- Q2 EPS, $0.25; H1 EPS, $0.51, Book Value Q2 $3.69, Special dividend of $0.08.
- Company remains on track to meet projected volume totals.
- Corporate issue will fade away over time.
- Kingold Jewelry is still a buy for high-risk oriented investors.
On February 2, 2014 I wrote an article, Kingold Jewelry, A Stock To Watch In The Year Of The Horse. Unfortunately, Kingold (NASDAQ:KGJI) had a corporate issue regarding a related party loan in their 10-K filing that was not beneficial for the stock price. Many investors viewed this transaction as a big red flag and sold their shares.
On the positive side Kingold announced a special cash dividend of $0.08 on June 17, 2013. This dividend will be payable no later than August 28, 2014 to stockholders of record as of June 30, 2014.
Worthy to mention is the following comment of the CEO in the company's press release:
"Despite the overall decrease in gold price during the quarter, we continuous to receive growing demand for gold products in China, and we were still able to increase our production. We remain on track to meet our projected volume totals for 2014 and continue to produce strong margins due to lower costs of production."
The fundamental metrics look sound, with a book value that is three times the current stock price of $1.21. P/E 2014 is below 2. If the gold price increases, the company's book value improves even more, because more than the half of their assets consist of gold inventory.
The big downside is still the fact that there is no sustainable dividend policy or stock buyback announced. A special dividend is a first step in the right direction. High-risk appetite investors could buy some shares at these levels and speculate that the valuation gap will shrink.
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