As a quick update on the blog - summary on SRRY.OB:
What they do
Sancon Resources Recovery, Inc. is an environmental service and waste management
company that operates recycling facilities in China and Australia. Sancon
specializes in the collection and recovery of industrial and commercial solid
wastes such as plastic, paper, cardboard, and glass. The recycled materials are
re-used by Sancon's manufacturing customers in China to make a wide variety of
new products including outdoor furniture, construction materials, building
materials, road surface, and various new products. Sancon's China operation is
licensed by the Chinese government for waste management services, and is
certified with ISO 9001 and ISO14001 standards. Sancon currently ships more than
25,000 tons of recycled industrial and commercial waste material annually to its
customers in China. Sancon's main operations and services include industrial
waste management consulting, collection and reprocess of recyclable materials
such as plastic, glass, cardboard, and paper sourced from suppliers such as
Hella, Toyota, Full Views, Wastech Holdings, Supagas, and Priority etc, before
its re-entry into manufacture cycles as raw materials. Sancon also provides its
full waste management services to large consumer products maker such as Pernod
Ricard. The use of recycled material is both environmentally friendly and is a
key part of today's competitive manufacturing process to lower costs. As China
gains global manufacturing dominance and oil price soars, Chinese manufacturers
are increasingly turning to recycled materials to lower its costs, resulting
tremendous demand for recycled materials import. The major customers for Sancon
are Chinese manufacturers and recycled material traders which are located mainly
in the Chinese provinces of Guangdong, Zhejiang, Fujian and Hong Kong.
Sales
Sales are generated by service charges and the sale of recyclable materials. The
sales in Q2 2008 were $2,940,268, representing a 251% increase compared to the
sales of $838,658 in same period of 2007. The sharp increases were mainly due to
the significant sales amount contributed from Sancon SH and CS, which started
their operation in Q3 2007 and Q1 2008. On August 15, 2007, the Company
completed the acquisition of 70% of the equity interest in Sancon Resources
Recovery (Shanghai) Co., Ltd by exercising its option to convert $200,000 of
convertible promissory note. On November 17, 2006, the company completed the
acquisition of 100% equity interest in Crossover Solutions Inc from Fintel Group
by paying $1 for the transfer of one share of Crossover Solutions Inc. being the
total number of outstanding share of Crossover. Crossover did not have any
operations or assets/liability prior to 2008. The both companies are engaged in
recycling material trading business. And sales for six months ended on June 30
for the year 2008 and 2007 were $5,889,264 and $1,531,706 respectively.
Financials
- O/S = 21.7 mil
- Market cap roughly 12 mil
- 6 months sales = 5.8 mil
- Margins increased from 17.9% in 2Q 2007 to 46.2% in 2Q 2008
- Gross profit increased to $2.87 million in the 2008 six months compared to $0.31 million in the year-earlier period
- 2008 net income for the first six months was $1.03 million, or $0.05 per diluted share, compared to a loss of $(0.22) million, or a loss of $(0.01) per share in the year ago period
Business Outlook
The Company expects to generate 2008 revenue of between $11 million and $12 million and net income between $2 million and $2.1 million and $0.09 to $0.1 per share
“We are pleased that we have achieved another profitable quarter, while positioning the Company for growth throughout 2008 and 2009,” said Jack Chen, Sancon’s Chief Executive Officer. “The recent announcement that we have been selected by the largest personal computer manufacturer in China to collect and process waste materials reflects the growing recognition in China of the importance of recycling. Companies are increasingly embracing these initiatives, endorsed by the Chinese government, to become more environmentally responsible. We have been positioning Sancon to benefit from these trends by investing in technology and recycling plants and depots to support growth in new Chinese cities.”
Links
http://biz.yahoo.com/bw/080818/20080818005365.html?.v=1
http://www.sec.gov/Archives/edgar/data/1288195/000101968708003728/sancon_10q-063008.txt
Tuesday, August 26, 2008
Monday, August 18, 2008
Storm approaching...
Tropical Storm Fay is approaching Florida, where I'm residing, but I'm really talking about the market here... :) It's nice to have a job of a weather forecaster. I love how they are saying: "There is an over 50% chance of Fay becoming a hurricane", which could pretty much mean there is 51% chance it'll be a hurricane, and 49% chance it will stay a Tropical Storm. Let's apply this to the market - "There is an over 50% chance of DOW closing positive tomorrow" :)
We've been seeing lots of +200 / -200 DOW swings in the past few weeks, but after all dust is settled, we are still trading in the same range. So, where do we go from here? I haven't changed my mind yet. Still believe we'll see 13k by late Sept / Oct, so I see a "big storm" coming into the market in the next few weeks, but I think this storm will be a disaster for the shorts. Shanghai market went below 2500, but judging how it's selling off, it seems like a capitulation is almost here...You rarely see 60% pullback on anything that went up, but here we are talking about pretty strong economy. All statistics point to a nice recovery in the next 6-9 months.
Now, back to our undiscovered stocks, as there have been plenty of news last week:
HRBN (Harbin Electric) - earnings were great. Conference call wasn't that great. I think they should work on the conference call a little better, as some of the explanation provided wasn't understood correctly by many. Anyways, stock did not give back its gains, instead continued its slow move. It was nice to see it work through $16.00-16.25 resistance. Chart still looks great. There are other resistances on the way - $17,00, $17.72... Nothing changed in the long term of the company. They just confirmed that the long term look very bright here.
AFAM (Almost Family) - did what I expected - dropped huge on simple profit taking one day. It deservers a 50/50 weather forecaster statement right now, as it's hard to predict what will happen now. Profit was made, off to the next play. No more updates on this one.
TXIC (Tongxin International) - still nothing to see here, except it it seems that IR is starting to inform the public a little more. Telling us when the earnings were going to be released is a start. China Auto Market has slowed down a bit, but still strong, and nothing compared to US market.
YTEC (Yucheng Technologies) - nice gain from $11's to mid $14's, but the "buy rumor, sell news" took its toll. I actually didn't have a chance to go over earnings today. Will analyze later to see if it's worth getting back in any time soon.
MAQ / MAQ+ (now GSL / GSL+) - completed its merger resulting in a nice gain for the warrants from around $1 all the way to $1.60. This was somewhat risky play, as you deal with warrants, where you can lose all your investment if merger doesn't happen, but the merger was nearly 100% guaranteed. Still keep an eye on this stock and warrant, as the resulting company is very interesting.
Similar type of play is happening now in FMGQ.OB / FMGQW.OB - another interesting merger, which most likely will happen as well judging by today's PR ( http://biz.yahoo.com/bw/080818/20080818005595.html?.v=1 ) , resulting in a nice gain for the warrants, as the strike price is $6.00 (so, it might get to $1.50-1.60 sometime after the merger). Once again - very risky play. Only play with warrants if you are ready to lose your entire investment in them.
Another new stock:
Few weeks ago I briefly mentioned a new stock to watch - SRRY.OB.
I believe this one may appreciate nicely in upcoming months.
Take a look at this latest earnings release:
http://biz.yahoo.com/bw/080818/20080818005365.html?.v=1
This company is a rapidly growing environmental services and waste recycling company, with operations in both China and Australia. And China Operations are growing at a very nice pace. Just look at this revenue numbers: "The Company generated record 2008 second quarter revenue of $2.94 million, a 251% increase compared to $0.84 million in the 2007 second quarter". This is despite some shutdowns due to the earthquake.
Gross Margin increased significantly (from 20% to 48%). Finally:
"2008 net income for the first six months was $1.03 million, or $0.05 per diluted share, compared to a loss of $(0.22) million, or a loss of $(0.01) per share in the year ago period. The Company expects to generate 2008 revenue of between $11 million and $12 million and net income between $2 million and $2.1 million and $0.09 to $0.1 per share."
Basically, they are trading at PE of 5 right now. $1 is not out of the question here for the short term. Long term - who knows how far they can take it with this phenomenal growth. More to come on this stock.....
That's it for today. Off to watch the weather forecasts :)
We've been seeing lots of +200 / -200 DOW swings in the past few weeks, but after all dust is settled, we are still trading in the same range. So, where do we go from here? I haven't changed my mind yet. Still believe we'll see 13k by late Sept / Oct, so I see a "big storm" coming into the market in the next few weeks, but I think this storm will be a disaster for the shorts. Shanghai market went below 2500, but judging how it's selling off, it seems like a capitulation is almost here...You rarely see 60% pullback on anything that went up, but here we are talking about pretty strong economy. All statistics point to a nice recovery in the next 6-9 months.
Now, back to our undiscovered stocks, as there have been plenty of news last week:
HRBN (Harbin Electric) - earnings were great. Conference call wasn't that great. I think they should work on the conference call a little better, as some of the explanation provided wasn't understood correctly by many. Anyways, stock did not give back its gains, instead continued its slow move. It was nice to see it work through $16.00-16.25 resistance. Chart still looks great. There are other resistances on the way - $17,00, $17.72... Nothing changed in the long term of the company. They just confirmed that the long term look very bright here.
AFAM (Almost Family) - did what I expected - dropped huge on simple profit taking one day. It deservers a 50/50 weather forecaster statement right now, as it's hard to predict what will happen now. Profit was made, off to the next play. No more updates on this one.
TXIC (Tongxin International) - still nothing to see here, except it it seems that IR is starting to inform the public a little more. Telling us when the earnings were going to be released is a start. China Auto Market has slowed down a bit, but still strong, and nothing compared to US market.
YTEC (Yucheng Technologies) - nice gain from $11's to mid $14's, but the "buy rumor, sell news" took its toll. I actually didn't have a chance to go over earnings today. Will analyze later to see if it's worth getting back in any time soon.
MAQ / MAQ+ (now GSL / GSL+) - completed its merger resulting in a nice gain for the warrants from around $1 all the way to $1.60. This was somewhat risky play, as you deal with warrants, where you can lose all your investment if merger doesn't happen, but the merger was nearly 100% guaranteed. Still keep an eye on this stock and warrant, as the resulting company is very interesting.
Similar type of play is happening now in FMGQ.OB / FMGQW.OB - another interesting merger, which most likely will happen as well judging by today's PR ( http://biz.yahoo.com/bw/080818/20080818005595.html?.v=1 ) , resulting in a nice gain for the warrants, as the strike price is $6.00 (so, it might get to $1.50-1.60 sometime after the merger). Once again - very risky play. Only play with warrants if you are ready to lose your entire investment in them.
Another new stock:
Few weeks ago I briefly mentioned a new stock to watch - SRRY.OB.
I believe this one may appreciate nicely in upcoming months.
Take a look at this latest earnings release:
http://biz.yahoo.com/bw/080818/20080818005365.html?.v=1
This company is a rapidly growing environmental services and waste recycling company, with operations in both China and Australia. And China Operations are growing at a very nice pace. Just look at this revenue numbers: "The Company generated record 2008 second quarter revenue of $2.94 million, a 251% increase compared to $0.84 million in the 2007 second quarter". This is despite some shutdowns due to the earthquake.
Gross Margin increased significantly (from 20% to 48%). Finally:
"2008 net income for the first six months was $1.03 million, or $0.05 per diluted share, compared to a loss of $(0.22) million, or a loss of $(0.01) per share in the year ago period. The Company expects to generate 2008 revenue of between $11 million and $12 million and net income between $2 million and $2.1 million and $0.09 to $0.1 per share."
Basically, they are trading at PE of 5 right now. $1 is not out of the question here for the short term. Long term - who knows how far they can take it with this phenomenal growth. More to come on this stock.....
That's it for today. Off to watch the weather forecasts :)
Sunday, August 10, 2008
Earnings and more
It's earnings time this week.
Harbin Electric (HRBN) is going to have a conference call and PR on earnings early Monday morning, but they already released 10Q Friday after hours.
The numbers look great! They beat on both revenues and net income. Margins are still nicely above 48%.
Six months results:
"For the six-month period ended June 30, 2008, we generated net revenues of $46.42 million compared to $27.62 million for the six-month period ended June 30, 2007, representing a 68% year-over-year growth. Linear motors and related integrated application systems contributed 44% to total revenues, automobile specialty micro-motors contributed 38%, and controllers, armatures, and other special motors contributed 18% compared to 76%, 0%, and 24%, respectively, for the six months ended June 30, 2007. "
"Net Income for the six months ended June 30, 2008 was $11.58 million compared to $7.96 million for the six months ended June 3, 2007, representing a year-over-year increase of 46%. This increase in net income was mainly due to new sales driven primarily by automobile micro-motor business and the tower-type permanent magnetic linear motor oil pumps. Earnings per diluted share grew 36% from $0.42 in the six months ended June 30, 2008 to $0.58 in the six months ended June 30, 2007. The income tax that the Company began to pay on earnings has resulted in a significant reduction in our growth of net earnings compared to previous periods."
Three months results:
"For the three months ended June 30, 2008, we generated net revenues of $23.96 million compared to $13.99 million for the three months ended June 30, 2007, representing an increase of 71% year-over-year. Linear motors and related integrated application systems contributed 45% to total revenues, automobile specialty micro-motors contributed 38%, and controllers, armatures, and other special motors contributed 17% compared to 66%, 0%, and 34%, respectively, for the three months ended June 30, 2007. "
"Net Income for the three months ended June 30, 2008 was $6.23 million compared to $4.56 million for the three months ended June 30, 2007, representing a year-over-year increase of 37%. Earnings per diluted share were $0.31 and $0.24 for the three months ended June 30, 2008 and 2007, respectively. The income tax that the Company began to pay on earnings has resulted in a significant reduction in our growth of net earnings compared to previous periods. Higher SG&A costs for the second quarter of 2008 versus the second quarter of 2007 also negatively affected the net earnings. Additionally, the Company received $763,408 in government grants in the second quarter of 2007, while none in the second quarter of 2008, also affected the comparison of the two periods unfavorably."
Now, in the next quarters the new acquisition numbers will kick in. Fundamentals are all there for an impressive growth. Company does not appear to slow down at all.
Summary: Excellent 2Q numbers (beat all analysts forecasts) coupled with great chart setup - if that doesn't give HRBN a nice jump, I would be really suprised. Anyways, no worries here for the long term as usual.
Tongxin International (TXIC) - Look, it's not a disaster that the company's stock is down less than 6% from the time they got the merger complete. Once again, many chinese stocks are down 40%+ in the past 6 months. Disappointed about lack of upward movement? Yes. Worried yet? NO. Give it time and wait for earnings.
Almost Family (AFAM) - What a beast. Great earnings, just great. Chart is getting overextended though. If you are not out of it yet, I would suggest to take profits here. Has to settle a bit.
Here is my thinking on the market:
So far, market acts as I pretty much expected: bottomed at 10,800-11,100 area. Now, pushed over 11,600's with Nasdaq and S&P500 breaking out technically. Unless something changes materially, we should see a next resistance at 12,200-12,300 area fairly soon. Still on target for 13k by late Sept or Oct.
Chinese market is about to start heating up again. It seems to be bottoming out at 2500-2700 area. Even if it goes slightly lower, this looks like a bottom. Statistically, stocks of the country with Olympics gain on average 30% in the next 9 months after Olympics. So, start nibbling on your favorite Chinese high flyers :), but I would suggest to stick with stocks that got great fundamentals. We are about to witness a next wave in Chinese stocks buying. Get ready for it...
Harbin Electric (HRBN) is going to have a conference call and PR on earnings early Monday morning, but they already released 10Q Friday after hours.
The numbers look great! They beat on both revenues and net income. Margins are still nicely above 48%.
Six months results:
"For the six-month period ended June 30, 2008, we generated net revenues of $46.42 million compared to $27.62 million for the six-month period ended June 30, 2007, representing a 68% year-over-year growth. Linear motors and related integrated application systems contributed 44% to total revenues, automobile specialty micro-motors contributed 38%, and controllers, armatures, and other special motors contributed 18% compared to 76%, 0%, and 24%, respectively, for the six months ended June 30, 2007. "
"Net Income for the six months ended June 30, 2008 was $11.58 million compared to $7.96 million for the six months ended June 3, 2007, representing a year-over-year increase of 46%. This increase in net income was mainly due to new sales driven primarily by automobile micro-motor business and the tower-type permanent magnetic linear motor oil pumps. Earnings per diluted share grew 36% from $0.42 in the six months ended June 30, 2008 to $0.58 in the six months ended June 30, 2007. The income tax that the Company began to pay on earnings has resulted in a significant reduction in our growth of net earnings compared to previous periods."
Three months results:
"For the three months ended June 30, 2008, we generated net revenues of $23.96 million compared to $13.99 million for the three months ended June 30, 2007, representing an increase of 71% year-over-year. Linear motors and related integrated application systems contributed 45% to total revenues, automobile specialty micro-motors contributed 38%, and controllers, armatures, and other special motors contributed 17% compared to 66%, 0%, and 34%, respectively, for the three months ended June 30, 2007. "
"Net Income for the three months ended June 30, 2008 was $6.23 million compared to $4.56 million for the three months ended June 30, 2007, representing a year-over-year increase of 37%. Earnings per diluted share were $0.31 and $0.24 for the three months ended June 30, 2008 and 2007, respectively. The income tax that the Company began to pay on earnings has resulted in a significant reduction in our growth of net earnings compared to previous periods. Higher SG&A costs for the second quarter of 2008 versus the second quarter of 2007 also negatively affected the net earnings. Additionally, the Company received $763,408 in government grants in the second quarter of 2007, while none in the second quarter of 2008, also affected the comparison of the two periods unfavorably."
Now, in the next quarters the new acquisition numbers will kick in. Fundamentals are all there for an impressive growth. Company does not appear to slow down at all.
Summary: Excellent 2Q numbers (beat all analysts forecasts) coupled with great chart setup - if that doesn't give HRBN a nice jump, I would be really suprised. Anyways, no worries here for the long term as usual.
Tongxin International (TXIC) - Look, it's not a disaster that the company's stock is down less than 6% from the time they got the merger complete. Once again, many chinese stocks are down 40%+ in the past 6 months. Disappointed about lack of upward movement? Yes. Worried yet? NO. Give it time and wait for earnings.
Almost Family (AFAM) - What a beast. Great earnings, just great. Chart is getting overextended though. If you are not out of it yet, I would suggest to take profits here. Has to settle a bit.
Here is my thinking on the market:
So far, market acts as I pretty much expected: bottomed at 10,800-11,100 area. Now, pushed over 11,600's with Nasdaq and S&P500 breaking out technically. Unless something changes materially, we should see a next resistance at 12,200-12,300 area fairly soon. Still on target for 13k by late Sept or Oct.
Chinese market is about to start heating up again. It seems to be bottoming out at 2500-2700 area. Even if it goes slightly lower, this looks like a bottom. Statistically, stocks of the country with Olympics gain on average 30% in the next 9 months after Olympics. So, start nibbling on your favorite Chinese high flyers :), but I would suggest to stick with stocks that got great fundamentals. We are about to witness a next wave in Chinese stocks buying. Get ready for it...
Saturday, August 2, 2008
Updates and new stock to watch
Very nice week for our undervalued small caps:
YTEC - Since mentioning it at low $11's, it had a very nice week. The break of mid-high $11's was crucial. We saw a nice gain all the way to mid $13's even when the market wasn't doing too good. Hard to say what will happen next, but some profit taking is inevitable at this point.
AFAM - wanted to mention it one more time. It continues to amaze me, as it breaks new high every week. It now reached $35, making it a solid 75% gain since mentioning it at $20 just a few months ago.
HEK - another solid performer this week. But its warrants make it a better play, because of the percentage gain.
HRBN - again, based on the chart, as mentioned earlier, it's starting to come out from the low base closing at just above 50 dma even in the down market. Last time we closed above 50 dma, we had a nice run for another 4 points. I believe this is the beginning of a very solid uptrend. The earnings are coming shortly and should continue to tell a successful story here. It's still early....
One continuous disappointment is TXIC (Tongxin International). Disappointment in terms of not gaining anything. I would take any not-losing stock in this market though :) Unfortunately, it's still not attracting the masses, but the earnings are coming and we may get some more exposure based on them...
New stock to watch - MAQ and the warrants MAQ-NT (MAQ+). More on this company in a few days. Quick note - the vote on acquisition is expected within next 10 days, so be sure to know the risks associated with it.
More updates in a few days....
YTEC - Since mentioning it at low $11's, it had a very nice week. The break of mid-high $11's was crucial. We saw a nice gain all the way to mid $13's even when the market wasn't doing too good. Hard to say what will happen next, but some profit taking is inevitable at this point.
AFAM - wanted to mention it one more time. It continues to amaze me, as it breaks new high every week. It now reached $35, making it a solid 75% gain since mentioning it at $20 just a few months ago.
HEK - another solid performer this week. But its warrants make it a better play, because of the percentage gain.
HRBN - again, based on the chart, as mentioned earlier, it's starting to come out from the low base closing at just above 50 dma even in the down market. Last time we closed above 50 dma, we had a nice run for another 4 points. I believe this is the beginning of a very solid uptrend. The earnings are coming shortly and should continue to tell a successful story here. It's still early....
One continuous disappointment is TXIC (Tongxin International). Disappointment in terms of not gaining anything. I would take any not-losing stock in this market though :) Unfortunately, it's still not attracting the masses, but the earnings are coming and we may get some more exposure based on them...
New stock to watch - MAQ and the warrants MAQ-NT (MAQ+). More on this company in a few days. Quick note - the vote on acquisition is expected within next 10 days, so be sure to know the risks associated with it.
More updates in a few days....
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