Call(s) to Action:

WSTI ($0.73) – Yesterday we covered our short position, locking in gains to take advantage of other opportunities.  Will continue to watch closely and may look to re-enter a short position.

EXETF ($6.76) – In its Q2 2014  results the company announced it has reached a resolution with the Office of the Inspector General regarding some previous activities by it U.S operations.  As we stated before, the resolution of this issue was needed to proceed with active negotiations regarding the sale of the U.S operations.  If the sale occurs, we believe it will lead to significant increase in shares.  Company was very specific in earnings press that the sales process will now move much faster.  We will look to aggressively add to our position at current prices.  The risk to the trade is that the sale of the U.S. operations is made at a price much less than our assumptions.

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

  • ChinaHybrids
    • DSKY (IPO) – The largest independent mobile game publishing platform in China expected to begin trading today.
    • YY ($82.75) – Reported strong Q2 2014 results. Beat analyst EPS estimates by $0.11, beat on revenues and guided above for Q3 2014 revenues.
    • SFUN, HIMX, MONT, PME all reported earnings, please reference our ChinaHybrid earnings screen for more details.
    • CTRP ($60.45) – Announced expanded partnership with Priceline.
  • U.S. News
    • BREW, OME and RAIL reported strong quarterly results.  Please reference our June 2014 earnings screen for details.
  • GeoBargains/GeoBargains on the Radar
    • Bullish Seeking Alpha article on GeoBargain on the radar SPCB ($9.54); Author calling for a double from current prices due to recent contract wins.
    • GeoBargain MOBS ($0.38) – Entered into stock purchase agreement with Yorkmont Capital Partners to sell 2.4 million shares at $0.33.  Happy to see the company was able to attract a respectable institutional holder which should add some credibility to the story.
    • GeoBargain CVU ($11.31) – Reported Q2 2014 results. Slightly beat analyst top and bottom line estimates and guided in-line for 2014 and 2015 revenues.
    • GeoBargain GTT ($11.09) – Reported record Q2 2014 results.  Reported Q2 2014 revenues of $48.1 million vs $39.7 in the prior year and slightly ahead of analyst estimates of $47.6 million.  Non-GAAP EPS for Q2 2014 was $0.02 vs break even last year and ahead of analyst estimates of a loss of $0.05.
  • Pump and Dumps
    • As we predicted, we learned from one of our Geo premium members that a $1 million promotional campaign has begun on APPG.

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

Disclosure: Long GTT, MOBS, SPCB, EXETF; 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
Soufun Holdings (NYSE:SFUN) $11.18 $0.14 $0.16* $0.15*
Himax Technologies (NASDAQ:HIMX) $6.89 $0.14 $0.14* $0.12*
Montage Tech Group Ltd (NASDAQ:MONT) $21.55 $0.37 $0.30* $0.26*
Pingtan Marine Enterprises Ltd (NASDAQ:PME) $2.31 n/a $0.18 $0.31

* denotes non-GAAP; ** Pre-market

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

In Other News…

Ctrip.com Intl (NASDAQ:CTRP) ($60.45) – provides travel services for hotel accommodations, ticketing services, packaged tours, and corporate travel management in China.  Announced expanded partnership with Priceline.

“the two companies have expanded an existing commercial agreement to strengthen their global partnership.  In addition, The Priceline Group agreed to invest $500 million through a convertible bond and Ctrip has granted The Priceline Group permission to acquire Ctrip shares in the open market over the next twelve months, so that combined with shares convertible under the bond, The Priceline Group may hold up to 10% of Ctrip’s outstanding shares. Upon purchase of the convertible bond, The Priceline Group will acquire the right to appoint an observer to the Ctrip board of directors.”

China IPO’s Set to Begin Trading…

IDREAMSKY TECHNOLOGY LTD (NASDAQ:DSKY) — DSKY is the largest independent mobile game publishing platform in China based on the number of active users in 2013, according to the Analysys Report. In the first quarter of 2014, the company had average monthly active users, or MAUs, of 98.3 million. The mission of the company is to deliver fun and engaging mobile games and entertainment to mobile users, thereby enriching their mobile lifestyle.   IPO was priced at $15.00, the stock opened for trading well above at $17.50.

On the U.S. Front…

Notable U.S. Earnings…

Stock Price** EPS Estimate Reported EPS Prior Year Reported EPS
$BREW $12.17 $0.11 $0.12* $0.07*
Omega Protein (NYSE:OME) $12.04 $0.22 $0.47* $0.22*
Freightcar America, Inc. (NASDAQ:RAIL) $24.24 $0.01 $0.20* -$0.43*

* denotes non-GAAP; ** Pre-market

GeoBargain/Specials…

Supercom Ltd Ordinary Shares (NASDAQ:SPCB) ($9.54) – GeoBargain on the Radar SPCB provides electronic monitoring, identification, and security products and solutions to governments, and private and public organizations in Europe, the United States, and Israel. There is a bullish Seeking Alpha article on GeoBargain on the radar SPCB ($9.54). The author is calling for a double from current prices due to the company’s recent contract wins. Here are the summaries of the article:

  • SuperCom is a debt-free microcap supported by gross margins above 80%, recurring revenue streams, multiple growth channels, outstanding cost control, and a shareholder-aligned management team.
  • Large 2014 contract wins enabled by the recent acquisition of its much larger primary competitor are not yet reflected in SuperCom’s valuation.
  • I expect 2014 non-GAAP EPS of at least $1.54, a 120% increase over 2013. At the current P/E ratio of 14, the share price will double to $22 by spring.
  • If the current pace of contract wins continues, a P/E ratio of 20 and a tripled share price of $31 are plausible.

B- Scada (OOTC:MOBS) ($0.38) – GeoBargain MOBS develops software products for the visualization and monitoring of real time data in heavy industry worldwide. The company entered into stock purchase agreement with Yorkmont Capital Partners to sell $2.4 million shares at $0.33.  Happy to see the company was able to attract a respectable institutional holder which should add some credibility to the story.   Yorkmont Capital is also invested in GeoBargain ISDR.

Cpi Aerostructures (AMEX:CVU) ($11.31) – GeoBargain CVU is engaged in the contract production of structural aircraft parts for leading prime defense contractors, the U.S. Air Force, and other branches of the armed forces. The company reported Q2 2014 results:

  • Revenues for Q2 2014 of  $21.0 million vs $20.9 million in the prior year period and ahead of analyst revenue estimates of $19.9 million.
  • Q2 2014 adjusted EPS was $0.20 vs $0.21 in prior year, beat analyst estimate of $0.19.

Quotes from management,

“The expected growth in revenue and net income for 2015 will be largely driven by growth in our commercial product lines. As such, our 2015 guidance is unchanged and reaffirmed.”

Gtt Communications (AMEX:GTT) ($11.09) – GeoBargain GTT is a cloud network provider to the world. The company reported record Q2 2014 results:

  • Revenues for Q2 2014 were $48.1 million vs $39.7 million in the prior year, slightly ahead of estimate of $47.6 million.
  • Non-GAAP EPS in this quarter was $0.02 vs $0.00 last year and ahead of analyst estimates of -$0.05.

Quotes from management,

“We delivered another record quarter with strong revenue and EBITDA increases and incremental margin expansion,” stated Rick Calder, President and CEO. “We are winning new multinational clients and growing our existing client base, and expanding our sales organization within both our Americas and EMEA/APAC business units. We are executing our strategy to extend ubiquitous network connectivity worldwide, to expand our cloud networking service portfolio, and to deliver outstanding service to our clients with simplicity, speed and agility.”

“With the success of our debt refinancing and recent equity follow-on, we have significantly strengthened our balance sheet and financial flexibility,” added Mr. Calder. “We are well positioned for rapid growth in the second half of 2014 as we accelerate toward our next financial objective of $400 million in revenue and $100 million in Adjusted EBITDA.”

Pump and Dumps…

Apptigo Intl Inc New (OTCCB:APPG) ($1.73) –  Creators of SCOREâ„¢, an interactive dating game that allows people to determine their compatibility through answering entertaining and engaging questions.  In our 8/5/2014 email we stated:

“For the pump and dump crowd, we have APPG. Second stock we found that  aims at riding the  hype  that  the popular  TInder APP has created.  Issues detailed shareholder letter, a common move of prior pump and dumps.  Fully diluted share count is 29 million.”

We learned from one of our Geo premium members that a $1 million promotional campaign has begun on APPG.

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

Sincerely,

The GeoTeam