TSTC - details from my CC with management late yesterday ......
I ended up speaking with Ren Hu for 54 minutes yesterday, as John Mattio (HC International) was listening in and here's what I have .....
A/R's are improving and the DSO's are heading down. DSO's to decline to 360 by the end of this month and 270 by Q-2. No reason to believe that any A/R's will be written off. The company has an excellent relationship with China's 3 major telecoms and the restructuring and consolidation of other telecoms into these 3 was the reason for the high DSO's. It was specifically stated that "The Government will not default," with relation to collecting receivables from the three major telcos. TSTC obtains short term loans from time to time from the Peoples Bank of China and if the bank ever thought their was a risk that TSTC coudn't collect their receivables, they wouldn't loan them money, as the loans are secured by A/R's.
TSTC currently does business in 8 countries and has its footprint in 28 countries. They have offices in Vietnam, Russia, Texas and other places. TSTC is working with a large engineering firm in the South (USA) in testing their WFDS technology in several Houston hospitals. Upon the completion and successful testing, a significant announcement will be forthcoming.
It is possible that 4th quarter revenue will exceed the prior three quarters combined. Net margins at least 20% and in line historically. Gross margins to increase, especially with WFDS playing a much greater role going forward. Management would not be surprised to see 100% increase in 2010 revenues, although no specific guidance has been released.
WFDS revenue should make up 20% of 2009 revenues and the target for WFDS is 50% of 2010 revenues.
When asked about how technology in the USA stacks up against WFDS, it was specifically stated that "There is no competition."
As far as the share structure, the O/S count has remained the same for 2 years and management states the structure is being highly protected and any future acquisitions will be done without PIPE deals. It is very possible that acquisitions will occur in 2010, including the USA and any acquisitions should result in higher stock prices, especially with favorable financing.
Barron Capital has taken a decent sized stake in the company. This is the same company that just did a favorable deal with BSPM.
In my calculations, EPS for this quarter should come in no lower than .60 and on the high end ? Who knows ?
AI
