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During the IPO season Francis Gaskins, editor of IPOdesktop.com & director of research for Equities.com, regularly appears on CNBC TV, Bloomberg, thestreet.com & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg... More
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  • China New Borun (BORN) IPO interesting, esp if price is reduced 1 comment
    Jun 7, 2010 3:02 PM | about stocks: BORN
    China New Borun (NYSE:BORN)
    At the price range mid-point of $13 BORN has a market cap of $332 million

    see BORN IPO financial analysis

    SUMMARY
    . BORN is a potential sleeper that could do well over time, especially if the IPO price is reduced.
    . Priced at 10x annualized earnings for the March quarter, with 46% more production capacity expected to be on-stream in December, 2010
    . Expected to be the largest player in its defined market: ingredients for high & medium-end baijiu.  Baijui is a white liquor, 18% to 68% alcohol by volume.  In comparison vodka is 35% to 50% alcohol.
    . Operated its facilities at full capacity since 2007.  To date has not experienced any difficulty in selling 100% of production even as production capacity expanded.
    Baijui industry is consolidating and BORN is still able to get government permits to expand
    . Uses an in-house developed process to create a competitive advantage according to BORN
    . Overall industry supply exceeds demand, but large producers like BORN historically sell 100% of their production capacity

    BUSINESS
    . Focuses on ingredients for the high and medium-end baijiu market
    . Based on data from the Frost & Sullivan Report and BORN’s industry knowledge, BORN believes it will be the largest producer of corn-based edible alcohol in China, in terms of current known production capacity, following complete development of the Daqing facility.
    . According to the Frost & Sullivan Report, BORN is currently the largest privately-owned corn-based edible alcohol producer operating in Shandong Province and Heilongjiang Province.
    . BORN’s edible alcohol products are primarily sold as an ingredient to producers of baijiu who further blend the products into finished products sold under various brand names throughout China.
    MARKET FOCUS
    . BORN’s focus is on ingredients for the high and medium-end baijiu market has had a direct impact on the demand for its product.  In particular during the recent economic downturn demand for baijiu in the PRC did not experience a significant decline.
     Demand for BORN’s product remained steady, when edible alcohol suppliers primarily servicing the pharmaceutical and chemical industries experienced sharp drops in demand.
    . Going forward, BORN believes the projected growth in the high and medium-end baijiu market will continue to result in an uptake of 100% of annual production.
    BORN believes that the annualized average price of edible alcohol will rise in the near term due to the growing demand for edible alcohol

    COMPETITIVE ADVANTAGE
    . BORN believes its in-house developed manufacturing process results in a cost effective, consistent and superior product widely sought by baijiu producers.
    . Has been able to sell 100% of production capacity in recent years due to its large production volume and high product quality
    . A key supplier for leading baijiu producers, who are willing to maintain long term relationships with BORN in order to secure product supply of BORN’s product.

    USE OF IPO PROCEEDS, $65mm
    $55 million to fund the expansion of production capacity.
    Remaining portion as working capital to be used to support the production capacity expansion

    see BORN IPO financial analysis




    Disclosure: none
    Themes: IPO Stocks: BORN
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  • Value Digger
    , contributor
    Comments (3456) | Send Message
     
    oops sorry folks !! wrong board.

     

    glta.
    13 Aug 2010, 01:10 AM Reply Like
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