GEO Investing

Calls to Action: None

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

General Highlights:

  • ChinaHybrid
    • JRJC ($4.68) –  Reports record Q1 2014 revenues, narrows loss from prior year.
    • CMGE (Halted) – Yesterday, our call to action relayed news on that  China Mobile Gaming’s President was fired, as stated on internet portals in China;  consequently, we identified it as a possible short opportunity.  We later updated the story in more detail on our  GeoInvesting Blog.  Shares were halted at around 3:00 PM.
    • MOBI ($8.16) – Shares of MOBI rallied 13% in yesterday’s trading session.  According to a Rosenblatt securities analyst, MOBI may possibly become a key  distribution partner for Chinese e-retail giant, Alibaba.
    • CNRR ($0.70) – We are beginning to track in our Chinese company database due to  recent financing and what appears to be a reverse merger transaction, giving Shanghai Yuankai Group Co., Ltd (a large Chinese legitimate company) majority control of the company.
  • GeoBargains/GeoBargains on the Radar
    • GeoBargain on the radar IG ($5.83) – Its latest  drug submission was in connection with an existing development, supply and marketing agreement with Impax Laboratories.  Impax will be required to make milestone payments to IG when certain milestones are met; Addressable market for this drug is over $100 million.   IG also  announced its 18th and 19th ANDA submissions to the FDA, marking the 5th submission this week.
    • GeoBargain on the radar WSCI ($8.91) – Yesterday we re-coded WSCI as a GBR based on strong Q2 2014 results and bullish outlook by management.  As we had surmised would happen, the company reported strong Q3 2014 results, with as 203% increase in net income on 17% increase in sales year over year.
  • Speculative
    • IVDN ($0.99) – Is this a Pump and dump or legitimate speculative play as investors await one of the company’s key products to be certified for global distribution.
  • Marijuana Hype
    • Adding GRSU, PTOO, CANK, RNBI and GPAY to our Cannabis screen. Per the reverse merger 8k for GPAY, the newly formed company looks to have only 1.3 million shares outstanding.  We are also keeping an eye on MassRoots, a company not yet public.

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

Disclosure: Long IG ; 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
China Finance Online (NASDAQ:JRJC) $4.43 n/a -$0.06* -$0.20*

* denotes non-GAAP; ** Pre-market

***JRJC reported Q1 2014 sales of $23.2 million vs $5.5 in the prior year, an increase of 321%.

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

In Other News…

China Mobile Games (NASDAQ:CMGE) ($14.63) (Halted) – a company develops and publishes mobile games through its subsidiaries primarily in the People’’s Republic of China. Yesterday, we identified the company as a possible short opportunity and called to action based on the news that its President was fired, as stated on internet portals in China. Later in the day we updated the story in more detail on our GeoInvesting Blog. Shares of the company were halted at around 03:00 PM.

Since our morning highlight email, CMGE has issued a press release stating:

“ the implementation of organizational restructuring and personnel changes in its game publishing business. The purpose of the restructuring is to streamline the Company’s operations to better position it for profitable long-term growth.”

Shares are set to resume trading today at 1:45 PM.

Sky-Mobi (NASDAQ:MOBI) ($8.16) – a leading mobile application platform in China. Its shares rallied 13% in yesterday’s trading session. According to a Rosenblatt securities analyst, MOBI may possibly become a key  distribution partner for Chinese e-retail giant, Alibaba.

Cn Resources Inc (OOTC:CNRR) ($0.70) – CNRR has completed a $6 million equity financing activity on 05/29/2014, and it appears to be a reverse merger transaction, through which Shanghai Yuankai Group Co. is taking majority control of the company. Shanghai Yuankai Group Co. is a group company based in Shanghai, China, with registered capital of 150 million RMB (about $24.2 million). It engages business in real estate development and operation, investment, venture capital and private equity investment, secondary equity market investment, e-commerce platform construction, high-tech and innovative material and new energy development and application.

Thus far we do not know which division of this company is merging into the shell, but we are beginning to track the company in our Chinese company database and will keep looking for any update of it.

On the U.S. Front…

GeoBargain/Specials…

Igi (AMEX:IG) ($5.83) – 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 today announced on its  drug submission that its seventh ANDA submission was in an existing development, supply and marketing agreement with Impax Laboratories, Inc. (NASDAQ: IPXL). According to the agreement, Impax will be required to make milestone payments to IG when certain milestones are met, and the addressable market for this drug is over $100 million.

IG also  announced its 18th and 19th ANDA submissions to the FDA, marking the 5th submission this week. Quotes from management:

“……We believe our current pipeline of submissions pending approval by the FDA has a combined addressable market of over $465 million based on recent data from IMS Health.”

Wsi Industries (NASDAQ:WSCI) ($8.91) – GeoBargain on the radar WSCI is a leading contract manufacturer that specializes in the machining of complex, high-precision parts for a wide range of industries, including avionics and aerospace, energy, recreational vehicles, small engines, marine, bioscience and the defense markets.  Yesterday we re-coded WSCI as a GBR based on strong Q2 2014 results and bullish outlook by management.  As we had surmised would happen, the company reported  strong Q3 2014 results:

  • Reported sales for its fiscal 2014 third quarter 2014 of $10,702,000 versus the prior year of $9,169,000 or an increase of 17% over the prior year quarter.
  • The Company also reported net income of $321,000 or $.11 per diluted share for the fiscal 2014 third quarter compared to $106,000 or $.04 per diluted share in the prior year third quarter or an increase of 203%.

The stock is down 10%  on the news. We are speculating that investors may be reading too much into  the following statement in the earnings press release:

“Our overall energy business was down versus the prior year third quarter”

Still, the overall theme of management commentary was strong . We will try to contact management  ASAP.  In our opinion, the following TTM valuation multiples are beginning to look compelling.

  • EV/S = 0.8
  • EV/EBITDA = 4.8
  • P/E = 17.5

Full Press Release Commentary:

“Our fiscal 2014 third quarter results have continued our recent trend of showing year-over-year growth. This is the third consecutive quarter where we achieved sales increases over the prior year quarter. While we are experiencing improved activity in most segments of our business, the largest contributor to our sales growth has continued to come from our powersports business — which was up 26% over the prior year third quarter and is up 50% year-to-date over the prior year. We successfully launched a major new program in the powersports business this year, and we have continued to develop new product lines as models change year over year.” Rashleger continued: “Our overall energy business was down versus the prior year third quarter, however, in our oil and gas fracking segment we experienced our third consecutive quarter of sales increases. In addition, we previously announced orders from three new customers in our energy business which generated some revenues in our third quarter, and we expect to see additional sales as these programs roll out in our fiscal 2014 fourth quarter.” Rashleger concluded: “We are pleased with our results, and our optimism for our future business and potential remains high.”

Speculative…

Innovative Designs (OOTC:IVDN) ($0.99) – Innovative Designs, Inc. manufactures and markets cold weather recreational and industrial clothing products made from INUSULTEX.

The stock has had a choppy performance over the past 5 years jumping between $0.20 and $0.50. But, the stock has been strong of late and is attempting  to break $1 to the upside. The Company has been gaining investor enthusiasm about its home installation product called Insultex® House Wrap. Annual revenues have ranged between a half million and a million since 2007, but the company is hoping that certification of its insulation  product will significantly change its financial outlook:

“Our House Wrap product continues to await the International Code Council’s certification of the lab which certifies the R value of House Wrap. Once such certification is obtained, we believe that the R value of House Wrap will be increased such that large national home builders will be able to use the product in their home construction. We cannot predict with any degree of accuracy as to when such certification will be obtained. We are currently supplying smaller contractors with the product. House Wrap is currently being offered, online, by Lowes, Home Depot and Tool King”.

We are unclear if this is a legitimate speculative play or a possible pump and dump. at this time.

Marijuana Hype…

We are adding 5 stocks into our cannabis screen:

Gold Party Payday Inc Common S (OTCCB:GPAY) ($0.10) Per the reverse merger 8K for GPAY, the newly formed company looks to have only 1.3 million shares outstanding.  As a result of the transactions, the former business of Canada Cannabis Corp. (CCC) is now the sole business of the Company’s wholly-owned subsidiary. CCC was focused on applying to obtain its initial license to produce and supply medical marihuana under the newly effective Marihuana for Medical Purposes Regulation in Canada and other startup activities in preparation for commencing full operations in the production and supply of medical marihuana.

Greenhouse Solutions (OOTC:GRSU) ($0.46)

Pitooey! (OTCCB:PTOO) ($0.70)

Cannabis Kinetics Corp Common (OTCCB:CANK) ($4.00)

Rainbow Intl Corp Com (OOTC:RNBI) ($0.19)

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