HUGE NED went down $4 because of MINOR product recall:
This is from the Yahoo NED Board. NED down because of the biggest overreaction in history: One older product line was missing a warning label!!
Just finished reading all the Chinese News Releases on Yahoo China:
In sum, only 1 model, MP800, which is an older model, was singled out as the product that was missing the warning label and has a metal substance content that exceeded standards. Noah already issued statement that all unsold product with the missing label will be recalled and anyone that purchased the product can exchange or return the DLD.
In addition, couple of newspapers already issued a retraction of sort saying that earlier reports that said the product will cause cancer is inaccurate. Professors from major china universities, as well as the Chinese government, all quantified that while the substance can caused cancer, it can only be done via direct contact (like licking or eating) or exposure to the fumes. Since the substance is minimial in the DLD and is buried inside the inner contents, exposure to the substance is virtually impossible and that the DLD is safe to use within the life expectancy of the machine itself.
Anyways, don't want to sound like a pumper but I think the selloff was way overdone (only 1 older model was affected). It might affect the company's reputation a little bit in the short term but most of the new growth is targeted to be coming from the development of tutoring centers with recurring revenues. I believe the fair value of the company s/b higher than the current price for sure, since they are projected to make over .50 per share next year.
Why CFC is THE BUY OF THE CENTURY: $4 per share cash and $.45 forward EPS = $20 fair value
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From: Jeff.corm...@gov.ab.ca - view profile
Date: Tues, Nov 20 2007 7:48 pm
Email: Jeff.corm...@gov.ab.ca
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NED is the buy of the decade IMO. NED has $4 per share cash and should
easily earn $.45 in this fiscal year.
Applying a conservative 35 PE gives NED fair value as $.45 X 35 + $4 =
$20 per share.
The earnings projections are based on the following assumptions:
2007 net income = $8.7 million.
2008 net income will increase by:
$5 Million in interest on $140 MM raised in IPO
$3 million in increased operating income (thats conservative).
Hence I see 2008 net income of about $17 million. With 36 MM fully
diluted shares that gives about $.45 per share.
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