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Skystar Bio Pharmaceutical Company Message Board

  • osubuck30 osubuck30 Jun 2, 2010 6:45 PM Flag

    Email sent to Scott Cramer.

    This is an email I sent to him:

    Title: Concerned shareholder.

    I know my little email won't make a difference but as a shareholder it is concerning Skystar may dilute at below book value. Taking a look at the last 10Q shareholder equity is $56.35 million with diluted shares are at 7.14 million putting a diluted book value of $7.90 per share! Now I know you are not looking at a company you can buy below book value so why would you value your own company like this? Possibly raising funds when Skystars share price is at the low of its recent range and the market as a whole has been shaky?

    I know the company does not give guidance but Q1 was stronger then my estimation. By my own estimates without an acquisition Skystar will do north of $1.80 per share in profit. So you are going to let someone have shares at about 4 times forward PE for a company that is growing at over 30%? The only way it would make since is if you were to purchase a company at less then 4 times its forward net earnings.

    Thanks for your time. I know you will not be able to tell me much.

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    • Well, this happens to many Chinese companies from time to time. SKBI, CSR, AOB, CMFO, FEED, ...

      They don't follow common sense. They dilute for questionable reasons, don't care about market conditions, don't care about shareholders. This is the way how Chinamen operates their companies for our money. Very sad.

      • 2 Replies to sisula3
      • Then do not invest in them anymore. yes, this is sad for the shareholders and is also very sad for the Chinese companies. These bad apples will hinder the ability of Chinese companies raising capital in international markets.

      • I know. I have been following these for years and every time I think I have found one thats different. Someone is going to get lots of shares CHEAP (below book value) by putting up the money.

        The thing that I don't like is no one could even get a few hundred thousand shares on the market cheap as any buying pressure and this one always surges. If someone can't even get a few hundred thousand shares why would you give someone millions at the lowest possible price???

        Its like you said this really should not surprise me but it always does. I plan asking a question at the next conference call. Someone needs to start questioning this guys in public. People need to start pressuring some of these management teams!

    • just because the S-1 says $28.5 million does not mean they will raise all of it. Basically they are saying $10 miilion for a new plant and $10 million for acquisition. IMO since they already have deposits they should raise only $10 million to finish the acquisition.

      RAISING THAT MUCH UNDER BOOK VALUE IS NOT GOOD MANAGEMENT!!Maybe you do not agree but I see no reason to throw current shareholders under the bus. Are you telling me none of this can wait just 1 year?? As cash from operations will add cash to the balance sheet every quarter. I know you need to take advantage of opportunities but NOT LIKE THIS!!!

    • the S-1 just filed specifies $28,750,000 proceeds needed. Also if you read down into the S-1 it tells you what the money is needed for. I hope that helps.

    • please tell me how you are coming up with $28 million??

    • I mean with the low share count no one could even get 200,000 shares at below $9! Why do I say this because any major buying pressure and this shoots up. If an institution wanted a couple hundred thousand shares they would have to pay up but now they are going to let someone have millions below book value!

      Sorry for the rant but I think they just need to be more patient. They should profit over $12 million the rest of the fiscal year. Plus add the over $12 million they have put down for deposits plus the $5.9 million they still have on the balance sheet(last 10Q) and you would be looking at a company this time next year with over $25 million in cash with the new plant paid for!

      I assumed the cost to complete the plant will be $2.1 million(source 10Q) and accounts receivables this time next year will be about $6 million up from $4 million now (so this is being conservative IMO).

      Now maybe they just have an awesome acquisition lined up that is going to grow at over 50% and are only paying 4 or 5 times net earnings for it but I highly doubt it. I am going to wait it out because long term this is still a great buy it just may take longer to materialize then before.

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