I am updating my staus.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I should clarify... "I belive it is naked shorting" means I think failure to deliver is naked short selling - assuming they are doing so deliberatly.
rich
The SEC says failure to deliver is not necessarily short selling - 1% of shares each day have failiure to deliver... but it sure looks interesting that the 1% keep hitting CDBT.
I belive it is naked shorting (more knowledgable feel free to butt in)... in essence you are selling shares without giving ownership to the buying party - you are creating more supply and we know what happens to a stock price with lots of supply.
http://en.wikipedia.org/wiki/Naked_short_selling
Has a sentence of failure to deliver... Saw a video about it once on web that was very good.
My question is can it go on forever? I am betting not. Supressing price means that the company can't raise captial at a proper rate but CDBT has vaults full of cash.
rich
CDBT Failure to deliver loooks like walking up moutain!
http://failstodeliver.com/default2.aspx
Do they eventually have to settle?
cheers
rich
I couldn't get it to work.... shame... It worked great with SKBI though. Great stuff...
cheers
rich
Hi Trader, Nothing Clever I'm afraid... took Item 4 in 10-Q found property and machine value and multiplied by 2 - about $7 million.
I suspect that this number would be affected by amoritization? So I added 3 million - fudge factor or what?
Also forgot there was $1.5 million cash on the balance sheet... keeping $0.5 for operations that's $1 million less they need to sell.
Assuming warrants are exercised and they need $1 million a month. If not more like $2 million. Assuming they don't want everything up front.
Is there any reason not to exercise a warrant if your in the money? Perhpas you want the coupon and exercise later?
Feels like were more like venture capalists than investors at the moment. I wonder when the rain will end?
rich
Ok, Working from two quotes and the 10-Q and 10-K....
1)
http://finance.yahoo.com/news/China-Power-Equipment-Inc-prnews-1559286993.html?x=0&.v=4
Mr. Song went on to say, "However, the strong demand within China for energy efficient products has also prompted Hitachi Metals Japan, our main supplier of the amorphous strips used in our cores, to expand its production capacity, which has, in turn, resulted in a significant reduction in our raw material costs. This decrease in the price of one of our key raw materials, combined with continual improvement in productivity and increased sales, should start to be reflected in the Company's financial results toward the end of this year."
First half:
Net Income $ 1,634,383
Second half should be stronger than first but lets double it...
$ 3,268,766
2)
http://finance.yahoo.com/news/China-Power-Equipment-Reacts-prnews-1811518553.html?x=0&.v=66
We know that they intend to "at least" double the manufacture next year... but lets say due to inefficiencies - contract workers and contracting out say. They get 150% increase in income instead - which I get to be:
Low Ball Net Income Estimate 2010 = $8,171,915
12.5% tax rate = 1,021,489
Income Net of tax = $7,150,426
Plant Costs
Plant and office building, Amort 20 years and in the 10-K it's worth $ 2,386,592
Machinery and production equipment, Amort 10 years $941,347
So that's $3,327,939
Worse case senario is assuming they are at full capacity now so they need to at least double the value $7 million and make it up to $10 million spend to cover capacity growth.
They do have construction for first half of year at $653,078
Cash flow for first six months is $1.25 Million, so we assume same for second half
Exercise Warrants $4 Million
--------------------------
Around $6 million potential Contruction without additional financing
---------------------------
So they need an additional 4 million in cash so they sell another 4 million shares at $1.
--------------------------
Pessemistic Quote
- Second half should strong than first but I've made it the same.
- Warrants dilute giving $4 million cash
- Already at capacity - so cannot increase earnings without buildout and need 4 million more cash through equity dilution.
- 10 million buildout for Building and Machines
- 150% growth in 2010 - conservative given management estimate of 200% growth.
- Valuation of P/E 10 for growing company
- 12.5% tax but will be 25% if not considered Hi-tech by PRC
EPS = $7,150,426 / 23,365,013 = 0.31
So P/E of 10 that's $3.10 share
$3.10 / 1.15 so that's $1 down for potential of $2.7 back in 2010.
-------------------------
Upsides
1) Annual production capacity 1000 ton and were not at capacity now - requiring fewer sold shares, and higher EPS in the last 2 quarters.
2) Sourcing amorphous alloy from China An Tai Technology Co rather than Hitachi.
3) 200% + income increase instead of 150%
4) Company expect second half to be stronger than first
5) Higher Multiple for company growing at > 100%
rich
Ok, I'm ignorant... can a company do that without notifiying anyone?
So, are you suggesting they selling issued shares and adding them to the outstanding?
cheers
rich
It's an interesting point - I kept a cactus as a child and I'm sure I'm not alone here... the only thing you could haverest every month would be spikes
That said clearly these cactus has been developed as crop plants so their characteristics would be different.
rich
-- cactus can be harvested a few times every month
Hmm, there's different interpretations of that. We could be talking about a single cactus sprouting many spurs every month or just that they go through the crop a few times a month and pick off the biggest spurs.
rich
Non Cash Charge...
*Assuming* they want to dilute using warrants. Then you get non-cash charges when the share price rises to cover the rise in fair value. Of course once the warrants have run their course the non-cash charges disappear and your left with a good boost in EPS.
So, if we put adie the Warrants non-cash charge Instead of 17 cents it should do around 30 cents.
I bought some more... interesting to see where this ends up... Good news is if it keeps going down LPIH won't have to write off any non-cash charge
rich
Hey Jo, Well I hope your right about Cigs but...
Succes is to be determined. They are starting off small so lets see. Since, in the end people buy cigs to fix their habbit. If the cigs don't have enough nicotine will they buy it? <Shrug> To me, they are trying Cactus because they have lots of Cactus not because they think they've hit on a radical new ingredient in cigarrettes that Chinese are craving.
Now, If they get a succesfful product do they have enough cactus to keep up? These aren't awful problems to have of course Just something that isn't clear to me yet.
I'm not convinced that US is going to be an obvious market. Does the US have a connection with consuming Cactus? The point is that the consumer should feel a health connection with consuming cactus. As an, admittedly, UK citizen my immediate reaction to cactus is "spikes" not health. I think perhaps US Mexicans might be a potential market? But, surely only try to market it if the product is sucessful in China?
I would describe my feelings on Cactus Cigs as cautiously optomistic.
Anyway, as it stands it's not material to the pps - which would seem to be significantly undervalued assuming a well run company.
rich
My question is can the expand the Cactus production?
They have 387 acres how far will that get them?
Do they need more?
If so how long to develop the new area?
rich
China launch cactus-based cigarettes in 2009
http://www.cigarettesflavours.com/alternative-smoking/china-launch-cactus-cigarettes/
rich
(from Jo's link)
Lots of thoughts about CSKI actually.
1) The SAIC forms of firms dealing with CSKI, which I read from the shorters website, showed that they were substantinally lower revenues (from memory 50% lower, do check) than CSKI had implied so CSKI said company X was 10% of CSKI revenues and 10% of CSKI was far more than the total revenues company X had reported.
In a PR [1] CSKI squared this circle by saying that all the partner companies had underreported. They have not given a reason why they did this.
2) The Inventories are very low - the company has explained this by saying all the companies it sells to takes stock just before audit - but I don't feel it's an adequate explanation why they are so high turnover - I freely admit not understanding this issue - I would highlight this as an issue any investor buying the stock should understand.
Conclusions (mine obviously)
These are the bashes of the company that stuck in my mind. It's convenient that it was the SAIC filings that were underreported (3 firms in total) and not that CSKI had overreported. I don't see, given the current opportunites available, why this company should have my dollars.
rich
[1] http://finance.yahoo.com/news/China-Sky-One-Medical-Inc-prnews-4020272328.html?x=0&.v=53
Think they are paying 12.5% tax - that's not going to last forever. So when I apply a 30% tax (I don't have a clue about tax rate for the provence ) this gives me $15 target.
rich
10 / 7 = 40% Growth
In the most recent CC CMFO said they used 70% of the capacity of the current plant's 10 tonnes. They have or about to open another 10 tonnes of capcity and this time next year they think they'll be using 50% of the double capacity. In other words they are using 40% more this time next year as 10 units of food. Put that into a PEG valuation, or however you like to play with it, and you end up with $20 valuation.
The sales point growth of 100% from this time last year and the distribution into a new region - suggests that other parts of the business are keeping in step with the inceased capacity.
Obviously, that would require top execution and a recovered market but it's something to gun for.
Is that how you calculated it Glen?
rich
Then use the left hand to operate the mouse! When they both spazz out it's time to retire. I'm onto my left.
rich
What Income Tax for 2010 - 35%?
I was trying to work out what tax CKGT would be paying in 2010. It says that 2009 would be the last year at 50% income tax reduction. Am I right in saying in 2010 it will be 35% tax?
I working from the fact that the Income tax section begins with the line Expected tax at 35% and then modifies it to roughly half.
Unless someone says otherwise I'm taking my guestimation of 2010 net income before tax and applying 35% tax.
rich
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6541941-1162-149875&type=sect&dcn=0001144204-09-020579
Note 9. Income Taxes
....
"This economic region allows foreign enterprises a two-year income tax exemption beginning in the first year after they become profitable, being 2005 and 2006 and a 50% income tax reduction for the following three years, being 2007 to 2009. Harbin Hainan Kangda was approved as a wholly owned foreign enterprise in March 2005."
....
Expected tax at 35% $ 2,372,594
....
BEIJING, Aug. 25 (Xinhua) -- Chinese lawmakers warned Tuesday of a "grave hidden peril" of epidemic animal disease because of inadequate monitoring facilities and a complex international environment.
....
....
They also said there should be relevant authorities to standardize use of veterinary drugs, strengthen and improve monitoring of the production and distribution of livestock products.
...
...
http://news.xinhuanet.com/english/2009-08/25/content_11942986.htm
rich
(Nicked from superman blogg)
Thank you for the welcome...
Last quarter there was 10,413,273 in cash. 30,000,000 shares.. I make that 35 cents a share in cash - I'm calm
The susidisy that farmers are getting, twice 2008.. makes me feel this looks a goer.
rich
Sorry, I realise now, that this is a repost?
Hi Joe,
"RINO's sludge treatment equipment is set for commercialization in the next couple of months and revenues will be massive."
Will the sludge treament success result in reduction of the inhouse de-sulphursation capacity, in the short term at least? I have assumed it would.
Seems the main problem with RINO is how they handle the growth.
cheers
rich
Hello drucwolf,
Have you noticed that much of the share price movement occurred without a single share being bought or sold? I read about the company over last weekend... liked it and wanted to buy a few shares. On moday it was 0.50 cents on open after it closed at 0.42 on Friday. I wasn't greatly surprised when it collapsed Tuesday. Anyway, someone's having fun.
cheers
rich
GEO Investor Reviewing CKGT's growth rate....
"Closer inspection of the second quarter financial statements possibly indicate that non-GAAP EPS may have actually increased significantly more that the 6% we had originally calculated. It now appears that 2009 first quarter non-GAAP EPS may have increased 40.0% ($0.07 vs. $0.05)."
http://geoinvesting.com/companies/company.aspx?g=posts&t=1355
rich
Agave and tequila? Ok, any more suggestions for baby food flavours? Hey, I might try some.
rich
Messaged GeoInvestor about their valuation
Hello all,
They use Non-GAAP valuation and talked about using certain figures in the statements. I will go over this in my time but over my head for now.
They apply tax rates to valuations hence why EPS appear lower than on quarterly reports.
They also said they prefer to go conservative and expand the story as they get a better feel to the company.
http://geoinvesting.com/companies/company.aspx?g=posts&t=1310
Anyway, one of the interesting things was that they were meeting up with the company when the visit this september and they were happy to relay any questions I might have...
I'm thinking off top of my head...
The March purchase is allowing new capacity but how much, approximately, expansion.
Are they still looking at cosmetics, hyginene products and baby food?
Any development with Cigarrette products?
cheers
rich
The numbers, as you say, were stellar. And it's obviously undervalued from price to earnings.
How do you reconsile the $57 million it is going to need within the next 18 months? Say they produce $27 million in cash during that time. Then where's the other $30 million coming from?
Do we know when they are going to need certain monies? What if there was a $20 million payment needed this year?
What I would want from managmenet was a statement along the lines of if they have problems getting a loan then shareholder value will be preserved as the highest priority - this is very rare occurance The irony of the situation is that if they got the company up to fair value - and they desrve to given how they've worked on A/R's - $30 million wouldn't be that signficant a dilution.
What do others think about it?
cheers
rich