Anyone who doesn't realized dilution is around the corner should join the clowns selling
the last couple of days.
Seems it is a necessary evil, as management has mentioned financing time and time again. Also don't like the use of the phrase in conjunction with the financing, "increase liquidity in the stock, which is of course code word for increasing the size of the float through the issuance of shares.
The fact that the longtime owner has such a large ownership position is in our favor as dilution should be kept to a minimum.
As someone who recognizes the exteme profitablity, free cashflow, of the operation, which will inturn lead to continued stellar growth going forward, I will find such dilution annoying, but on the bright side, it may present a further buying opportunity as the dullards sell on such news.
The company has lived up to every single promise over the last 18 months in terms of protecting shareholder value...rescinding S-3 that would have issued shares for acquisition, completing Huajie acquisition with all cash and no dilution, completing a reconciliation of SAIC/SAT tax filings versus SEC filings covering 3 years verified and signed off by auditor who directly observed data on PRC computers in the state tax office, and promising they would not issue shares below $3.
There elieve they won't keep the last promise, too. LPH is not out of cash and inventories and locked-in advances were at very healthy levels before deal closing, which is why they waited so long to close Huajie. The rampup is proceeding well and turn should be quick so as to build inventory over the next 2-3 quarters.
with fiancing. I am against it, I think ramping up through existing cashflow makes sense. They have fantastic free cashflow that they can reininvest and get 35% plus annualized return by turning over their inventory over and over again. Dilution won't be the end of the world, just an annoyance. I am long and am continuing to add to my position.
Android burrped...Had typed, there is no reason to believe they won't keep the last promise, too (not to issue shares for raising $$$ below $3). To have come this far only taking the 18 month long slow road to raise cash from profits for Huajie only to then renig on a promise made not to dilute below $3 PPS in a rush to ramp up inventory quicker would be a completely stupid reversal by management. LPH is aware of the acute need to play by shareholder friendly moves as evidenced by everything they have done. The CEO has been with the company 17 years since its inception and knows how to run an acquisition rampup without diluting. And he knows that doing otherwise and issuing shares below book value would cause all those investors to pack up and go home.