I screened with Finviz for companies that trade with a Price/Cash ratio of less than 1 and checked if the companies had any debt. I then calculated the net cash (cash - debt). I believe that stocks that trade below their net cash levels are potential takeover candidates or "going private" candidates. I wrote the part I of an article titled "5 Stocks Trading Below Net Cash" on August 18, the part II on August 19, the part III on August 26, the part IV on August 27, the part V on August 27 and the part VI on August 28. In this article I will feature three China based companies and two US based companies. I chose these five companies because they have all reported the second quarter financial results already. Here is a look at the five additional companies that trade below the net cash level currently:
1. Zuoan Fashion (ZA) is a leading design-driven fashion casual menswear company in China, and is headquartered in Shanghai. Zuoan offers a wide range of products, including men's casual apparel, footwear and lifestyle accessories, primarily targeting urban males between the ages of 20 and 40 who prefer stylish clothing that represents a sophisticated lifestyle. Through extensive networks of distributors and retail stores, Zuoan sells its products in 29 of China's 32 provinces and municipalities. As of June 30, 2012, Zuoan had 1,331 stores located in China.
The company reported the second-quarter financial results on August 30 with the following highlights:
|Net income||$10.4 million|
|Net Cash||$143.3 million|
|Shares outstanding (NYSE:ADS)||27.8 million|
|Net cash per share||$5.15|
For the third quarter of 2012, the company currently anticipates revenue in the range of $77.1 - $80.3 million, gross margin of approximately 46-48%, net income of approximately $15.7 - $16.4 million.
Zuoan expects to open approximately 25 self-operated flagship stores in the full year 2012. Approximately 175 new retail stores and 25 flagship stores are expected to be opened by distributors and sub-distributors in of the full year 2012.
The stock is currently trading at 28% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to be profitable for the full-year 2012 based on the company's outlook.
2. Noah Education (NYSE:NED) is a leading provider of education services in China. The company's brands include Wentai Education, which operates and manages high-end kindergartens, primary and secondary schools, Little New Star, which provides English language training for children aged 3-12 in its directly owned and franchised training centers, and Yuanbo Education, which focuses on early childhood education services in the Yangtze Delta region.
The company reported the full fiscal year 2012 ended June 30, 2012 financial results on August 29 with the following highlights:
|Net income (Non-GAAP)||$2.4 million|
|Net Cash||$82.2 million|
|Shares outstanding||36.6 million|
|Net cash per share||$2.25|
Based on current estimates and market conditions, for the first quarter of fiscal 2013, Noah expects to generate net revenue in the range of $6.0 million to $6.5 million. For the full fiscal 2013, the company expects to generate revenue between $29.0 million and $29.9 million.
The stock is currently trading at 43% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to be profitable for the full-year 2012.
3. VLOV (VLOV.OB),a leading lifestyle apparel designer based in China, designs, sources, markets and distributes VLOV brand fashion-forward apparel for men ages 20 to 45 throughout China. As of June 30, 2012, VLOV products were sold by its distributors at 414 points of sale across northern, central and southern China, as well as at 18 stores in Fujian Province owned and operated by VLOV.
The company reported the second-quarter financial results on August 13 with the following highlights:
|Net income||$4.9 million|
|Net Cash||$28.2 million|
|Shares outstanding||7.9 million|
|Net cash per share||$3.57|
The stock is currently trading at 19% discount to its net cash per share value. I would recommend buying the shares below the net cash level. I am expecting the company to be profitable for the full-year 2012.
4. American CareSource Holdings (ANCI) is the first national, publicly traded ancillary care network services company. The company offers a comprehensive national network of more than 4,800 ancillary service providers at more than 38,000 sites through its subsidiary, Ancillary Care Services. ACS provides ancillary healthcare services through its network that offers cost-effective alternatives to physician and hospital-based services. These providers offer services in 30 categories including laboratories, dialysis centers, free-standing diagnostic imaging centers, infusion centers, long-term acute care centers, home-health services and non-hospital surgery centers, as well as durable medical equipment. The company's ancillary network and management provide a complete outsourced solution for a wide variety of healthcare payors and plan sponsors including self-insured employers, indemnity insurers, PPOs, HMOs, third-party administrators and both federal and local governments.
The company reported the second-quarter financial results on August 9 with the following highlights:
|Net loss||$0.8 million|
|Net Cash||$10.6 million|
|Shares outstanding||17.1 million|
|Net cash per share||$0.62|
Kenn S. George, CEO and Chairman of the Board, stated:
"While we are disappointed but not surprised by the continued declines in our legacy accounts, we are focused and working assiduously on preserving that revenue stream, in part by providing technical support to our clients to accelerate the claims flow cycle. More importantly, we are directing energy and resources into strategic initiatives that will offset our torpid sales conversion ratio and will diversify our revenue sources to facilitate growth in the future."
The stock is currently trading at 16% discount to its net cash per share value. I am not expecting the company to be profitable for the full-year 2012.
5. Amtech Systems (NASDAQ:ASYS) manufactures capital equipment, including silicon wafer handling automation, thermal processing equipment and related consumables used in fabricating solar cells, LED and semiconductor devices. Semiconductors, or semiconductor chips, are fabricated on silicon wafer substrates, sliced from ingots, and are part of the circuitry, or electronic components, of many products including solar cells, computers, telecommunications devices, automotive products, consumer goods, and industrial automation and control systems. The company's wafer handling, thermal processing and consumable products currently address the diffusion, oxidation, and deposition steps used in the fabrication of solar cells, LEDs, semiconductors, MEMS and the polishing of newly sliced silicon wafers.
The company reported results for its third fiscal quarter (ending June 30, 2012) on August 9 with the following highlights:
|Net loss||$3.0 million|
|Net Cash||$42.3 million|
|Shares outstanding||9.5 million|
|Net cash per share||$4.45|
The supply/demand imbalance for solar cells and modules continues to negatively impact the entire solar supply chain. The company expects revenues in its fiscal 2012 fourth quarter ending September 30, 2012 to be in the range of $15-17 million. Gross margin percentage in the September quarter is expected to be similar to the June quarter. Total SG&A and R&D expenses are expected to be lower. The company expects to incur a net loss in the fourth quarter.
Operating results could be impacted by the timing of system shipments, the net impact of revenue deferral on those shipments, and recognition of revenue based on customer acceptances, all of which can have a significant effect on operating results.
The stock is currently trading at 11% discount to its net cash per share value. I am not expecting the company to be profitable for the full-year 2012.
Disclosure: I am long ZA, NED. 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.