 fd eps (proforma through 9 mos) assuming both companies were together since Jan 1. However, the best quarter was Q2, on a proforma basis and Q3 is down sequentially from there.
The company doesn't provide any backlog or order numbers for either business. They didn't give any guidance in the PR, so I find it very hard to assume that Q3 is annualizable.
Sono Digital is on track for some growth in FY06, but I don't think its going to be huge. Last year, they did about 6MM in rev, according to the company, and have rev ytd of 4395. They would have sell through 1.6MM in rev to match last year's total revenue.
To sum, the driver of profits is Sono, but its growth is at best 10%. E'Jenie has suffered big declines from last year, and who knows how they are doing in Q4? The company had said earlier that it wouldn't meet guidance and was pulling back from making any new statements regarding sales and earnings. They declined to say how business was going, except to say:
"The increases in revenue and net income were the result of our acquisition of Galaxy View International at the end of the second quarter, as were the increases in interest expense and cost of sales. Galaxy View is integrating well into our business model, and we are beginning to see the benefits."
They completely ignored E'Jenie battery shells.
It is tempting to think that the company could earn 0.07 - 0.09 eps for this year, on a proforma basis, but the recent trends look a bit worrisome.
Berliet, those are excellent observations on the BBC Q3 financials. I saw those troubling issues also, but forgot to mention them. Cash flow and A/R collections continue to be a real problem here.
Wade, this is what finally tipped me into the sell and wait column:
http://www.nypost.com/seven/11142006/business/chinese_checkers_business_christopher_byron.htm
In late September, Bodisen announced that it had dismissed Wei as its "investment adviser." But the announcement came amid heavy selling by insiders in Bodisen's shares.
Much of the selling flowed through New York Global, which attracted the attention of Amex compliance officials, and the exchange opened an investigation, leading to its de-listing action.
Sources at Bodisen told The Post yesterday that the company is cooperating with "all parties," suggesting that other investigations besides the Amex's may be under way.
One major unresolved question is the actual ownership of Bodisen itself. Publicly traded companies in the U.S. are required by law to provide audited annual financial statements that include the names of all investors holding 10 percent or more of the company's stock.
In March, Bodisen filed an audited financial statement with the SEC acknowledging that its ownership list was incomplete "do [sic] to an inadvertent oversight," but that it was working to "rectify the problem."
Eight months later, it still has not filed a corrected statement, even though evidence surfaced in the eruption of insider stock sales in Bodisen's shares in September that an individual named Wei Min Zhang was a recent owner of more than 10 percent of the company's shares.
Investigators have not yet established whether such a person even exists, or the legality of more than $40 million worth of recent Bodisen stock sales, most of which flowed through either New York Global or the troubled brokerage, Chicago Investment Group.
In March, Chicago Investment Group was named in a Brooklyn federal indictment as one of 15 New York-area brokerage firms with branch offices that had been infiltrated and taken over by members of the Colombo, Luchese and Bonanno crime families.
---------------
The issue of share ownership has really bothered me in the past. The early investors in Bodisen were listed in an 8k filing, but the recent Form 144 selling is coming from other individuals not listed.....which could mean that some other shares are coming from somewhere else. If you look at the way in which the shares of the top two managers (Wang/Chen) are held, you'll see that the majority of their shares are held indirectly by their children:
Here are the Form 3 filings for Karen Wang:
http://www.sec.gov/Archives/edgar/data/1178552/000114420406013893/xslF345X02/v039801_ex.xml
and Bo Chen
http://www.sec.gov/Archives/edgar/data/1178552/000114420406013889/xslF345X02/v039805_ex.xml
May be nothing, but it does seem curious.
Just wish I had doubled down on CXTI instead of TBYH....I'd be even higher!
The chinese stocks had been beaten down so much, they were bound to get a good pop once their earnings news came out. The majority of those I follow have had really stellar earnings reports, and that usually attracts attention, esp when they carry such low PEs. The problem is sustainability of these surges. When does the contest end again?
CSSTF out with very strong quarter...haven't seen a pr yet, but they did about 0.39 fd eps in Q3 alone, and are up to 0.70 ytd.
I think they could earn close to 0.90 in FY06, with very strong growth potential for the next few years...
trade cash for TBYH.ob. Gambling that this will attract some attention once its PR comes out and people realize that its business is still pretty strong (albeit with lower margins).
Well, I threw in the towel on BBC this AM, selling at the open. Poor quarter, reflecting slowing rev growth, increased write-offs, and now the latest allegations from Chris Byron of possible stock ownership improprieties....
This one could very well be the next CESV if they don't straighten this out. Learned my lesson about going against Greenberg and Byron: don't touch anything that they are both going after!
My guess on the slowing rev growth is that they had capacity constraints in the quarter, which could possibly be corrected by Q1 of next year. However, with no PR issued or clarification from the company, how would we know?? This doesn't look good. Either way, I think it will be impossible for the company to meet its earlier guidance for topline growth this year.
Of course, my trading and timing of this stock has been abysmal, so it wouldn't surprise me if it takes off from here. Good luck to any who are still in it; I don't think this has any chance of really rebounding until they settle the AMEX inquiry and show that they will have the capacity to grow next year by completing those two facilities in the NE and NW of China.
Wade, I wouldn't blame Herb on this one. "Seeking to delist" BBC may be a strong statement, but it isn't far off from the 8k filing headline:
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Delisting
On November 6, 2006, Bodisen Biotech, Inc. (the “Company”) received a letter (the “Deficiency Letter”) from the staff of the American Stock Exchange (“AMEX”) indicating that it is not in compliance with certain continued listing standards, specifically Sections 132(a), 132(e), and 403 of the AMEX Company Guide.
-----------------
Blame this one on the company and specifically on its corporate counsel. Corporate counsel was lax (IMHO) when it came to these small regulatory details. However, Management has had its head in the sand for too long, and willfully ignored conventional disclosure issues. If their IR person is telling me the truth, then they were aware of questions surrounding NYGG for some time. Clearly, when they fired the firm, it was a tacit recognition that there was a problem with NYGG. The AMEX notice to delist may actually be the best thing for the company IF they take strong corrective actions. I listed a few that they should consider.....how they deal with this will be telling. I'd like to think that management has lots of incentive to do the right thing, as they own over 40% of the company. Consider this sobering fact: the two principals involved here (Wang/Chen) took a combined $16MM+ hit today to their personal net worth.
Here's a head scratcher...CAAS ( a Chinese automotive company ) comes out with quarterly earnings of 0.07 (0.15 ytd) and the stock surges up to 9.70 (+1.95) on the day. Sales and earnings were up nicely, up 54% and 40% respectively:
http://biz.yahoo.com/prnews/061113/cnm011.html?.v=17
BBC, which has better topline and net eps growth, is stuck in reverse. CAAS is arguably overvalued...with a annualized pe of 35! BBC is stuck in the single digits for a PE.
CAAS, btw, was also discussed by Herb Greenberg and came public via reverse merger. If BBC was able to get just half that valuation it would be trading closer to 15.
Wade, I'm not selling BBC at present. I still think the problems are fixable....and now they are front and center for management to deal with. They had very poor counsel on these issues in the past, IMHO, so now the drop in share price and their own net worth will demand that they pay attention to them (at least I hope.)
The stock price is at an important area of support in the 8 - 8.50 range. If it breaks that, then we could selling down into the 6s.
Has the risk increased? Perhaps, but I would actually argue that they have dropped, since the news is now out and the company has promised to deal with the issues the AMEX raised. Is the company really committed to full disclosure? We'll see. I will be tempted to buy some more if it drops below 8.
Wade, re BBC. Here is the full 8k filing on the AMEX deficiency letter:
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Delisting
On November 6, 2006, Bodisen Biotech, Inc. (the “Company”) received a letter (the “Deficiency Letter”) from the staff of the American Stock Exchange (“AMEX”) indicating that it is not in compliance with certain continued listing standards, specifically Sections 132(a), 132(e), and 403 of the AMEX Company Guide.
Among other things, AMEX believes that the Company made insufficient or inaccurate disclosure in its public filings with regard to its relationship with, and payments to, a consultancy firm and its affiliates both prior to and subsequent to its listing on the AMEX. Additionally, in the context of the Company’s relationship with the consultancy firm, AMEX expressed concern that the Company has internal control issues related to its accounting and financial reporting obligations. Prior to receipt of the letter from AMEX, the Company publicly announced that it had terminated its relationship with the consultancy firm.
The Company has already contacted AMEX to confirm receipt of the Deficiency Letter. To meet AMEX requirements, the Company intends to submit a plan to AMEX indicating what actions it has taken and will take to bring the Company into compliance with the AMEX Continued Listing Standards. If the plan is accepted, the Company will continue its cooperation with AMEX during the plan period, during which time it will be subject to periodic review to determine whether it is making progress consistent with the plan.
Prior to filing the plan and, if a plan is timely filed, while the plan is under review by AMEX, the Company expects that its common stock will continue to trade without interruption on AMEX.
Concurrent with filing this 8-K, the Company is distributing a press release announcing the receipt of the Deficiency Letter. The press release is attached to this report as Exhibit 99.1.
-----------------
The company stated that it will file its quarterly report, and will have a CC when this has been settled:
"The Company also announced that, accordingly we will need to communicate with Amex and will file its Form 10-QSB for the third quarter ended September 30, 2006 on time, it is postponing its previously scheduled November 15, 2006 conference call. After the Company has resolved its Amex compliance issue, the Company will have the conference call."
http://biz.yahoo.com/pz/061112/108639.html
This is a fixable problem, so long as the problems are just in the disclosure of who was paid what and when. BBC's management either ignored the securities regulations regarding the consultants they used or had bad counsel from its corporate attorney. This problem (Wey/NYGG) was fixable from a regulatory perspective long ago. The fact that they ignored the problem reflects poorly on their judgement. You should see some of the emails that I sent to IR regarding this exact issue! Here is some other stuff that is related to this that i posted about awhile ago:
http://www.investorshub.com/boards/read_msg.asp?Message_id=10943050&txt2find=bbc
Short term, it will be difficult to guess how low we could go. I do think that if the company can show that it is serious, it will do one or all of the following:
a) Replace their current corporate counsel with a bigger name that has the respect of the Street.
b) Replace their accountants with one of the bigger firms, again to show they are serious about the accounting deficiencies.
c) Come clean with regards to share ownership. How much stock is still restricted?
d) Fully disclose the details of their relationship with NYGlobal and Wei. Did they do the reverse merger? If not, who did and how many shares did they get?
What's amazing to me is that not only did BBC get admitted to the AMEX, they also raised money on the AIM as well! Where was the notification of these problems then? Perhaps the AMEX was sloppy as well....they admitted that there were some issues prior to its listing that needed to be resolved.
Tough way to start the week.
Arturo, TCLL recently posted an amended 8k that gave pro-forma numbers for the first 6 mos of 2006 for the fds.
The fds count appears to be 227MM shares. It does include the impact of the acquisition shares, as per footnote (6):
"Adjustment to include shares issued to purchase NJJ and for the shares and warrants issued to Barron as a result of the securities purchase agreement in the earnings per share calculations. "
What threw me off earlier was the purchase obligation:
"The Company shall purchase Escrow Shares from the NJJ Shareholders at a purchase price per share equal to $0.20 per share (the “Escrow Purchase Price”), subject to adjustment. The number of Escrow Shares being purchased shall be determined by dividing the Payment Amount (as set forth below) by the Escrow Purchase Price. Within five (5) business days after the determination of the net profits for any fiscal quarter or any portion thereof for the Company up until the one year anniversary of the NJJ Agreement (a “Covered Period”), the Company shall make a payment in the total amount (the “Payment Amount”) equal to the lesser or (x) seventy percent (70%) of net profit for the applicable Covered Period; or (y) the amount by which twenty four million dollars ($24,000,000) exceeds all payments previous made by the purchase of such Escrow Shares. In no event shall the total of the payments for the purchase of the Escrow Shares exceed twenty four million dollars ($24,000,000).
--------------
My guess is that this purchase was factored into the share count on a proforma basis. That reduced fds by 120MM.
WAG: 11/22/06 8:35 PM
Bob, as others have commented, AAGH has filed two documents in the past 10 days that are HIGHLY dilutive to shareholders.
1. S-8 for 25MM shares (which will also be expensed in Q4)
2. A convertible promissory note that converts into 100MM shares. (filed on 10/30)
This kind of activity is what gives microcaps a bad name. I'd avoid this stock.
CSSTF....there are some real games being played with this one today. The sp is all over the map on fairly high volume. Today's range is 7.75 - 8.70. My guess is that there was some 144 "restricted" stock unloaded today, with the sellers trying to sucker in the TA buyers who bought on the new 52 week high.
With 176k shares registered for sale via form 144 in the past month, I hope that the significant volume today has cleared away the last of these sellers.
As I stated earlier, the company is on the cusp of a couple of very strong quarters, with a solid year or two of growth ahead of it. For those who don't know about the company, here is what they do:
Based in Shenzhen, China, China Security manufactures, distributes, installs and maintains security and surveillance systems through its wholly owned subsidiary, Golden Group Corporation (Shenzhen) Limited. China Security has a manufacturing facility located in Shenzhen and a R&D facility which leverages an exclusive collaboration agreement with Beijing University. In addition, China Security has built a diversified customer base through its extensive sales and service network that includes 37 points of presence throughout the PRC. For more information visit China Security's website: http://www.goldengroup.cn/eindex.asp
---------
Lots of really good sales catalysts ahead of the company in 2007:
"Regulations promulgated by governmental agencies in China relating to security and surveillance often create opportunities for us. Currently, there are a number of formal and planned regulatory drivers which the Company believes offer significant growth opportunities. These include the estimated $6 billion to $12 billion that the Chinese government expects to spend for security infrastructure in preparation for the 2008 Olympics, along with the planned investment by Shanghai for the 2010 Worlds Fair. In addition, several ordinances have been passed by the Chinese government which require security surveillance systems to be installed in: (1) 660 cities throughout China for street surveillance; (2) all entertainment locations starting from March 1, 2006; (3) all Justice Departments and Courts; and (4) all coal mines in China (currently estimated at 28,000) by the end of 2008.
(Picture 2morrowsgains' distinctive "thumbs up" signature here....)
sleestack76, how does IIG arrive at the non-GAAP eps number?
Is it EBITDA?
CSSTF has hit a new 52 week high today, and now trades around 8.60. Perhaps it is on the strength of a potentially very strong Q3. After Q2 results were released, along with its 6k filing, the company revealed this:
"The total value of the contracts signed and in progress in the second quarter was approximately $23 million. $5.7 million of this $23 million was recognized as revenue in the second quarter of 2006. Management expects that the rest of the $17.9 million revenue will be recognized in the third quarter of 2006. The Company achieved $1.5 million revenue from product sales during the current quarter. Approximately, $0.8 million worth of contracts signed in the first quarter of 2006 were recognized in the second quarter. As a result, the total revenue recognized in the second quarter is approximately $8 million.
17.9MM with similar margins and higher fds count would be 0.20/share. That doesn't include any additional business that was booked and recognized in the quarter. If they did another 5-6MM, which seems likely, then CSSTF could report another 0.06 - 0.07, for a total of 0.26 - 0.27 fd, ft eps for Q3 alone.
The company continues to report solid growth, as evidenced by this last PR on orders:
http://biz.yahoo.com/prnews/061102/lath088.html?.v=68
China Security Signs $10.7 Million in New Contracts
Thursday November 2, 11:29 am ET
SHENZHEN, China, Nov. 2 /PRNewswire-FirstCall/ -- China Security & Surveillance Technology, Inc. ("China Security") (OTC Bulletin Board: CSSTF - News), a leading provider of digital surveillance technology in China, has recently signed $10.7 million worth of new contracts. These contracts cover installations for various projects located throughout China.
....
"We have experienced continued strong growth in demand for security surveillance systems driven both by regulatory mandates and general demand from the corporate sector. These new contract wins indicate China Security is gaining momentum in the market place while expanding its geographic reach," commented Mr. Guo Shen Tu, Chief Executive Officer of China Security. "We are winning more city-wide surveillance projects as a result of our improved sales efforts and the tailwind associated with the publicized government mandates focused on improving and increasing public safety."
The stock has seen some recent Form 144 activity, but buyers have not been deterred. If CSSTF were trading on a better exchange, it could easily get an AOB multiple, IMHO.
Mike, I agree. The pro-forma numbers look pretty good for TCLL. First half numbers:
Rev: 938MM
Pretax: 20.9Mm
Adjustement: -3.62MM (one-time gain)
Adj pretax: 17.3MM
pf tax rate: 35%
Adj net: 11.22MM
FDS: 227MM
eps: 0.05
Annualizing, we have a 0.10 FY06 eps. Management believed that its second half would be similar to its first half, according to comments in the Q2 10Q.
Let's be conservative and assign this a 8x forward multiple and I think 0.80 might be realistic for a target price. I nibbled a little bit this AM. Volume seems to have really dried up.
CPHI had a CC for their Q2 results, so this is the second CC they've had. I believe this is part of an ongoing effort by a few of the legitimate chinese micros to improve transparency and reach out to US investors. They need to tap the capital markets to help increase capacity, and this is an essential step in that process.
Typically, these shares are issued to consultants who have provided a shell for a company to reverse-merger into...
What's interesting here is that there doesn't appear to be a previous shell company associated with OPBL. Looks like they did do an IPO, but on the OTC? Its unusual, but perhaps they were able to do it because of the expertise of the company's Chairman, Marc Nordlicht:
"Mark Nordlicht: Mr. Nordlicht is a founder of the Company and has served as our
Chairman of the Board of Directors since 2000. Mr. Nordlicht has also been the
Managing Partner of the General Partner of Platinum Partners Value Arbitrage
Fund, a market-neutral hedge fund, since January 2003. Mr. Nordlicht also served
as Managing Partner of West End Capital from 1998 through 2002. In his various
positions, Mr. Nordlicht is also the Chairman of the Board of Platinum Energy
Resources, Inc., a publicly-traded company, since April 2005. Mr. Nordlicht has
been responsible for the oversight of all of our operations. Mr. Nordlicht
earned a BA degree from Yeshiva University in 1989."
-from OPBL's 10K
If anybody knows their way around securities regs, its probably these guys. Platinum is involved with numerous PIPE deals, and I believe is involved with CXTI.
Its actually amazing that with such heavy volume the stock isn't up higher than it is. My guess is that we're still seeing the overhang from some of this stock.
Perhaps larry or R59 can help me out with this question about OPBL and the pattern of Form 144 sales. If we go to vickers-stock.com, one can find the history of Form 144 filings in the stock:
Ticker: OPBL
Security Name: Optionable Inc
Security Type: Common, Ordinary Stock
Price: 1.09
Description: N/A
Vicker's Insider Index: 14
Insider Index Date: 11/4/2006
Shares Outstanding: 51,618,574
Main Industry: N/A
Industry: N/A
Country: Domestic
Exchange: OTC Bulletin Board Market
# Insider Holders: 3
% Held by Insider: 35.653
Shares Held by Insider: 18,403,343
Abbreviation Codes
21 Records found
Page 1 of 1
(Sort by Column available for 7000 records or less.)
Filer Relation Geo Code Trans. Date From Trans. Date To Form Type Action Shares Dollar Price From Dollar Price To Current Market Value Type Traded / Owned Holdings
CASSIDY, KEVIN CEO NY 10/1/2006 N/A Form 4 B 150,899 $0.600 N/A N/A Direct / Direct 216,943
JACKSON STEINEN INC. N/A NY 8/2/2006 N/A Form 144 N/A 50,000 N/A N/A 32,500 N/A / N/A N/A
KENMORE ASSOCIATES, LLC N/A NY 7/13/2006 N/A Form 144 N/A 447,200 N/A N/A 313,040 N/A / N/A N/A
LOBELL, JONAH N/A NY 7/12/2006 N/A Form 144 N/A 250,000 N/A N/A 175,000 N/A / N/A N/A
CASSIDY, KEVIN DIR NY 7/1/2006 N/A Form 4 B 66,044 $0.750 N/A N/A Direct / Direct 66,044
CHESED CONGREGATIONS OF AMER N/A NY 5/15/2006 N/A Form 144 N/A 250,000 N/A N/A 200,000 N/A / N/A N/A
HAKODES, SHEBEL N/A NY 5/10/2006 N/A Form 144 N/A 490,000 N/A N/A 392,000 N/A / N/A N/A
MOHER, HOWARD N/A NY 5/10/2006 N/A Form 144 N/A 250,000 N/A N/A 200,000 N/A / N/A N/A
MACHLSWITZ, GUY N/A CAN 5/10/2006 N/A Form 144 N/A 249,765 N/A N/A 199,812 N/A / N/A N/A
LOBELL, JONAH N/A NY 4/6/2006 N/A Form 144 N/A 250,000 N/A N/A 212,500 N/A / N/A N/A
BOISSEAU, MARC-ANDRE CFO FL 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Direct / Direct N/A
NORDLICHT, MARK CB NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Direct / Direct 16,440,150
ZUCKER, YECHIEL ABRAHAM SEC NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Indirect / Indirect 95,250
ZUCKER, YECHIEL ABRAHAM SEC NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Direct / Direct 1,746,250
CASSIDY, KEVIN CEO NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Indirect / Indirect 1,905,000
O'CONNOR, EDWARD J. PR NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Indirect / Indirect 901,929
O'CONNOR, EDWARD J. PR NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Indirect / Indirect 901,929
O'CONNOR, EDWARD J. PR NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Indirect / Indirect 3,904,158
CASSIDY, KEVIN CEO NY 3/13/2006 N/A Form 3 N/A N/A N/A N/A N/A Indirect / Indirect 113,665
LANG, REBECCA N/A NY 12/6/2005 N/A Form 144 N/A 158,750 N/A N/A 158,750 N/A / N/A N/A
CASSIDY, HEATHER FRANTZ N/A CT 11/15/2005 N/A Form 144 N/A 514,000 N/A N/A 514,000 N/A / N/A N/A
Mike, I would go over to the Raging Bull boards for CXTI:
http://ragingbull.quote.com/mboard/boards.cgi?board=CXTI
You'll see some fairly insightful discussions over there.
R59, I would be cautious about annualizing earnings for OPBL based solely upon Q3's results. Based upon last year, Q3 and Q4 were much stronger than Q2 and Q1.
Here's what I determined:
FY05 total rev: 5805
Q1: 1159 eps: 0.00
Q2: 1278 eps: 0.00
Q3: 1700 eps: 0.02
Q4: 1668 eps: 0.00
FY06
Q1: 2234 eps: 0.02 (untaxed)
Q2: 2477 eps: 0.01 (includes exp from accel debt payment)
Q3: 4527 eps: 0.04 (1% t.r.)
Q4: ??
Of course, they have mentioned that it has become more difficult to predict revenues because of increased volatility. This is good for the brokers, esp options and derivatives, so as long as this lasts it will be a good thing....but it does appear that the company tends to have a stronger second half than first half based upon this quick review.
Another anomaly that I think deserves mention...Q4 05 had very low GM (compared to prior quarters), coming in around 34%. Q2 05 also had lower GM as well....around 38%. So far in FY06, that trend has continued with Q1 and Q3 posting strong GM around 60%, but Q2 06 coming in a bit lower, around 52%. I would say that Q4 revenues will be slightly higher sequentially than Q3, but with lower margins, if past performance is any indication.
BBC will host a Q3 CC for investors. First time they have ever done that....
Press Release Source: Bodisen Biotech
Bodisen Biotech, Inc. to Report Third Quarter 2006 Financial Results On November 15, 2006
Thursday November 2, 8:30 am ET
SHAANXI, China, Nov. 2, 2006 (PRIMEZONE) -- Bodisen Biotech, Inc. (AMEX:BBC - News) (website: http://www.bodisen.com) announced today that it will report its financial results for the third quarter ended September 30, 2006 on Wednesday, November 15, 2006.
The management team will also host its earnings conference call on the same day at 5:00 pm Eastern Time. Bodisen Chairwoman and Chief Executive Officer Karen Qiong Wang and President Bo Chen will be on the call to discuss the quarterly results and highlights, and to answer questions.
The conference call will be available on webcast live at http://www.bodisen.com and available for replay at the company's corporate web site for 90 days. A replay of the call will be available by dialing 800-405-2236 (international 303-590-3000), and entering passcode 11074999#. The replay will be available starting at 8PM EST on November 15, 2006 and through 5PM EST November 22, 2006.
About Bodisen Biotech, Inc.
Bodisen Biotech Inc. (AMEX:BBC - News) is a leading manufacturer of liquid and organic compound fertilizers, pesticides, insecticides and agricultural raw materials certified by the Petroleum Chemical Industry Administrative office of China (Chemical Petroleum Production Administrative Bureau), Shaanxi provincial government and Chinese government. Ranked the 16th fastest growing company in China by Forbes China in January 2006, the company is headquartered in Shaanxi province and is a Delaware corporation. The company's environmentally friendly ``green'' products have been proven to improve soil and plant quality, and increase crop yields.
Safe Harbor Statement
This press release may contain forward-looking statements within the meaning of the ``safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of Bodisen Biotech, Inc. management and are subject to a number of factors and uncertainties that could cause changes to the planned earnings conference call from the description in the forward-looking statements.
Contact:
The Piacente Group
Investor Relations:
E.E. Wang
(212) 481-2050
--------------------------------------------------------------------------------
Source: Bodisen Biotech
Hi cmk....biggest question here is will the company get enough respect from investors to get a forward multiple of 12-15x earnings? If so, there is still a lot more upside for this year, if we assume the company can earn 0.23 fd eps for FY06. That would put fair value at 2.75 - 3.45. Plus, if the stock can get above 3, then Collins might consider applying to the AMEX.
2morrow, thanks for posting that analyst report for HRBN. As you know, I'm pretty bullish on China in general, so I've kept close tabs here.
Here is a key paragraph:
Net Income and Earnings Per Share
In arriving at our projection on net income figures, we assume that proceeds from $50 million floating rate notes at the end of August 2006 will not be repaid before their maturity. This liquidity will earn interest at an average rate of approximately 3.6%, compared to 8.7%–10% interest charges based on today’s LIBOR. Net interest expenses are estimated at $0.8 million in FY2006, $3.1 million in FY2007 and $3.4 million in FY2008.
The Company’s net income is expected to grow 35.1% year-on-year to $13.5 million in FY2006 against $10.0 million in
FY2005. Diluted earnings per share are expected to rise 19.7% to $0.79 in FY2006 from $0.66 in FY2005. The lower
increase in diluted EPS relative to net income is due to the dilution impact of issuing some 2 million new shares during the year.
In FY2007, we expect the Company’s net income to increase 23.5% year-on-year to $16.7 million. Increase in diluted
earnings per share will be slightly lower at 3.8% to $0.82 from $0.79 in FY2006. Due to the issuing of new shares for the
acquisition of Harbin Taifu in the first quarter of 2007 and 2.1 million shares related to the warrants attached to the $50
million floating rate notes, the impact of dilution on EPS in FY2007 is visible.
In FY2008, we expect net income to increase 93.6% to $32.3 million, largely driven by the 74.6% increase in revenue.
Diluted earnings per share will rise 93.9% to $1.59 from $0.82 in FY2007.
---------------------
So, we have a mediocre year in FY07 for eps growth, followed by what could be really strong comp in FY08. With the stock currently trading at 9, HRBN trades at 11x FY07 estimates. Not bad, but given the tepid earnings growth projection for next year, you may get a chance to buy it cheaper, IMHO.
A few chinese stocks I follow are trading at 5-7x FY07 estimates, and I would put them a bit higher up on the buy list...for now.
Which ones?
CSSTF
BBC
TBYH
CAGC
CXTI
CPHI
CKGT
R59 and Hweb, I think the reason that CRLI has been beaten down is the threat that Dialog4 will be selling their 1.25MM shares into the market at some point. The SEC declared the registration of those shares effective back in July.
There are also some significant risks that the company could be forced into a bad equity for cash deal to meet its debt obligations (copied from their risk statements in the last 10Q):
As a result of our outstanding debt obligations, we have significant ongoing debt service requirements which may adversely affect our financial and operating flexibility.
Even after giving effect to the restructuring of the debt we owe Harman, the settlement of our disputes with Dialog4 and other obligations, we will need to generate significant cash flow to meet existing debt scheduled principal payments. As of June 30, 2006 over the next twelve months, we need approximately $922,329 to pay scheduled installments of the principal on our existing debt. Not included in the $922,329 are obligations totaling $1,175,000 held by Jayson Russell Brentlinger, the father of C. Jayson Brentlinger, our Chief Executive Officer, President and Chairman. With respect to $475,000 of the total obligation owed to Mr. Brentlinger, if he were to demand repayment, we would have 30 days from the date of notice to satisfy the $475,000 obligation. If we fail to generate sufficient cash from operations to meet these and other ongoing financial obligations, our results of operation and financial condition may be adversely affected.
--------------
YTD cash flow: +104k. How are they going to raise the cash? Cash on hand as of June 30: 32k. I think there is substantial risk of the company having to issue more shares on highly unfavorable terms.....
Nice job, Mike, on ORXT. I bailed way too early on this one. Was concerned about the potential for lower margins, but they obviously were already discounted in the market.
I'm hopeful that TBYH is misunderstood as well. I think they may surprise investors, as the stock appears to already discount a steep drop-off in sales or margins going forward. If the company's outlook for FY07 can still be achieved (minimum 10% growth) then why can't it garner at least an 8-10x PE? ORXT looks to me to be trading around 15x my forward estimate of 0.15 - 0.16 eps, but maybe I'm too conservative. Certainly, the last quarter indicated some risks in margin pressure.
ORXT (a handset distributor/sales) at 2.25 is trading at 10x trailing earnings. TBYH is trading at 5x, and is in the handset design biz. Margins are much higher in design vs distribution, but could be under more pressure? At least that seems to be the market's decision up till now.
May not be the best place to post this, but I thought some of the issues raised in this article might resonate with the posters on the VMC board. I'm curious how many agree with this take?
Revolt of the fairly rich
Today's lower upper class is seething about the ultrawealthy.
By Matt Miller, Fortune columnist
October 25 2006: 8:43 AM EDT
(Fortune Magazine) -- Not long ago an investment banker worth millions told me that he wasn't in his line of work for the money. "If I was doing this for the money," he said, with no trace of irony, "I'd be at a hedge fund." What to say? Only on a small plot of real estate in lower Manhattan at the dawn of the 21st century could such a statement be remotely fathomable. That it is suggests how debauched our ruling class has become.
The widening chasm between rich and poor may well threaten our democracy. Yet if that banker's lament staggers your brain as it did mine, you're on your way to seeing why America's income gap is arguably less likely to spark a retro fight between proletarians and capitalists than a war between what I call the "lower upper class" and the ultrarich.
Here's my outlandish theory: that economic resentment at the bottom of the top 1 percent of America's income distribution is the new wild card in public life. Ordinary workers won't rise up against ultras because they take it as given that "the rich get richer."
But the hopes and dreams of today's educated class are based on the idea that market capitalism is a meritocracy. The unreachable success of the superrich shreds those dreams.
"I've seen it in my research," says pollster Doug Schoen, who counsels Michael Bloomberg and Hillary Clinton, among others. "If you look at the lower part of the upper class or the upper part of the upper middle class, there's a great deal of frustration. These are people who assumed that their hard work and conventional 'success' would leave them with no worries. It's the type of rumbling that could lead to political volatility."
Lower uppers are doctors, accountants, engineers, lawyers. At companies they're mostly executives above the rank of VP but below the CEO. Their comrades include well-fed members of the media (and even Fortune columnists who earn their living as consultants).
Lower uppers are professionals who by dint of schooling, hard work and luck are living better than 99 percent of the humans who have ever walked the planet. They're also people who can't help but notice how many folks with credentials like theirs are living in Gatsby-esque splendor they'll never enjoy.
This stings. If people no smarter or better than you are making ten or 50 or 100 million dollars in a single year while you're working yourself ragged to earn a million or two - or, God forbid, $400,000 - then something must be wrong.
You can hear the fallout in conversations across the country. A New York-based market research guru - a well-to-do fellow who's built and sold his own firm - explodes in a rant about ultras bidding up real estate prices. A family doctor in Los Angeles with two kids shakes his head that between tuition and donations, ultras have raised the ante for private school slots to the point where he can't get his kids enrolled. A senior executive at a nationally known firm seethes at the idea of eliminating the estate tax; it is an ultra conspiracy, in his view, a reprehensible giveaway to people whose outsized lucre bears little relation to hard work.
As one civic-minded lower-upper businessman told me, even his charity now feels insignificant: When buyout kings plunk down $1 million for a youth or arts group, his $20,000 contribution doesn't get him the right to co-chair a dinner, let alone a seat on the board.
There's only so much of this a smart, vocal elite can take before the seams burst - and a bilious reaction against unmerited privilege starts oozing from every pore. Especially when it's clear to lower uppers that many ultras are reaping the rewards of rigged systems: CEOs who preside over tumbling stock prices, hedge fund managers who barely beat the market.
It may seem far-fetched to think a revolt against extreme inequality will be led by posh professionals. But the conversations above suggest there's a potent political opening for a "comeuppance agenda."
Eliot Spitzer, an ultra by birth (like F.D.R.), has shown the power of turning against the sleazy self-dealing of his class. Once Spitzer's crusades against greed sweep him into the New York governor's mansion next month, imitators may follow. Shame as a strategy to constrain avarice may come back into fashion.
Like I said, it's just a theory. It could be sour grapes. But if I were in this for the money, I'd bet there was something to it.
Matt Miller is a senior fellow at the Center for American Progress and the author of "The 2% Solution: Fixing America's Problems in Ways Liberals and Conservatives Can Love."
--------------------
I think Lentinman has offered similar views on this subject. I wonder how many feel the same way out there?