Call(s) to Action:
QLTY ($13.28) – In our 8/4/2014 email we stated:
“Will nibble at shares prior to Q2 2014 earnings which are expected to be announced tomorrow after the close.”
Q2 2014 revenues and EPS were generally in line with analyst estimates, sales came in at $255.6 million, an increase of 6.8% over Q2 2013 and met analyst estimates of $255.6 million. However, the low end of Q3 2014 EPS guidance of $0.19 to $0.23 is well below analyst estimates. We don’t think the quarter performance coupled with potentially weak guidance will be a strong catalyst to drive shares toward our original price target of $19.00. We will likely look to unwind our position.
Here are the other stories that the GeoTeam is following today… (Please see full disclosures at bottom)
- CCCL (Currently Halted) – Regained compliance with Nasdaq. Will resume trading on 8/7/2014.
- AXN ($0.42) – Announced it had received notice that it is not in compliance with certain sections of the NYSE MKT Company Guide.
- PAOCD ($10.00) – Beginning to track because the company recently entered into a reverse merger transaction with a China-Based container supply company.
- ZPPB ($4.00) – Beginning to track because recent reverse merger entering on-line casino operations. Aiming to introduce VIP Asian gamers to the on-line offerings.
- U.S. News
- Earnings update – APT, DAVE and EVOL all reported strong Q2 earnings. Please see earnings screen for details.
- MNDO ($2.39) – The company reported record Q1 2014 revenues in May, and management commentary was bullish on their revenues and margins for the next few quarters, based on the existing large order wins in the past.
- GeoBargains/GeoBargains on the Radar
- GeoBargain on the radar XRM (13.27) – Reported Q2 2014 results; Reported non-GAAP EPS of $0.42 vs $0.37 in the prior year and well ahead of analyst estimates of $0.05.
- Pump and Dumps
- OROE ($0.35) – Adding to pump and dump watch list as the company has entered into a consultant arrangement with payment of 10,000 shares being made at $3.00.
For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.
Disclosure: Long MNDO positions ; Other Long Positions; Other Short Positions; Pump & Dump Positions (Password GEO2014)
Summary of general highlights:
On the Asian Front…
China Ceramics Co (NASDAQ:CCCL)($1.35) – a leading Chinese manufacturer of ceramic tiles used for exterior siding and for interior flooring and design in residential and commercial buildings, today announced that on August 5, 2014, the NASDAQ Listing Qualifications staff notified the Company that, following the Company’s filing of the Annual Report on Form 20-F for the fiscal year ended December 31, 2013, the Company regained compliance with the terms of the NASDAQ’s continued listing requirements.
The Company has been informed by the NASDAQ Listing Qualification staff that trading will resume on Thursday, August 7, 2014.
Mr. Jiadong Huang, the Company’s Chief Executive Officer, commenting on the notification, said,
“Regaining compliance with NASDAQ’s continued listing requirements and the resumption of trading in our securities on the Nasdaq Global Market are significant achievements for the Company and our shareholders. With this issue behind us, the Company’s management will continue to pursue its objectives of strengthening the Company’s core business and maximizing shareholder value.”
Aoxing Pharmaceuticals (AMEX:AXN) ($0.42) – a specialty pharmaceutical company focusing on research, development, manufacturing, and distribution of narcotic, pain-management, and addiction treatment pharmaceuticals, previously announced
it had received notice from NYSE MKT LLC that, based upon the financial statements contained in Aoxing Pharma’s Annual Report on Form 10-K for the year ended June 30, 2013 and its Quarterly Reports on Form 10-Q for the periods ended September 30, 2013 and December 31, 2013, Aoxing Pharma is not in compliance with the following sections of the NYSE MKT Company Guide:
On August 4, 2014, the Exchange notified the Company that the period during which it will be permitted to regain compliance with Section 1003(a)(iv) has been extended to September 21, 2014. The Company will be subject to periodic review by the Exchange Staff during the extension periods. Failure to make progress consistent with the plans or to regain compliance with the listing standards by the ends of the extension periods could result in the Company being delisted from the NYSE MKT LLC.
Pan Ocean Container Supplies L (OTCCB:PAOCD) ($10.00) – Beginingn to track because the company entered into a reverse merger transaction on July 10th 2014, to acquire an ocean container supply company, we are not certain but we believe the transaction has been consummated.
On July 10, 2014,we executed an agreement with Pan Ocean Container Supplies Co., Ltd . (“Pan Ocean”), and our company (the “Agreement”), whereby pursuant to the terms and conditions of that Agreement, Pan Ocean shareholders will acquired six million (6,000,000) shares of our common stock, and Pan Ocean would become a wholly owned subsidiary of the Company.
Pan Ocean Container Supplies Co., Ltd. (POCS) was founded in July 2, 2012 and started production in January 2013. Orientation of POCS is to build ISO containers and multi-purpose containers.
Zippy Bags (OOTC:ZPPB) ($4.00) – Beginning to track because it completed a reverse merger with an online casino operation out of Cambodia.
These shares were issued in connection with their contribution of their efforts in establishing a business (Top Point, Ltd, a Samoa Company) as a junket operation to the online casino operated by Lucky 89 Hotel & Casino, Cambodia and Grand Golden Hotel & Casino, Cambodia. Top Point simultaneously acquired 100% of the capital stock of Wonderful Gate Strategy Company Limited (“Wonderful Gate”), a Macau company from Carmen Lum who will be the Company’s Chief Financial Officer and a Director of the Company. It is intended that Lucky 89 Hotel & Casino-Prey Vor, Au Village, Thmei Commune, Kampong Ro District, Cambodia and Grand Golden Hotel & Casino, Kampong Cham Province, Cambodia will enter into a junket operator agreement with Wonderful Gate shortly. Under this agreement, Wonderful Gate will be responsible to introduce VIP Asian gamers to the casino’s online operations and to maintain its back office online platform in return for a 0.25% commission on the total bets played by those gamers. All of the junket’s operations will be consolidated with the Company. Following the issuance, the Company has 20,000,338 shares of Common Stock outstanding.
On the U.S. Front…
Notable U.S. Earnings…
|Stock||Price**||EPS Estimate||Reported EPS||Prior Year Reported EPS|
|Alpha Pro Tech (AMEX:APT)||$2.26||n/a||$0.05||$0.02|
|Famous Dave’s Of America, Inc. (NASDAQ:DAVE)||$25.02||$0.36||$0.40||$0.28|
|Evolving Systems, Inc. (NASDAQ:EVOL)||$10.07||$0.12||$0.15||$0.09|
* denotes non-GAAP; ** Pre-market
MNDO ($2.39) – MNDO develops, manufactures, and markets real-time and off-line billing and customer care software in the Americas, the Asia Pacific, Africa, Europe, and Israel. We are long MNDO and coding as a GeoBargain on the Radar. Reasons for tracking:
- The company reported record revenues and strong EPS growth for the first half of fiscal year of 2014 :
- Q1 2014 vs. Q1 2013 Revenue: $5.7 m vs $4.4 m
- Q1 2014 vs. Q1 2013 EPS: $0.05 vs $0.01
- Q2 2014 vs. Q2 2013 Revenue: $6.3 m vs $4.4 m
- Q2 2014 vs. Q2 2013 EPS: $0.08 vs $0.02
- The company has announced in July that it had a new contract win with an East European mobile operator to build Bulgarian commercial 4G LTE mobile network, and two follow-on two orders from previous customers. Below is the management commentary for the order wins,
“The European markets have been slow for many years overall. We believe that our ongoing presence in Europe is important for future potential growth as these markets will eventually recover. We are pleased with the new win as it reflects the growing reputation of our state-of-the-art all-inclusive solutions and of our execution on implementations. We are pleased as well with the follow-on orders since we know that our customers always have a choice to stay with us or choose a competitor’s solution, especially when enhancing their offerings or networks. Staying with MIND is the confirmation we get for the quality of our technology and the high level of our support,” commented Monica Iancu, MIND’s CEO.
The receipt of these orders is an indication of the company’s position in their realm.
- According to management commentary from the Q1 2014, it seems like the company could continue current its growth pace for at least a few more quarters in the coming future,
“We expect that the impact of our previously announced latest large wins will be significant both to our revenues and to our margins for the next few quarters as we recognize the deployments based on percentage of completion recognition method”
- The well respected institutional investor Renaissance Technologies LLC has increased its position in the company from 6.43% (02/12/2013) to 6.74% (02/13/2014).
- Good capital structure. Weighted diluted share count as of Q2 2014 is 19 million; no debt.
- The trailing EPS is $0.22 as of Q2 2014, which gives us P/E ratio around 11. We think the stock could trade a P/E of around 15 to 25 if momentum investors find the stock which equates to price target range of $3.30 to $5.50
- If the order winning pace slowed in the future and the sales cycle become larger, the revenue growth would slow accordingly. Thus we need to inquire about the company’s mid-term outlook.
Xerium Technologies (NYSE:XRM) ($13.27) – GeoBargain on the Radar XRM is a leading global manufacturer and supplier of two types of consumable products used primarily in the production of paper: clothing and roll covers. Reported strong Q2 2014 results:
- Net sales for Q2 2014 were $139.7 million vs. $138.3 million in the prior year.
- Non-GAAP EPS of $0.42 vs $0.37 in the prior year and well ahead of analyst estimates of $0.05.
President and Chief Executive Officer Harold Bevis, said, “In Q2 2014, Rolls rebounded and Machine Clothing continued to progress. Gross margins and Adjusted EBITDA improved, reflecting the success of our restructuring and operational efficiency programs. Both businesses performed well and in line with expectations, and orders remained strong as a result of base market health and the Company’s growth programs. Q2 2014 performance with our key customers in each region of the world remains strong, and our outlook remains unchanged. The primary risk factor, both upside and down, continues to be the health of the global economy. In sum, barring sales volatility and foreign exchange risk, both the Rolls and Machine Clothing businesses are on track to meet combined full-year performance of $116 – $120 million Adjusted EBITDA, which is consistent with our previous guidance.”
Pump and Dumps…
Oro East Mining Inc Common Sto (OTCCB:OROE) ($0.35) – OROE is focused on the development of its three substantial piles of leached ore (the 3 WMUs) at an aggregate mine in Carson Hill, California (the “Carson Hill Project”) owned and managed by the Company’s privately held subsidiary, Oro East Mariposa, LLC, a California limited liability company. Reasons for tracking:
- The company has entered into a consulting arrangement with payment being made through the issuance of 10,000 shares at $3 and issued a convertible note with an exercise price of $3,. According to the its most recent 10Q SEC filing,
“In February 2014, the Company entered into consulting agreements with an individual to issue up to 10,000 common shares for services to be received over a period of ten months. The services can be terminated at any time with or without cause. The shares were valued at $3 per share for a total of $30,000. All 10,000 shares were issued in April 2014.”
“The Company issued a $360,000 principal amount of 12% convertible note in 2013 and due June 5, 2014 (“Convertible Note”)……Upon maturity of the Convertible Note, the holder may convert all but not less than all the outstanding principal and interest due at $3.00 USD per share into common stock of the Company.”
Investors may get pumped up over the fact that individuals are willing to take shares valued at $3 when the stock is trading at $0.35.
- According to the company’s 8K filing, it has entered into a fund agreement with a Dubai-based LLC on April 18, 2014,
“On April 18, 2014, Oro East Mining, Inc. (“Company”) entered into a Funding Agreement with Wall Street Equities, Ltd., a Dubai-based limited liability company with principal offices at CNN Building, Office 23, Media City, Dubai, United Arab Emirates (“Consultant”). Consultant is an experienced fundraiser and pursuant to the Funding Agreement, Consultant will provide services to Company for issuing $100 million in convertible bonds at an annual interest rate of between 6% and 12.5% and help market for sale said convertible bonds in Europe and East Asia. The consideration paid by Company under the Funding Agreement is $35,000.00 in administrative fees to Wall Street Equities, Ltd. and $10,000.00 to Mohamad Toufic Nehmeh, Esq. In the event that $60 million in bond sales are transacted by Wall Street Equities, Ltd. within 90 days of the execution date of the Funding Agreement, then an additional 6.8 million restricted common shares shall be issued to Funder, to be tradable within 6 months after issue.”
For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.