SinoHub, Inc. (SIHI) SinoHub, Inc. is an electronics company. The Company is engaged in two business segments: electronics product manufacturing and sales (ICM, Integrated Contract Manufacturing), and electronic component sales and services (ECSS), which is consisted of electronic component sales (ECP) and electronic component supply chain management services (SCM). The ICM segment is focused on providing custom, private label mobile phones (also known as white-box mobile phones) to developing countries. SinoHub's ECSS segment includes procurement-fulfillment and spot electronic component sales to manufacturers and design houses, and warehousing, delivery and import/export. Last Sale: $ 0.51 Market Value of Listed Security: $ 17,062,050 Earnings Per Share (EPS): $ 0.48 Net Change: 0.08 18.6% Shares Outstanding: 33,455,000 Float: 22.8M (From TDA) P/E Ratio: 1.06 Read more: http://www.nasdaq.com/symbol/sihi#ixzz1lSJMhTAl
The recent drop in PPS in 2011 is because their earning dropped but it is way undervalue now. Let me explain farther below:
2011 Q3 Report: Earning Drop In 2011 Q3 but recovered some in Q3
BUSINESS HIGHLIGHTS: Commenting on the results, SinoHub’s CEO, Mr. Harry Cochran said, “Our results for the third quarter were largely in line with our expectations, as we continued to be impacted by the decline in ICM revenue following the cut back in orders from a major customer in the second quarter. While we have not yet replaced all of the revenue lost from this key customer, our results have stabilized thanks to our progress on the business development front. In fact, we have successfully broadened our base of smaller ICM customers placing higher margin orders, which led to an improvement in our ICM gross profit margin from the low in the previous quarter. We have also made significant inroads with a number of large developing market mobile phone operators. For example, Philippine Long Distance Telephone Company (PLDT), owners of Smart Communications, Inc, the leading wireless services provider in the Philippines, recently added SinoHub to their List of Accredited Suppliers for Mobile Phones (Private label) for a three year period. This marks a significant step in the sales process with one of the largest mobile phone operators in Southeast Asia, and while we have not yet secured any orders, we are working hard to move this relationship to the order phase.
“The process to shift the electronic component sales part of our ECSS segment to a brokerage model is ongoing, and we expect to make further progress here in the fourth quarter of 2011. This transition is necessary as we continue to focus our resources on developing our ICM business segment.
“Looking ahead, we remain committed to our long-term strategy to deepen penetration of the mobile device market in developing nations and in other international markets, including North and South America. We believe that our joint design process and our track record of delivering high quality phones with minimal lead times and flexible order quantities continue to provide us with clear competitive advantages. While we may continue to face near-term pressure in the short term, we remain confident that our rate of growth in the ICM business segment will rebound in the year ahead.”
Lei Xia, President of SinoHub, added, “We are delighted to become an accredited supplier to PLDT after a thorough due diligence process run by Dun & Bradstreet on their behalf. With forty-eight million subscribers, Smart Communications has a dominant position in their market, and we look forward to establishing a strong long-term relationship with them.”
Liquidity and Capital Resources As of September 30, 2011, the Company had US$7.0 million in cash and cash equivalents, an increase from US$4.5 million as of December 31, 2010 resulting primarily from new money raised in the first half of 2011. The Company had working capital of US$75.5 million on September 30, 2011, up from US$57.5 million at the end of 2010, and a current ratio of 1.6 to 1 on September 30, 2011.
As of September 30, 2011, the Company had approximately US$7.0 million available to borrow under its credit facilities.
During the nine months ended September 30, 2011, the net amount of cash used in the Company’s operating activities was US$17.6 million, compared to US$4.7 in the same period in 2010, which was mainly attributable to the increase in inventories and accounts receivable.
As of September 30, 2011, inventories were approximately US$37.1 million and accounts receivable were US$60.2 million, compared to approximately US$14.6 million and US$45.7 million on December 31, 2010, respectively. The increase in inventory was related to our ICM business and the increase in accounts receivable resulted from lower collections in ECP in the quarter caused by a change in policy by the Chinese banks which had the effect of lowering credit availability for our customers.
Full-year 2011 Revenue Guidance
The Company reiterates its sales outlook of approximately 2.5 million mobile phones in 2011, and its full-year 2011 revenue guidance of approximately $195 million. The forecasts reflect the Company’s current and preliminary view, which is subject to change.
Earning for 2010 Q1= 0.12 (Number from my TDA account) 2010 Q2= 0.10 2010 Q3= 0.19 2010 Q4= 0.25 2011 Q1= 0.12 2011 Q2= 0.03 2011 Q3= 0.08 In 2010, SIHI was value at a PE ratio of 5. For example, 0.12+.10+.19+.25=0.66, and 0.66*3=$3.3, $3.3 is the range that SIHI traded in 2010. Currently SIHI EPS is $0.48 if you add 2010 Q4, 2011 Q1, 2011 Q2, and 2011 Q3 together. Let be conservative and take out 2010 Q4 because I don’t think they will earn that much in 2011 Q4. Let use an estimate of 0.08 for 2011 Q4 because that is the average of the previous three 2011 Qs. Thus mean the EPS for 2011 is $0.31, and using the PE ratio of 5, the PPS should be 0.31*5 = $1.55. SIHI is way undervalued! Good fundamentals! The company is bouncing back from a disappointing 0.03 EPS in 2011 Q2 and starting to make a turn away, posting 0.08 EPS in Q3
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