Hi, all.
I attended the New Energy presentation at the Rodman & Renshaw convention in Shanghai yesterday and would like to share my thoughts on it. The conference runs through the 8th of March and the company is still there attending today, I believe.
• The company wants to hear from shareholders, and is very open to listening to their concerns. Even though I’m not an institutional investor, I was able to meet one-on-one with John Mattio (SVP, HC International), Ken Lin (IR VP, New Energy), and Jack Yu (Chairman, New Energy), and discuss with them my questions, which they readily answered. If you have any questions you also wish to pose, please contact them directly: they would like to hear from you! In addition, if you want to visit their manufacturing facilities, they have given an open invitation for interested parties to go and see for themselves how the business is operating.
• The conference was packed, and the New Energy presentation was filled almost to capacity, with only a few empty seats available.
• I’ll do a quick comparison of this investor packet with the last one (November 2010), and indicate any significant changes (of course, whether these are significant or not is all in my opinion):
o Page 4: Company’s EPS guidance is at least $1.40
o Page 7: 2010 Estimated Revenue of $95.0M
o Page 12: “Dedicated assembly line based in Shenzhen produces 18-20 million packs a year”, as opposed to before: “Dedicated manufacturing facilities based in Shenzhen produce 45 million battery cells a year”
o (also on Page 12): the company indicates in the new presentation packet that the current facility is operating at 70% capacity, as opposed to its previously-indicated capacity of 50%
o (I have asked the company to provide clarification of what is the difference between the last two bullet points)
o Page 14: ‘Kim Fai 2011 Guidance is $24.0 million in revenues and $5.0 million in net income’, as opposed to before: ‘Acquisition expected to be accretive to earnings and completed for $24.0 million in equity and seller’s note at 4.8x 2011 projected earnings’.
o Page 17: ‘Adjusted net income guidance is of $18.0’, and ‘is conservative with adjusted earnings per share (of) $1.40 for’ ‘2010’
• I spoke with the company about hiring a Big Four audit firm. At this time, the company recognizes that it is something of shareholder interest, but has not decided whether to hire one or not.
• The company is hoping to grow its overseas exposure. Currently, the company’s revenue from overseas sales is just 5%. According to Ken Lin, though, there is the potential that within the next 3 years approximately 30% of the company’s revenue could be derived from overseas sales. This would largely be based on the higher margins that overseas sales would generate and currently-perceived competitive advantages that New Energy has over existing competitors.
• A stock buyback is still being considered and no decision has been made yet on whether to initiate one.
• Response to the GeoInvesting accusation that the filings don’t match: John Mattio and I spoke about this issue and he stated that he understnds what GeoInvesting had indicated and responded to their accusation by indicating that sometimes a website which is investigating a Chinese company will just use a subsidiary’s financial report, compare that with the SEC’s documents, and then claim that the company’s reports don’t match. John denies that there is a problem between the SEC and SAIC documents.
• John Mattio introduced a person who works for NASDAQ (I believe on their listing team) to Ken Lin and Jack Yu, and informed Ken and Jack that there are shareholders who would like for NEWN’s stock to trade on the NASDAQ as opposed to the AMEX. This is another example, in my opinion, which shows the company’s interest in responding to shareholder interests, as well as John’s responsiveness to making sure the company understands what shareholders want.
• Agoracom or other stock pumpers: Jack Yu (Chairman, New Energy) was shocked when I told him about the accusations that New Energy hired companies to engage in illegal activity in order to pump up the stock’s price. I sent him, as well as Ken Lin and John Mattio, the posts that had been made on Yahoo which indicated that New Energy had contractually engaged companies which would perform such illegal activity, as well as the individual posts that implied such activity had already occurred with New Energy’s consent, so that New Energy would be able to know which individuals would choose to post messages such as this. I did this so that every investor would be able to understand further that the intention of those posters was just to drive down New Energy’s stock price for personal gain as they were shorting the company at that time when they made these posts, and so they just chose to LIE about the activities the company had engaged in.
• As an FYI, the company DENIES ANYTHING LIKE THIS HAPPENED as they state that they HAVE NEVER HIRED ANY COMPANY TO PUMP THEIR STOCK, so if you would like to contest their statement, please, by all means, publish your proof that something like that did happen. Also, I would like to remind all of you that if you have posted on Yahoo, your IP has been stored. Therefore, even if you think you can hide behind your Yahoo user name, there’s a good chance you can’t.
• When I asked about the company’s plans to increase the public awareness of New Energy, Jack Yu, the chairman of New Energy, stated that although in 2010 the company had to focus most of its attention on growing its business, in 2011 the company would continue focus on maintaining its business competitiveness while at the same time doing its utmost to also increase its market recognition.
If anyone has any addition questions or concerns, please contact me, or better yet, please contact the company directly:
ken@newenergysystemsgroup.com
john.mattio@hcinternational.net
Thank you!
