Uniroyal Global Engineered Products (OTCQB:UNIR) manufactures coated fabrics such as the well know Naugahyde line. SA published two earlier articles that I wrote on this stock which described how last year the company became publicly traded via a reverse merger and outlined the company strategy. In this article, I am reviewing how the company performed relative to its stated goals and providing an update.
UNIRs objective in the acquisition of Wardles Storeys Limited just prior to engineering the reverse merger was to establish itself as a world class, just in time supplier. Uniroyal has now achieved technical and design approval from all of the leading German automotive manufacturers such as BMW (BAMXY), VW (OTCPK:VLKAY) and Mercedes Benz (OTCPK:DDAIY). The company is working at 65% capacity after expanding its manufacturing operations last year and is keen on continuing to gain market share in the fragmented coated fabrics for the automobile industry, where UNIR derives about 60% of their income. Management now aims to increase the addressable market from about $2 billion focused on the automotive industry, to $10 billion over the next five years from growth from the European introduction of the highly regarded Naugahyde brand for industrial and consumer solutions; an untapped area as Wardles has historically focused on the automotive market and Naugahyde lacked an European base.
Key to establishing their new goal, management has been keen in acquiring a company in Asia in order to truly be a global force and to improve on marketing opportunities in China. Kudos to the UNIR team for not rushing on this acquisition plan and overpaying just to complete the plan. While they look and wait for the right acquisition to come along, they are working on filling up the excess manufacturing capacity.
UNIR is currently traded over the counter but will qualify to uplist to either the Nasdaq or the NYSE when they file their 10K. They may also do a secondary in order to increase liquidity as there are very few available shares and there is interest from institutional investors and funds. UNIR recently completed its first investor presentation as a publicly traded company.
The stock price is in an uptrend despite the overall market turmoil. The stock price hit a new high right after the reverse merger was announced and a new opportunity for market excitement presents itself as the company is likely to apply for an uplisting.
The underlying fundamentals indicate that the stock is undervalued with a PS of .43 and EV/Rev. of .73. Net income, gross profit, revenues and margins as reported for 2015 were all higher than for the same period for the prior year. Cash improved from approximately $600k at the end of 2014 to over $2 million presently.
Overall, the company has been true to its strategy in its short lived public life. The combination of Wardles with Uniroyal is stronger than each company separately. It is likely that the company will obtain a Nasdaq or NYSE listing in the next couple of months and that it will be attracting new institutional and hedge fund buyers as the story and the underlying strategy continues to unfold.
Please see my previous articles on this stock for risk factors associated here.
Disclosure: I am/we are long UNIR.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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