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Title: Central Industries (CND.A.v) – bottom fishing opportunity? Post by: Tara on August 15, 2008, 01:21:13 PM Central Industries (CND.A.v)
President & CEO: Zoran Konevic (905) 272-3133 info@cencanfoods.com or Gerry at 416-407-3868 Central Industries Corporation Inc., (the “Company”) is a food processing company that converts both wholesale cuts or primal meat cuts, and smaller cuts derived from the primal cuts, the sub primal meat cuts, and produces fresh boxed and case ready products. The Company’s products are marketed and sold to Canadian national and regional grocery chains. In addition, the Company uses international food brokers to sell its products abroad, primarily into the Asian Pacific market and in so doing, continues to build increased recognition for its “Choice Pak” brand. The pros - Trading way below 10x EPS - Positive net earnings in Q1=.01$ and Q2=.02$ which should increase with Canada/Russia food regulation issues resolved - Positive working capital over 1.7M$ (.09$/share) - Retained earnings of 586k - Positive free cash flow - No real long term debt except lease payment to the former CEO - Have not seen any lawsuits pending, only the lease debate with former CEO - 19.3M shares outstanding, CEO owns about 52% - Book value of .13$ (.10$ if goodwill is removed) - Market cap of about 2M$ - Excellent receivables collection of 7-14 days on average - Food industry = pretty stable sales, even in recession The cons - gross margin of about 20% - lease debate in progress (current plant owned by the former CEO); company is contemplating moving to a new larger location, and expecting to drive leasing cost down by an appreciable amount; - illiquid - no investor relation exposure yet & no recent insider buying What makes this company interesting in my opinion? The stock is trading at bargain multiples, as EPS was +.03$ for the first 6 months with 2007 EPS +.02$/share. The stock lingers around book value and working capital per share. It looks like fundamental bottom fishers can make an impressive return from these levels, especially if their Russian opportunities are reactivated (sales roughly 1.5M$ per quarter from what I understand). P.S. The above is simply my personal understanding and not to be construed as investment advice. Do you own due diligence. And giving credit where credit is due, this pick came from Bamako on www.smallcaps.ca (http://bigcharts.marketwatch.com/charts/big.chart?symb=ca%3Acnd%2Ea&compidx=aaaaa%3A0&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=2737126&style=320&time=8&freq=1&nosettings=1&rand=654&mocktick=1&rand=9353) |