GEO Investing

Calls to Action: REPR announced 41% increase in sales for Q1 2015 vs prior year. Appoints COO. Coding as GeoBargain on the radar.  Comfortable adding to our position prior to interview.

General Highlights:

  • ChinaHybrid
    • YGE announced the official commissioning of Malaysia’s largest solar power plant
    • KONGto  change symbol to KZ effective 6/16/2014
  • GeoBargains/GeoBargains on the Radar
    • Activist investor Lloyd Miller  purchased additional convertible stock and warrants in GeoBargain SLTC that will further increase his stake in the company.
    • GeoSpecial LAKE reports Q1 2015 results.  Overall sales increase 8% (highest yoy growth in 4 quarters) and adjusted EBITDA increased 124% (highest level in 3 years). Appears to have reported first non-GAAP EPS profit in several quarters.  Restructuring process nearing its end.  Management states LAKE is in best position in years.
    • GeoBargain MOBS restatement of financials, negatively impacted Q1 2014 results (revenues for the quarter were still up 22%).  Long term story still intact.
  • Marijuana Hype
    • Low floater HMTF initiated investor relations campaign.

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

Disclosure:Long SLTC, LAKE, MOBS REPR; Other Long Positions; Other Short Positions; Pump & Dump Positions (Password wwwGEO2014)

Summary of general highlights:

On the Asian Front…

Select China Earnings…

Stock Price** EPS Estimate Reported EPS Prior Year Reported EPS
Ku 6 Media Co (NASDAQ:KUTV) $1.59 n/a -$0.09* -$0.05*

* 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…

Kongzhong (NASDAQ:KONG) ($8.86) – a leading online games publisher and developer in the PRC, today officially announced that,

“effective June 16, 2014, the Company’s American Depository Receipts (ADR) will commence trading on the NASDAQ Global Select Market under the new trading symbol “KZ” (NASDAQ: KZ). The change represents the company’s efforts to better align its company branding as an online games company. The previous trading symbol was “KONG”.

Yingli Green Energy (NYSE:YGE) ($3.05) – YGE is a leading vertically integrated manufacturer of photovoltaic products in China.  YGE  announced that:

“its wholly-owned subsidiary, Yingli Green Energy Singapore Company Pte. Limited (“Yingli Singapore”), is pleased to announce the official commissioning of Malaysia’s largest solar power plant, which is powered by over 10 MWs of Yingli Solar modules. The project was developed by Amcorp Power Sdn. Bhd. (“Amcorp Power”), which is a subsidiary of Amcorp Group Berhad, an investment holding company based in Malaysia.”

China Digital Tv Holdings (NYSE:STV) ($3.78) – STV is a leading provider of conditional access (‘CA’) systems to China’s rapidly growing digital television market.   STV announced that:

“it has reached a framework agreement (the “Framework Agreement”) with Cinda Investment Co. Ltd. (“Cinda Investment”), an integrated investment company and a wholly-owned subsidiary of China Cinda Asset Management Co., Ltd., regarding an asset restructuring (the “Restructuring”). Under the terms of the Framework Agreement, China Digital TV plans to inject its CA, Network Broadcasting Platform and Video on Demand businesses into Shanghai Tongda Venture Capital Co., Ltd. (“Tongda Venture”) (Stock Code: 600647), a company listed on the Shanghai Stock Exchange and controlled by Cinda Investment. In exchange, China Digital TV will acquire a controlling stake in Tongda Venture and receive RMB1.15 billion in cash from Tongda Venture.  China Digital TV expects to consolidate Tongda Venture financially upon completion of the Restructuring.”


Lakeland Industries (NASDAQ:LAKE) ($7.82) – GeoSpecial LAKE manufactures and sells a comprehensive line of safety garments and accessories for the industrial protective clothing market.  LAKE reported first quarter 2015 results:

  • Sales worldwide increased to $23.5M or 8.1% from $21.7M last year. Excluding Brazil, sales increased to $21.8M or 9.1% this year from $20.0M last year.
  • Adjusted EBITDA worldwide increased 124% to $1.6M vs. $0.7M last year. Excluding Brazil, Adjusted EBITDA was $1.8M this year vs. $1.5M last year.
  • Non-GAAP EPS of $0.05 vs loss of $0.12 in prior year period

Quotes from management:

“The Company’s business rationalization and transition is nearly complete as we are experiencing solid growth internationally and domestically.  We have made the necessary investments to grow our sales channels and enhance our product development, while reducing our cost structure and modifying operations for improved leverage….

We are beginning to benefit from the growth in most of our businesses around the world along with improvements in Brazil as our consolidated operating profit increased by nearly 340% to a $580,000 profit from a loss of $240,000 in the prior year.  Global growth trends are positively impacting Lakeland Industries and we are in the best position in years to drive improved operating performance.”

As we mentioned several times before, we are monitoring LAKE as a possible takeover candidate.  The company has had problems with its Brazilian subsidiary which had put our takeover thesis on hold.  However, we see this thesis slowly coming back on the table based on management’s beliefs that the restructuring process is nearing its end.

B- Scada (OOTC:MOBS) ($0.39) – GeoBargain MOBS develops software products for the visualization and monitoring of real time data in heavy industry worldwide.  Yesterday MOBS filed an 8K, restating Q1 2014 financials.

“The Company was provided information from a customer regarding an annual royalty payment owed to it from sales of its software. The original amount provided of $120,000 was included in revenues and accounts receivable as of and for the three months ended January 31, 2014. Subsequently, the Company received a revised reported amount of $603 from the customer.”

After accounting for the adjustments, MOBS Q1 2014 revenues are $335 thousand vs $274 thousand in the prior year period.

Selectica (NASDAQ:SLTC) ($6.16) – GeoBargain SLTC provides guided selling, sales configuration, and contract lifecycle management solutions for mid-size firms to speed up sales cycle and streamline the contract process. We believe the long term story is still intact.  Activist investor Lloyd Miller  purchased additional convertible stock and warrants in GeoBargain SLTC that will further increase his stake in the company.  AS we mentioned in our October 11, 2013 email alert,  Lloyd Miller had increased his  stakein SLTC to 25.3%.  Lloyd Miller has been an activist in many companies that have been acquired in the past.

Marijuana Hype…

Home Treasure Finder (OTCCB:HMTF) ($0.54) – On 3/24/2014 we added HMTF to our Cannabis screen due to an 8k filing stating the company intended to construct and lease up to 125,000 square feet of grow space at this site to suit the needs of one or more state licensed cannabis growers.  HMTF  initiated an investor relations campaign.

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.


The GeoTeam