DAC Technologies Group International, Inc (DAAT)

[abh3vt]

StockPeeker, I spoke with David Collins, CEO of DAAT, today regarding the concern over tariffs on imported Chinese goods. He felt that the chances of a Republican President and Congress passing such an aggressive tariff against China were very remote. (We'll ignore the ill advised steel tariffs for the moment).

I think he's right that a 28% tax on Chinese goods is just too much to swallow for American consumers....who've come to rely on cheap imported goods from Asia. Plus, it goes against the free-trader mentality that good Republicans are supposed to possess, so I think this is just saber-rattling and they'll come to their senses soon. Even if it passed, Bush would most likely veto it.

The more likely scenario, according to Collins, is that the yuan will be allowed to float up by around 3-5% over the next year or so. If that happens, the price increase would be simply passed along to customers. (thus, margins wouldn't be impacted) Even if this occurs, the price increase wouldn't impact their level of price competitiveness. DAAT would still have the lowest price points vs. their competitors, according to Collins.

Meanwhile, work continues on rolling out the new products in the meat grinding and the digital game camera segments. Not very sexy, but they've been effective at increasing sales each year with greater margins.......