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ETLT- any one have thoughts?
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[QUOTE]Originally posted by blue_in_MI: [QB] one of the knocks against ETLT has always been that their big cash position was earmarked only for use in china. is interesting, with some regulation changes, there has been at least a mild change in that regard, though too early to tell how it'll pan out. the part of the filings that on the last 10Q read: "Although the Company has a cash and bank balance of $21,329,840, it has all been designated by management for expansion of its operations within the People's Republic of China. Therefore, if the Company is to expand outside the PRC, as it anticipates doing, or pay its non-PRC obligation, it will have to sell additional shares of its stock or borrow funds from third parties." now has been changed in this 10K to read: "Although the Company has a cash and cash equivalents balance of $18,224,488 and short-term investments of $9,909,084, management believes that the best return for such cash and short-term investments is in the People's Republic of China. Therefore, if the Company is to expand outside the PRC, as it anticipates doing, it will have to sell additional shares of its stock or borrow funds from third parties. However, because of the loosening of currency restrictions in the PRC, it can pay its non-PRC obligations from its funds held in China." some of how this week goes for ETLT will depend on the 10Q which should also be out shortly. it's seasonally their slowest Q so i don't have big expectations, and doubt the 1stQ will show big numbers. but - is clear that ETLT is working to "smooth out" their revenue instead of having it all concentrated in the last two Q's per year. E-Sea revs will be basically nonseasonal and should help in this regard. In comparing the results with their pre-stated "guidance" from back in december: looks like net income came in a little lower than they expected (earned about $1M in 4Q, rather than the $1.2M they guided for), but - revs came in quite a bit higher than they guided for (almost $6M in the 4thQ, compared to guidance of about $4M). note that also they seemed to not include the 5-6M shares that they issued to purchase e-sea (which i still believe was a great deal, btw) in calculating the .12/share bottom line: next Q we will see about net profit based on 39M rather than 33M shares. actually i think this is one thing ETLT messed up in their unaudited comments on the bottom of page 32 of the filing. they mention .18/share if they were to have had e-sea all year, but - unless i'm missing something, this number should have been based on the full share count of 39M rather than the 33M they apparently used. so really would have been more like .15/share,unless i'm missing something...? my general view of ETLT is that it's a promising value stock that is unfortunately incompetent at filing on time, but - has great growth potential, particularly with e-sea. revs have ramped up quite nicely the last 4 years, topline roughly: $13M, $15M, $17M, and now $23M. i think they've done a good job in several areas, for example keeping their margins at above 30%. was clear they could never sustain the near-40% margin they were at a year or two ago, but - i'm impressed by keeping it above 30%. they've also clearly made moves to put their large cash position to work: the new dairy project, and e-sea. i look at both of these as long-term projects: neither will have a gigantic initial impact on their numbers, but - both (particularly e-sea) i think will continue to grow and add to their numbers down the road. i could be wrong, but: my view of ETLT is that it's a long-term hold. sounds like other projects/acquisitions may well be in the works as well, though so far the mango/wal-mart thing mentioned on their website has still yet to be formally announced. i don't expect the numbers there to be huge, though. their biggest expansion project of course is the dairy cattle breeding center. this will cost them on the order of $33M (reduced from the original figure due to tax-free nature), and they're projecting 5 years out additions of $12.5M to revs and $2M to profit, and the ROI point perhaps in year 6 (was 7, but - tax changes since helped). will be funded mostly via their cash position, which imho is a good idea: no one seems to care about their cash position, so might as well put it to use in generating profits and growing the company. will clearly take awhile for these to add to the bottom-line, but - i like their long-term idea of putting their cash to use. one nice thing about e-sea: seems to have a quite nice margin. for 2006 it looks like e-sea might provide perhaps $2.5M in revs, will be interesting to see the growth rate it takes after that point. i'd certainly hope that it would continue to rise up quite a large amount in later years. also at this point it's hard to speculate on what other projects they might get involved with, they do seem to be continuing to actively seek to expand further. we'll see. [/QB][/QUOTE]
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