Ziyang Ceramics Corporation (fka ZYCI)

[Tex]

re sales and eps

I certainly find big deals encouraging, and I think the CDS-identified AoHong acquisition certainly will perform. However, CAAH's fundraising last year was predicated on the idea that it would be acquiring two targets, and I think both the target earnings and the target share price information are based on the idea of having two executing earners in China. Also, CAAH owns less than 60% of AoHong, so not all AoHong's revenues flow to CAAH.

I think CAAH will end up with a new subsidiary eventually, and I think AoHong-created profit will help fund it. I think until then, CAAH might do okay but I don't see it exploding. Moreover, at current share volumes, we really need something quite a bit more exciting to get folks watching this stock -- you just can't buy/sell a position with a daily volume under $20k shares, with a share price under $0.10. We've had a lot of days that $10k doesn't change hands.

To be able to make money on this, there needs to be some excitement. CDS is trying to parade CAAH in investor conferences, but I think the best way to fix the share price and the volume has got to be solid news on serious growth and profit -- which is likelier to happen if we've got a second operating unit in China.

The next question is how long it'll take people to care about revenues in China. A look at ETLT suggests folks can happily underprice it for more than a couple of quarters. That sucker, despite being profitable, has traded below cash equivalents!

Take care,
--Tex.