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Universal Security Instruments Inc. Message Board

  • stillwater9999 stillwater9999 Nov 15, 2007 1:02 PM Flag

    Stupid to sell now

    The market cap of UUU ($28 MM) is getting very close to working capital. (approx $24 MM). It is not smart to sell at this point. The dollar will rebound at some point (currencies are cylical).


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    • I agree.

      What do you think about the soft European housing market. I believe UUU has to begin selling their product in China as they have been licensed to do. Their ability to produce huge volumes of product should allow them to maintain pretty decent margins once they can find a growing market to supply.

      I feel like UUU's systems are in a better position now than they've ever been in before. US housing should pick up in a year, and should base early in 2008. So earnings should pick up there.

      It would be interesting to find out at what amount the CAD has to decrease before UUU can compete better on price in the US markets. The silent reality is that CAD housing is weakening and will likely continue to weaken when the US market picks up steam later in 2008. I imagine currencies will react to the stabilization of the US dollar and the potential interest rate cuts in Canada in advance of these later dates.

      If Canadian operations can successfully triple the production capacity and find a market for it, revenue would come in at around 12 million per quarter. If it can achieve 7% net income on that over time it will add about 800K per quarter to the bottom line.

      I hope management is trying to figure out a way to rely less on European construction and focus more on Asian growth. US operations will turn.

      Also, when is UUU going to further push into the retail market. They can certainly produce the volume at low price points, so why not take it further than just HD.

    • Correction - used an incorrect number. WC is only around $10MM but BV is over $10MM. In any case if you wanted to sell, you should have done it awhile ago, getting too cheap for that now.


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