A Speculative Play on Bronze Marketing

Feb. 6.07 | About: Bronze Marketing (BNZE)

I discovered a new speculative play on Friday and alerted 1/2 way between its big move (just before the dip to $2.30). Bronze Marketing, Inc. (BNZE) announced the filing of a preliminary information statement on Schedule 14C with the SEC to increase Bronze Marketing's authorized capital stock, effectuate a 1-for-10 reverse stock split of Bronze Marketing's capital stock and change the company's name to Sutor Technology Group Ltd. The initial information of this merger had come out a few months earlier, but it has now closed and is now being noticed by the traders. While the terms are somewhat complex, it appears that once its all said and done, the new company, Sutor Steel, should have 38m outstanding, but there is likely a possibility of a reverse split in there as well.

The 8k had the mention of a 1:10 reverse split, but that was likely when it was still at $1 - with the current interest of the stock, it would be more likely they may only see a 1:4 reverse split if that, but obviously something to watch for. From reviewing the 8k, the company saw revenue of 190.5million and net income of 11.5m net in 2005. That would have amounted to 0.35eps as a combined company with Bronze. The last reported quarter September 06 saw 38m in revenue and 2.95m net. As possible signs to come, the merger has also written in 'make good' provisions - min. 18.9m net from 2007 to be met, and then 23.5m for 2008.

Those are numbers that far succeed its current share price even at $4, but there is a lot unknown being on the OTC, and an apparent current float of only 150k. This has serious potential of a huge move, but I would expect wild swings as was evident Friday. A gambling trade for sure, but the company has huge potential and will be operating at production levels much higher than even China Precision Steel, Inc. (NASDAQ:CPSL) [(400000 tons for 2007 for CPSL, vs 1.5 million tons for 2007 for BNZE (Sutor)].

Disclosure: Author is long BNZE.