China Shuangji Cement Ltd.(fka CSGJ)

[sean007]

Huge Secondary Dilution May be Coming
From the October 22nd presentation to German investors, CSGJ plans to raise $140 million to buy several plants in the next three years. The increase in production will result in projected earnings of $32 million. Assuming that the funding comes from stock offering, and the share price doesnt take a hit (big assumption), that means 200 million shares issued. So, EPS would be about $0.14 per share. In reality, the share price will be affected, so EPS would come in arguably about $0.08-0.12 per share with more shares and/or leverage needed. Given risk and time, the price is fair value right now at about $0.70 per share.

Interesting, the stock price starting falling exactly after the German presentation.