Reading from todays press release, it seems that the additional 15m capacity will not be invested this year , meaning no 38M dollar cash out.
At current operation, they will have a 40m dollar cash balance at yearend. They can:
-keep it in the bank. 2 dollar per share cash
-pay off the 13mm short term loan en keep 27mm cash
-use a miserable 6mm of this cash, pocket money, and declare 0.3 dividend. Using 15% of the cash balance for dividend would lead to 9% div rate.
Lets see how clever this CEO is.
The market is really strange at times. AMZN, selling at 200-300 times earnings is toying with all-time highs. CCCL on the other hand with solid earnings higher than the stock price is toying with all-time lows.
That it is.
But it is being Walked Down on low volume.
The good thing is we will soon have earnings, and, as usual they will be good, but no one will believe them which is why we are sitting where we are.
Is there a difference between a SPAC and a RTO?
So what makes people believers, I still think a modest DIVIDEND.
I've to admit I was dead sure that CCCL would have expanded their production capacity. I'm pleased to I was wrong and the CEO and the board aren't too much engaged into building something big instead of something profitable.
CCCL will surely pay down some of the debt first and maybe look some acquisition candidates. The ceramics field is quite scattered and CCCL is one of the top players, even it's market share is around 3% to 5%! So there's certainly room and need for some mergers.
But I suspect CCCL will keep a big chuck of profits on its bank account - they're short of cash, at least when compared to other Chinese SMEs. Even they aren't expanding the capacity right now, I suspect they will reserve some cash to do it without relying on new bank loans.
I'd be delighted to see a stock buyback and then dividend announcement. Like Xinyan did. If dividend happens, I guess it will earliest happen Q2 or Q3 2013.
I remember in one of the investor calls CEO (or somebody from the board) that dividend could earliest happen late 2012 depending on the capacity addition project. Now it's been canceled for a while, so there should be - like ddutchpeter analyzed - enough money to make share buybacks and pay dividend.
Okay, these guys did something very Chinese and used the money generated Q2 operations to pay debts, around 8 million USD. They've still 5,5 million USD left bank borrowings and 9,5 million longer term debt. So it's safe to assume that during Q3 CCCL will use the money generated from operations to pay rest of the bank borrowings. (Probably longer term debt will be paid off when it's maturing.)
When entering into Q3, CCCL had cash in hand around 12 million USD. I estimate during Q3 they'll generate (at least?) 10-12 million USD, so after Q3 and repayments they'll have about 17-19 million USD cash in hand. It really leaves room for dividend.
>> Lets see how clever this CEO is.
You shouldn't invest one cent of your money in this company until they declare a dividend and return some of that money to the rightful owners.
These chinese idiots will have to learn the hard way.