GEO Investing

Here are the stories that the GeoTeam is following today… (Please see full disclosures at bottom)

General Highlights:

  • ChinaHybrid
    • GAME ($6.76)  – reported weak Q1 2014 results
    • HPJ ($4.80) – delivered two containers of its Ni-MH rechargeable batteries to Costco as an initial trial order that will be used as power sources for general solar light products.
    • OINK ($2.18) –  completed $3.8 million private placement
    • MOBI ($6.71) –  announced  the sale of its 37.9% equity interest in Shanghai Fangcun Information Technology Co.
  • U.S. News
    • DAEG ($1.17) –  Q4 2014 Non-GAAP EPS of $0.07 vs $0.03 on down revenues.  Commentary calls for growth in next two quarters.
  • GeoBargains/GeoBargains on the Radar
    • GeoBargain on the radar IG ($5.86) – Announced 16th ANDA submission to FDA.
  • Tier 1 Pink
    • PFHO ($55.78) CEO Tom Kubota continues to nibble at shares during sharp pullback in stock.  Second open market purchase in last week of trading.  Added  shares in open market at $51.00.  In related news, late in the trading day yesterday,  Seeking Alpha published an  article stating shares of PFHO could double overnight.
  • Pump and Dumps
    • TAPM ($1.30) – Recent reverse merger in the hot mobile gaming industry.  Will watch for pump but has a sense of legitimacy.
  • Marijuana Hype
    • ALPC ($0.49) and AXIM ($0.51)- adding to our Cannabis screen

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Disclosure: Long IG, PFHO, HPJ; Other Long Positions; Other Short Positions; Pump & Dump Positions (Password GEO2014)

Summary of general highlights:

On the Asian Front…

Select China Earnings…

Stock Price** EPS Estimate Reported EPS Prior Year Reported EPS
Shanda Games (NASDAQ:GAME) $6.68 n/a $0.20* $0.24*

* denotes non-GAAP; ** Pre-market

Please see our ChinaHybrid March 2014 quarter earnings screen (password GEO2014) for select companies that have reported earnings.

In Other News…

Shanda Games (NASDAQ:GAME) ($6.76) – an online game developer, operator and publisher in China, reported first quarter 2014 results:

  • Revenue was $161 million this quarter, a 9.6% decrease from $177 million in the same quarter last year.
  • Non-GAAP EPS of $0.20 vs $0.24 in the prior year period.

Quotes from management:

“During the first quarter of 2014, net revenues generated from MMO games grew as we added new versions to our existing portfolio and expanded into new regions…

“Average monthly active users increased significantly overseas thanks in part to Dragon Nest’s continued strong performance in Europe.  This demonstrates the strength of our franchises and the enduring appeal our portfolio brings to users as we introduce our unique content.  We are currently hard at work preparing for the launch of a number of new mobile games which we are all excited for.  We will continue to focus on leveraging our years of operational experience and competitive advantage to seek out new opportunities.”

As we mentioned in our previous emails, the company received its “go-private” non-binding offer on 01/27/2014, with the tender price of $6.90 per ADS.

Highpower Intl (NASDAQ:HPJ) ($4.80) – a developer, manufacturer, and marketer of lithium and nickel-metal hydride (Ni-MH) rechargeable batteries, and a battery management systems and battery recycling provider announced today that they had delivered two containers of its Ni-MH rechargeable batteries to Costco as its first trial order that is going to be used as power sources for solar light products.

Quotes from management:

“We are delighted to have received an initial order from Costco, and are hopeful that this will lead to a new sales channel for our Company. Highpower is committed to developing and expanding long-lasting relationships with world-class customers such as Costco, which is a widely admired Fortune 100 company,”

“This first trial order for solar light products is quite exciting because lighting is one of the key industrial applications for our products. We believe that larger retail and wholesale chains such as Costco will increasingly look towards selling environmentally friendly products to customers, and feel that this has lasting benefits to Highpower given our dedication to products that result in energy savings and pollution reduction. We believe that our green and environmentally friendly products will continue to experience increased demand.

Tianli Agritech (NASDAQ:OINK) ($2.18) – a leading producer of breeder hogs, market hogs and black hogs headquartered in Wuhan City,China announced today that the company has completed a $3.84 million private placement of its common stock to Mr. Houliang Yu, who is a citizen of the PRC and  serves as CFO of Aoxin Holdings Co. Ltd. (“Aoxin”), a diversified holding company whose main business is in industrial park development and operations. Among this private placement 1.6 million shares were issued and sold at $2.40 per share to Mr. Yu and the aggregate consideration of this placement is $3.84 million. The offered price is about 9.6% premium over the closing price of $2.19 on 06/17/2014. After this private placement, the Company will have 21,164,000 common shares outstanding, and Mr. Yu will own around 7.56% of the total outstanding common shares. The proceeds of this private place will be used to pursue accretive M&A opportunities.

Sky-Mobi (NASDAQ:MOBI) ($6.71) – a leading mobile application platform in China, today announced the sale of its 37.9% equity interest in Shanghai Fangcun Information Technology Co., Ltd. (“Fangcun”), a leading China-based mobile game developer, to Guangdong Alpha Animation and Culture Co., Ltd. (SZ:002292), a company listed on the Shenzhen Stock Exchange. The Company realized a capital gain of RMB56.4 million1 from this transaction.

Michael Tao Song, Chairman and Chief Executive Officer of Sky-mobi, stated:

“We are extremely pleased with the growth of Fangcun’s capabilities for mobile games in China. MonsterxMonster, a light mobile game, which we closely collaborated on with the Fangcun team from concept design to product distribution, has become a recent hit in China and overseas. The success of Fangcun as well as the increasing recognition of Sky-mobi’s other strategic investments demonstrate our strong capabilities in discovering and cultivating game developers. These strengths are undergirded by our ability to leverage our deep understanding of Chinese light mobile game players’ preferences and identify strategic investments that possess tremendous potential. One of our strategic objectives in solidifying Sky-mobi’s leadership in the mobile game publishing market is to continue our dedication in collaborating with and investing in start-up mobile game developers with innovative and unique solutions. We endeavor to consistently distribute the highest-quality and most popular mobile games and applications through our well established distribution networks. Motivating us in this endeavor is our strong commitment to further supporting growth for every participant in our eco-system. We believe that the Fangcun deal is just the beginning of this commitment to strengthen our pipeline of talent. Going forward, we may further leverage our broad platform and explore opportunities of investing in such talented emerging gaming developers, adding an additional avenue of growth in near future.”

On the U.S. Front…

Notable U.S. Earnings…

Stock Price** EPS Estimate Reported EPS Prior Year Reported EPS
Daegis (NASDAQ:DAEG) $1.24 n/a $0.07* $0.03*

* denotes non-GAAP; ** Pre-market

GeoBargain/Specials…

Igi (AMEX:IG) ($4.69) – GeoBargain on the Radar IG engages in developing, manufacturing, filling, and packaging topical semi-solid and liquid products for cosmetic, cosmeceutical, and pharmaceutical customers in the United States. IG announced today that it has submitted the 16th ANDA in 2014 to the FDA.

Quotes from management:

“……This is our second submission this month, and we plan to add to our pending submissions throughout this week. We believe our current pipeline of submissions pending approval by the FDA has a combined addressable market of over $395 million based on recent data from IMS Health.”

In Other U.S. News…

Tier One Pinks…

Pacific Health Care (OOTC:PFHO) ($55.78) – GeoBargain on the Radar  and  Tier  One Pink PFHO engages in managing and administering health care organizations (HCOs) and managed provider networks in the state of California. The company’s CEO Tom Kubota continues to nibble at shares during sharp pullback in stock.  This is his second open market purchase in last week of trading, and the price of added  shares in open market was $51.00.  In related news, late in the trading day yesterday,  Seeking Alpha published an  article stating shares of PFHO could double overnight.

Pump and Dumps…

Tapinator (OOTC:TAPM) – a leading developer and publisher of mobile games on the iOS, Google Play, and Amazon platforms, which focuses on a number of different genres including driving, parking, puzzle, shooting, tossing, and word games.  Reasons for tracking:

  • The company is engaged in sexy industry (mobile gaming) that has received pump   campaigns in the past.
  • The company completed a reverse merger on 06/16/2014. According to the agreement, the Company issued 36.7 million shares of its common stock to the members of Tapinator, LLC in exchange for 100% of the outstanding membership interest units of Tapinator, LLC.
  • Potential sense of “legitimacy“  due to  management claims that
    • Tapinator’s owned and operated portfolio which includes over 40 mobile gaming titles that, collectively, have over 20 million users.
    • A number of these games have risen to the top of the mobile leaderboards and have been featured.
    • On track to report revenues of $400,000 in 2014, compared to $55,000 in 2013.

Marijuana Hype…

We are adding two stocks to our cannabis screen:

Alphala (OTCCB:ALPC) ($0.49) – ALPC announced on 06/16/2014 that it entered into a Letter of Intent with FV Pharma Inc. and certain shareholders of it to purchase all the Class B non-voting shares of the company. FV Pharma is striving to establish a state of the art medical marijuana production facility located in Cobourg, Ontario.

Axim Intl (OTCCB:AXIM) ($0.51) –  AXIM announced that the major shareholder of the company, Rosemary Samuels, entered into stock purchase agreement with Sanammad Foundation and Medical Marijuana, Inc. Pursuant to the agreements, Sanammad Foundation and Medical Marijuana, Inc. would acquire total of 14,943,650 shares of common stock which represents approximately 91% of the issued and outstanding common stock of AXIM, and acquire 1,000,000 shares of preferred stock which represents 100% of the issued and outstanding preferred stock. It appears that the preferred shares in total can be converted into 100,000,000 shares of common stock.

For a list of stocks we are tracking in the Marijuana space please go here.

**Please note that our decision to buy selected marijuana names is just based on our desire to ride the hype surrounding the sector and not an endorsement of their operations.  In the long-term, most of the marijuana stocks being hyped will likely come crashing down.  Also note that on 3/17/2014 we  mentioned that we have liquidated most of our marijuana holdings.

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Sincerely,

The GeoTeam