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Lotus Pharmaceuticals, Inc. Message Board

  • amendoza amendoza Oct 7, 2008 4:27 PM Flag

    Has anything changed fundamentally?

    Probably not. I would say this company is earning about .25 cents this year. So if anyone knows anything about investing, 1x earnings, and this thing is growing at around 30%. This is a no brainer. Now all you and I need is some guts.

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    • First, is this a buy? Yes. We are probably at a PE of 1 or at least under 2. We are selling at 1/3 of book value.

      But your question was “Have things changed fundamentally?”

      Yes.

      1. Last quarter profit down to 5 cents per share ($2.2 million) from 7 cents per share ($3.0 million) last year. First quarter profit not that good, either. (I will note, however, that the second quarter report stated that last year’s revenue benefited from the collection of $1.8 million of allowances, which suggests the profit downturn may not be as severe as it looks on first brush.)

      2. Selling expense up from $792,000 last year to $5.9 million this year. That’s a 745% increase! Selling expenses went up due to “short term sales incentive program and bonuses to improve accounts receivable.”

      3. Selling expenses represented 30.4% of sales. Last year selling expenses were 6.2% of expenses. (I question whether the $19.4 million of revenue should have been stated as “net revenue” because a large portion was done with rebates/incentives far out of line with what is normal in the industry.)

      4. Third party drug manufacturing revenue down 80-90%.

      5. No new drugs approved that have affected sales. (Hope this improves in quarter 3.)

      6. Huge commitment to build manufacturing plant for 3 times equity, with no near term benefit.

      7. Unless there is a huge upward movement in price (and there could be) over the next 2 ½ years, the preferred will be redeemed. This will put Additional pressure on cash flow as company will be required to return over $6 million of cash.

      8. The current economic crisis is likely to result in major reductions in China’s growth.

      9. The current crisis could result in banks in China not loaning construction money for the new building, putting stresses on cash flow and requring more expensive financing. (Also possible banks will loan at home rather than to US which would benefit company.)

      10. "Make goods" looked easily doable in quarter #1. Now, I’m skeptical. To make the “make-goods” the profits are going to have to be great the rest of the year.

      I am hoping for a good third quarter, but am not sure.

      In comparing this to 1929, the Dow and S & P are down what? 15%? 20%? Maybe 25%? Lotus is down over 80%. This is 1929 for us.

    • Just like CNOA which I was buying at $0.20 same boat

 
LTUS
0.01750.0000(0.00%)Jul 29 2:54 PMEDT

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