COGO ($2.22-2.34) up 10-15% premarket on earnings beat.
15-May-12 16:07 ET COGO
Cogo Group beats by $0.07, beats on revs (2.00 +0.00)
Reports Q1 (Mar) earnings of $0.13 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus Estimate of $0.06; revenues rose 62.2% year/year to $169.3 mln vs the $151.7 mln consensus. "We achieved strong year-over-year growth in each of our three business end-markets and continued to show good control of operating costs. However, as we have indicated on previous calls, the tight credit environment in China continues to negatively affect our SME business and consequently suppresses our gross margin. I am also pleased to report that the audit committee is currently reviewing my personal proposal to purchase certain Cogo assets, liabilities and operating business units. We expect to complete the review of my personal proposal before the end of the second quarter of 2012, subject to the successful negotiation of deal terms, the approval of the audit committee and other contingencies. Target companies of the deal roughly account for 26% of the group's revenue, with a gross margin of approximately 5% in the first quarter of 2012. I continue to believe that this purchase, which may possibly place an overall value of Cogo at $6-$8 a share, will help to legitimize the value of our financial assets."
08:53 Cogo Group: Solid Q1; asset sale to CEO on track - Canaccord Genuity (2.00 ) -Update
Canaccord notes Cogo reported Q1/12 results above its estimates as strength in the Telecom business drove the upside despite the lower gross margin due to the larger Telecom mix. Cogo CEO Jeffrey Kang's proposal to purchase roughly 26% of Cogo's revenue, assets, and liabilities with an expected purchase price of $60-82M remains on track and could provide a catalyst for shares to rise toward tangible book value, or $6.45.
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