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Tuesday, July 19, 2005

YaSheng (YHGG) press release

YaSheng Group's Vinylon Division to Increase Production Due to Export Demands
Due to new International regulations implemented by the WTO earlier this year, export quotas have been lifted resulting in a sharp increase of sales for the Vinylon division.
Over the past several years, products from the Vinylon Group were all allocated towards the export market due to higher profit margins. The increase in production will result in additional product lines and higher output catered for the International Markets. Products from the Vinylon Group include: low-elastic polyester, a water-soluble industrial insulating fiber, and a comprehensive line of Vinylon fibers.
The LanZhou Vinylon Company, Ltd. produces only about $15 million worth of exported goods per year right now while the total revenues for YaSheng Group is over $600 million. Even if they quintuple Vinylon exports to $75 million, it would only be a 10% increase in overall revenues. The claim is that they're high margin goods, so perhaps the effect on earnings would be greater. But my thinking here is not a quintupling of revenue, but maybe a doubling at best.

My estimate based on insufficient information is that this is a non-event. Nothing changes except the fact that they seem desperate to generate press releases. At best, it simply correctly matches up with the 10-Q information [the products produced by Vinylon] and doesn't cause a red flag.

UPDATE: Well the stock is certainly rising fast, $2.20 today. I still have more to buy, unfortunately.

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