NED $6.30 +$.50 $4/share cash $.50 forward EPS $14 IPO price
NED:NYSE ($6.30) is the buy of the year IMO.
-$4 per share cash
-9 MM float
-Reported $.20 in most recent quarter.
-NED should easily earn $.50 in this fiscal year.
-NED IPO price was $14 and rose to $23.
Applying a conservative 35 forward PE gives NED fair value as
$.50 X 35 + $4 = $22 per share (another China education stock EDU, trades at PE of 80).
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 at least $17 million. With 36 MM fully diluted shares that gives about $.45 - $.50 per share.
From Investor's Business Daily
Noah Education Holdings has two pluses going for it when it goes public this week on the Big Board:Demand for Chinese IPOs remains high, and as a provider of handheld teaching devices, it's involved in education. Chinese families put high value on education. With a government-imposed one-child policy, a growing number of Chinese families with expendable income are able to focus expenditures on an only child. According to government figures, Chinese families spend about 15% of their disposable incomes on education and culture. Such incomes on a per-capita basis have grown almost 7% a year from 2002 to 2006 and are expected to rise more than 8% a year through 2011. "Education is a very hot space in China," analyst Alex Xu of Brean Murray said.
Since private educator New Oriental Education & Technology (NYSE:EDU - News) went public last year, at $15, its share price has more than quadrupled. But while New Oriental teaches in physical classrooms, Noah plies the digital world. It focuses on handheld digital learning devices, or DLDs. These devices come with content that supplements grade-school textbooks. It also sells handheld e-dictionaries. "While Noah may be riding on Oriental's (success), it still has good growth opportunities," analyst Matthew Molberger of Renaissance Capital said. Of the almost 300 million students in China between ages 5 and 19 -- Noah's target market -- only 3% use DLDs. That low penetration rate leaves room for growth, he says. Citing an industry source, Noah says DLD sales in China will grow more than 20% annually over the next couple of years. In a crowded market where the top-five players hold about 80% of the DLD market, Noah says it is No.1 in sales, with about a 30% market share.
Noah in its present form was created in 2004. At that time, the founders took the assets of a five-year-old translation-device business, Noah Industrial, and turned them toward interactive education. Though it's officially based in the Cayman Islands, Noah operates in China through subsidiaries. Noah began selling handheld e-dictionaries in 2004 and handheld DLDs in March 2005. Strong growth in DLD sales is offsetting a slowdown in e-dictionaries. The company has developed about 28,000 courseware titles based largely on content it licenses from educational publishers in and out of China, including Oxford University Press and People's Education Press. It puts a big emphasis on English language courseware. But Noah also covers standard grade-school subjects such as Chinese, math, physics, chemistry and history. Supported by TV ads, Noah's DLDs are sold in bookstores, electronics and department stores, mall kiosks and Noah-branded stores. The company's Web site also offers content for downloading. Efforts are underway to expand content to the fast-growing mobile phone market in China. Noah also is working to fold its technology into other tech devices, such as interactive entertainment consoles and personal digital assistants. To tap into another area of the supplemental education market, Noah recently began offering some after-school tutoring programs.
Noah has enjoyed strong growth since its start-up in 2004. Revenue in its fiscal year ending June 30 totaled $72.9 million, up from $51.6 million the prior year. Net income over that time jumped 77% to $8.7 million.
