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Universal Security Instruments Inc. Message Board

  • carnyplantman carnyplantman Feb 8, 2008 12:57 PM Flag

    Not pretty


    It could continue to fall. Too much uncertainty and too little company advisories.

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    • Today, Universal, Kidde and First Alert (using the Family Guard brand) all sell ionization smoke detectors in retail for less than $5.00. Kidde (United Technologies) already manufactures in China and recently bought the Firex business from Invensys. I suspect that all vendors will move to China from current Mexican plants. What this means is that all vendors will share the same manufacturing costs. The question is whether the larger companies with their better known brands will accept the lower margins which are acceptable to Universal? Contractors dont really care if they all have a UL label (or ETL) and consumers who buy homes dont look at the label on the smoke detector on the ceiling. While everyone is thinking about the Canadian sub's default, the basic problem is that the home building market in the US is in a recession and it may be a couple of years before it recovers. Universal might be an acquisition play for one of the large companies if it gets "clean". By that I mean we determine and they deal with the extent of the Canadian "impairment". Univeral has no significant advantage over the larger manufacturers if they are all producing in China but they have market share, especially among contractors-- that has value to the other companies.

    • I have already pared my shares back and written off the rest. It was definitely the 'subprime' investment of my portfolio.

      >>It could continue to fall.

      I think it almost definitely will continue to fall. This recent default in Canada is a pretty clear indication that things have not gone well across the border. That will be a drag on earnings and probably and eventually asset write off.

      I think most people had bought this in the hope for a short term earnings recovery, after that is disproven next quarter (imo) I think we will see some heavy selling. Seems to be much more night coming before we see dawn....

      • 1 Reply to tradeforyourlife
      • What do you think the 1/2 ownership of the HKJV venture is worth?
        The HKJV will be expanding into China and Japan so earnings will grow over the next 1-2 years.

        I value the HKJV earnings at over 20 million. US operations are worth about around 12-15 million.

        I wouldn't be surprised if the HKJV turns around sharply at some point over the next 1-2 years as they move into Japan and China. We could see 1M+ quarterly earnings coming in from the HKJV and UUU would go back above $20.00.

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