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Lihua International, Inc. Message Board

  • beachsidefreddy beachsidefreddy Aug 29, 2011 12:16 PM Flag

    HERE IS ALL YOU NEED TO KNOW ABOUT LIWA AND ANSWER TO TODAYS PIECE

    Margin: margins are perfectly in line with industry if you look at it on a product by product basis... copper wire margins are in low teens (which is in line given the fact that LIWA internalizes their own copper rod for wire production and also because they use scrap vs. virgin copper). The highest margin product is CCA wire, which is not a commodity product and very few competitors (FSIN is the only public company I know and their margins are in line with LIWA's).
    Strong revenue growth: LIWA's revenues is volume sold * copper prices... copper prices have increased a lot since '08 and this significantly contributed to revenue growth... they are in a passthrough business so their real revenue is gross profit that they are generating... in addition, liwa has doubled capacity in 2010 and about to double it again in 2011
    Cash position: LIWA raised cash specifically for the current capex; as of Q1 FY2010 LIWA had ~$45mm in cash while capex was earmarked for $40... obviously the company can't spend every single dollar on its balance sheet for capex since they still need funds for working capital and operations, so they issued 3mm shares to facilitate the capex. Cash is not held in a long term bank account since it's constantly being used in operations and short-term interest income rate in China is less than 0.1%.

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