Tuesday, January 24, 2006
Eternal Technologies (ETLT) E-Sea update
The initial clinic is located in Shenzhen and has been open for two months. During this period, the Company netted approximately $68,000 (or over $400,000 on an annual basis). All of the fees for the Company's services are paid by local government agencies. The Company hopes to open four (4) to six (6) additional clinics during the current fiscal year which should produce an additional $2,000,000 -- $3,000,000 of revenue at very little cost.
With about 40 million shares outstanding, this would mean something along the lines of an additional 4 cents per share profit which we would expect to increase the value of the shares by about 60 cents while the shares are selling for less than 40 cents.
UPDATE Wed Jan 25, 2006: Looks like the market finally noticed. The price went up to 48 cents and fell back a bit.
I am not sure whether to feel emboldened or worried.
I assumed they meant revenue. If they end up generating $2.5 million revenue from this new business and when they claim it's at "very little cost" which makes sense to me (that wouldn't be true of something in the steel industry or anything from YaSheng for example), then I'd assume perhaps $1.6 million would fall to the bottom line as net profit, which would be 4 cents per share. Put a P/E of 15 on that additional profit and the value of the stock goes up 60 cents while the stock itself only went up by 2 cents.
In other news, CXTI announced a new $35 million contract over 3 years. CXTI stock went up as much as 30% during the day (ending up 21.7%). I figure the contract added thirty something cents of value to the stock which is about how much the price went up by the end of the day.
I believe this press release differs from cheerleading press releases because it discloses a significantly new source of revenue and it is 'material' in the sense that even this one operation adds enough to the top line that it could affect someone's investment decision.