As most of you know RedChip is one of the fastest growing investor relations firm servicing small-caps in the United States. We have offices in Orlando, New York, Paris and Shanghai. In addition to our investor relations services which include sponsored research, RedChip Real Radio, road shows and conferences; we also have an independent research division, whose index is currently up 29%.
One of our IR clients is a little known manufacturer of mechanical and electronic components for hi-tech customers and a manufacturer of solar modules. We are paid a monthly fee to represent and advise this company to the small-cap equity community. I should note here that the average New York Stock Exchange company spends approximately $350,000 a year on investor relations, far more than what WEMU spends (see full disclosure).
The company has been profitable since its founding in 1993 and has only done one financing in its history, a straight equity deal recently completed with no stock registration rights for 6 months. This company has been extremely well-managed by Jimmy Wang, who came to America in 1986 as a graduate student with $40.00. After working at MP World Manufacturing, Inc. for five years he started Worldwide Energy and Manufacturing. He has built this company one step at a time the right way, growing it organically, running a tight ship, while growing profits systematically. The Company has been profitable since his first year in business. Moreover, he has put over $500,000 of his own money into the company. There are now 3.1M shares outstanding (includes recent financing) and 350,000 shares in the float (in six months, there will be 1.45M in the float with the registration of 1.1M shares from the financing).
Worldwide's 2007 revenues were $12.13M with earnings of $575,674 or $0.28 a share. In January of 2008, Jimmy Wang launched his new solar division and has already executed $14.8 million in solar contracts, which is more than all of 2007 revenue on the contract manufacturing side. He is projecting $18 million on the contract manufacturing business and approximately $20M on the solar division.
The Company has 0 long-term debt and a credit facility of $2.5 million. Total projected revenue for fiscal 2008 is $35 million - $38 million with approximately $2.5 million in net income. He is projecting $100 million in revenue in 2009. The company also intends to apply to the NasdaqCM this year.
He has demonstrated that he is well on track to reach the $35 million - $38 million revenue target with his first quarter revenue and earnings. Revenues were up 90% and earnings were up 89% (see press release)
Jimmy Wang's vision is to create another First Solar, Inc. (NasdaqGS: FSLR), which is now a $633 million company trading at $252.00. First Solar is trading at 32x revenue (ttm) and 101x earnings (ttm). Another company he has set his sights upon is Suntech Power Holdings Co. Ltd. (NYSE: STP) a $1 billion solar play, trading at $36.00. This stock is trading at 3.5x revenue (ttm) and 29x earnings (ttm). If WEMU traded at only 4x 2008 projected sales of $35 million, the stock would trade at $45.00. If it traded at 30x 2008 projected earnings, it would trade at $37.20. I suggest that investors position now in the stock while the float is still small and before it makes its next move, which should be to the $14.00 range (see RedChip Research here) -- a target I believe is very conservative.
In summary,
This is my view on why WEMU is a smart investment at current levels:
1) WEMU represents an opportunity to build an entry level position before the market for this stock is efficient at which point the stock should trade in line with its peer group
2) WEMU has received $14.8 million in solar contracts over last the four months
3) 2008 revenue growth of 200% ($35 million) and earnings growth of 400% ($2.5 million)
4) Potential upside of 100% - 500% upside over next 12 months
Disclosure: This blog should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. Worldwide Manufacturing USA, Inc. is also a client of the RedChip Companies, Inc. and of RedChip Visibility, a division of RedChip Companies. RedChip Visibility, a division of RedChip Companies, Inc. has been contracted by WEMU to increase investor awareness of WEMU to the small-cap equity community. WEMU paid RedChip Visibility a monthly fee of $10,000 for investor relations and $15,000 for the RedChip Visibility Research Program. Additionally, the analysts contributing to the referenced reports certify that the views expressed therein accurately reflect the analysts’ personal views as to the subject securities and issuers. RedChip certifies that no part of the analysts’ compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analys t in the report. Additional information on the securities mentioned in this report is available upon request. Reports are based on data obtained from sources we believe to be reliable but are not guaranteed as to accuracy and do not purport to be complete.
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