Value Microcaps Motherboard

[whyme2005]

UPDATED DD on SIMC FOR THOSE INTERESTED IN THIS STOCK......

Investors following SIMC have been accumulating for 3Q earnings results that more than likely will exceed expectations.

http://stockcharts.com/gallery/?simc

Simclar, Inc. (Nasdaq: SIMC) is a consistently profitable global contract manufacturer of electronic and electro-mechanical products.

Although SIMC reported a profit in 2Q 2005, it was lower than expectations. The company has corrected the reasons that lead to that sub-par performance, and expects strong performance in the second half of 2005.

Regarding 3Q 2005 and 4Q 2005, SIMC's Chairman Russell said on the 2Q 2005 release:

.."Although the second quarter results were disappointing, we continued to expand our customer base and product offerings. The outlook for the company as a whole is good for the second half of 2005, and we expect sales and profitability to increase over the first half of the year."


Unlike other low-float microcaps, SIMC does not depend on one industry or ane big customer. SIMC has over a dozen plants and hundreds of customers worldwide. SIMC operates manufacturing plants in China, Mexico, Scottland, and six plants in the United States. SIMC has invested considerable resources in the China plant/region this year. CEO expects huge growth in the region now and in the future.

SIMCs geographical/product/customer diversification lowers the risk considerably. That is a big reason why SIMC is consistently profitable and has been profitable in 9 out of the last 10 years. Not many companies can claim that.


+++++SIMC INVESTMENT HIGHLIGHTS:


* 1.8 Million Shares in Float
* Profitable in 9 of 10 years (2001 was the exception)
* 2004 most profitable year - EPS=$0.36
* Revenues of over $50million/year
* Added two new plants early this year
* 48% Revenue Growth. From $36M in 2003
* Market Cap only $24 million
* P/E = 15
* P/S = 0.45
* Insiders own 75% of the company.

REGARDING 3Q AND BEYOND:


SIMC Chairman Sam Russell commented upon the release of 2Q 2005 financial results on August 12:

"It is disappointing to report a decrease in sales in the quarter compared to the same period in 2004; however, this is caused by two of our plants in particular. One of these plants generated significant sales in the second quarter of last year due to above average demand from two of its customers. Unfortunately, there has been no such similar demand in the current year, with the result that sales for that plant have decreased by $707,000 (53%) in the second quarter of 2005.

"We... are pleased to note that this plant has now returned to profit and we expect it to remain profitable throughout the third quarter..."

..."The other plant in question has experienced a general decrease in business levels in the quarter, with the result that its sales are down by $808,000 (29%) in the second quarter of 2005. I'm pleased to say that, since the end of the second quarter, that plant has been successful in winning a significant order which will result in significant sales growth in the remainder of 2005 and on into subsequent years..."

...."The sales reductions at these plants decreased our profitability in the quarter..."


In other words, the two plants responsible for the drop to 3c/share net income in 2Q 2005, returned to profitability early in 3Q.

More importantly, the second plant mentioned in the report won "a significant order which will result in significant sales growth in the remainder of 2005 and on into subsequent years.."


Yes, SIMC does not seem to trade much. That is because no one wants to sell their shares. However, last April SIMC traded over 10M shares in a week after it released 4Q 2004 earnings.

DO YOUR DD