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Saturday, December 24, 2005

More companies, ho ho ho

WCSTF (sec), Canadian auto industry business (exhaust manifolds, stuff like that) that I looked at years ago, but haven't looked at any details lately. They just went dark this year. Typically they earn over C$4.00 per share (actually around US$3.50), but last year they earned C$2.67 (US$2.32). They're trading for $17.

But I have a real problem with this company. They're always making acquisitions and those acquisitions don't have a good track record. The long term stock price reflects the lack of any sustained business progress. What this company should do is stick to what it does well, and pay the excess cash back to shareholders.
not interested

ALGOF (sec), Ontario steel company. Historically crappy.
not interested

AMHI (sec), recent bankruptcy. Texas health clinics (2 medical, 9 chiropractor). Losing money.
not interested

AMLH (sec), travel services, develops "luxury vacation home ownership and destination properties". Mentioned the word synergies (blech). Serial acquirer. Absolutely horrible balance sheet.
not interested

AMLJ (sec), RF and microwave power amplifiers, mostly for defense work. 45% gross margins, 10.4% operating margins, 10.8% net margins (tax benefit). Prior year was even better. Balance sheet is rock solid, but PP&E is almost entirely depreciated (fast schedule). Earned $935K ($1 million prior year). 10 million shares, 2 million options (at $1... geez, is this some finance professor's exam question?). Issued 2 million shares for acquisition (got $1 million cash along with it). Free cash flow is much less than earnings due to AR, was almost OK in prior year.

Q2 2005: Earned $507K in 6 months (half in Q1, half in Q2). Cash flow from ops is good, but capex is high (paid for with line of credit). Low taxes.

Stock might be worth 80 cents. Selling for $1.17.
worth following

AMLS (sec), Chinese reverse merger, Hubei Pharm Co., but then acquired licenses and another Chinese pharm, then sold off some part of the business.

Looking at Q1 05, we're talking about a very small business. Total assets are $364K, $220K of which are an investment in an offsheet subsidiary. Current ratio is less than 1/3... oops, they've discontinued operations.
not interested

AMRU (sec), video on demand streaming over broadband channels in Singapore (reverse merger). 7 full-time employees, all in Singapore. Balance sheet is strong, but assets are mostly licenses. $4 million revenue in 2004, but only $931K gross margin. $512K net income. 27 million shares, unknown options (doesn't seem to be much, if any). Lots of shares issued for cash and services. CEO owns 21% of the business. 1.9 cents per share earned in 2004. Cash flow is terrible and horribly suspect due to "acquisition of license in exchange for account receivable" in both 2004 and 2003 of over $1 million. Plus big capex in 2004. This all funded by shares issued for cash.

Jump ahead to Q3 2005: Lots of cash showed up on the balance sheet (I'll bet it's not from operations). PP&E jumped from $520K to $3.7 million. License assets (net) jumped from $2.4 million to $7.6 million. Revenues jumped due to "Digit and on-line games" of $8.4 million (which is now the vast majority of revenues). But gross margins are only 14%. SG&A went up... they made less in 2005 than 2004: $64K net income in 9 months (vs $334K). It was a loss in Q3 proper. Share count is now 30 million. Cash flow from ops is essentially zero. The acquisition of equipment ($3.3 million) and licenses ($5.3 million) are very large. They raised $10 million from stock, so I was right. They have 5 customers.
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not interested

AMST (sec), rock quarries. Both dimensional stone for architecture and construction stone for road base and back fill. They produce "Berea Sandstone" which has been used in: Bill Gates' house, The Hancock Building in Boston, Parliament Building in Ottawa, Buffalo City Hall, Oberlin College campus, NHL Hall of Fame, UP, and some others (these range from 1885 to 2004). Their own headquarters building was built in 1900. Balance sheet is not far from rock solid, but it was somewhat weak in 2003, 2002, 2001. 28% gross margins. 9% operating margins (operating loss in 2003, 2002, 2001, 1999). Earned $153K in 2004 (lost a bit more in 2003). 2 million shares. 130K options. Earned 7 cents in 2004. Free cash flow is weak due to payables and accrued liability changes. For whatever reason, the stock is selling for $9.00. This is an interesting business, but unfortunately I doubt it will ever be an investment possibility.
not interested

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