GREAT analysis/info on ETLT outlook from Harbinus
Check this out, from Harbinus's reply to me on Yahoo message board NWD. Can't say this man doesn't do his homework!:
"Re: Paging Harbinus, ETLT pt 1
by: harbinus
Firstly, I would like you to note that in the message that I replied to, there was a mention of an earlier posting that I made. The posting said that the stock is somewhat risky, and that you shouldn't bet the farm on it. It is only 8% of my portfolio. There are a few reasons why I am bullish on it, so I will go through all of them because I might as well get it out on paper.
I like the strategy that they have started to employ. They understand that when a culture shifts from non-industrialized to an industrialized nation with a larger middle class, the diet of that culture changes from one that is primarily carbohydrate based, to one that is meat and dairy based. The instances of this are very numerous and include Taiwan, Japan, Hong Kong and South Korea. I include these Asian examples so people don't bring up points like "this isn't going to happen in China, Asians are lactose intolerant".
Milk companies in China are going through a huge boom right now and are even having trouble keeping up with demand. I am in fact largely invested in Chinese milk companies as well. But this aggressive demand will create a scarcity in dairy cows, which are large and expensive to import. ETLT is positioning itself in a great niche market by building a herd of high yield dairy cows. They will be cash cows for years to come, please excuse the pun.
It is positioned to take advantage of not only the dairy boom, but the meat boom in China. They have begun selling sheep meat and building up a herd of sheep. They are also using embryonic transfers to quickly build up a breed of high yield dairy cow and sheep, based on advanced Western animal husbandry techniques
Re: Paging Harbinus, ETLT pt 2
by: harbinus
So I'm bullish on both meat and dairy in China, so ETLT is a perfect match. Furthermore, their Income Statement is pretty damn good because I do not believe that their COGS will increase as steeply in the future as they work out the kinks in their sheep farm. Their top line revenue growth and the addition of a related but new business, animal rearing for meat make me optimistic about the long term prospects of the company. This will also give them a chance to gain more experience in managing a farm for what I believe could be their more lucrative herd of dairy "cash" cows. They will also achieve some economies of scale, both in land and labour utilization, ability to negotiate contracts on feeds, etc. Also they will not have to rely totally on artificial breeding techniques because the animals will b self perpetuating.
Another reason why I like them is that they are valued at less than their cash on hand, which frankly should not happen. Their market cap is floating at around 14 million while their cash in Renminbi denominated currency is equivalent to 21 million US. They also have about 9 million in receivables on the balance sheet, for a working capital number of over 30 million. This in my opinion is frankly the equivalent of irrational exuberance, except with the opposite outlook. It is irrational bearishness, and on an industry which really on the whole has a great long term outlook.
In terms of its technicals it has broken a long term downtrend and investor awareness is being raised. A strong short term (2 week) support level has shown itself at over 40 cents. They hired a new investor relations company, though I think that they should not outsource that function. This could lead to some short term price appreciation if they are good at getting out there and promoting the stock. With the right kind of promotion, this stock could have a P/E of approximately 35-40.
Oh yeah, I forgot to mention, the stock's current trailing P/E is under 3, making it very undervalued on that metric as well.
Simply put, I think that the transition of the Chinese diet could be one of the greatest investment opportunities of our time. ETLT is leveraged to both Meat and Dairy production in China, and currently has an extremely attractive valuation based on a number of metrics, including: P/E Ratio, sales and net income growth, customer relationship growth, price-to-book ratio, price-to-cash ratio, acid ratio.
If you don't have at least a small holding in this one, you have a good chance of regretting it. I believe ETLT is a STRONG BUY."
Harbinus is saying here that ETLT is headed for $3 - $4 stock territory in the near future. Excellent prospects, glad to be holding strong at this level. Dreaming of an HYRF CXTI type breakout soon ( since they are also China related stocks that I liked).
GLTA this week!
