China Kangtai Cactus (OTC:CKGT), a developer, manufacturer and marketer of a variety of cactus-based consumer products, reported 2009 second quarter financial results yesterday. Revenue increased 30% to $6.5 million, while earnings per share increased 6.0% to $0.07. The GeoTeam® has monitored this stock for some time now, but we were hesitant to take a manufacturer of a cactus based products seriously. Well the joke has been on us. The stock has risen sharply from $0.25 in April to its current price of $0.95. We will be taking a closer look at China Kangtai due to its recent quarterly performance and its recent annual growth rate in sales and earnings:
|Full Year 2008||Full Year 2007||Period Change|
|GAAP Revenue||$20.3 M||$14.2 M||43.0%|
Fully Tax-Adjusted GEO Supplied Non-GAAP EPS a
|Adjusted Trailing EPS||$.26||n/a||n/a|
|Adjusted Trailing P/E||3.7||n/a||n/a|
Please note that after a quick read of China Kangtai's cash flow statements, the GeoTeam® will likely seek clarification on several items in these statements that may effect our earnings per share determinations as well as our P/E calculations, and consequently our investment stance. Also going forward, second half financial comparisons appear to be more challenging. We have requested an interview with management.
Current book value per share based on GAAP is $1.43.
While we are not particularly impressed with China Kangtai's second quarter earnings per share growth rate of 6%, the stock is selling at a discount to book with a trailing P/E of 3.7, prompting us to code CKGT as a GeoSpecial at $0.95 per share based on Repricing of Risk Premium. Achieving a price above book should require an acceleration in its earnings per share growth rate.
aNon-GAAP EPS Figures exclude certain non-operating gains and losses as well as certain non-cash items. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information . For a more complete explanation of the company's definition of non-GAAP please refer to its financial press releases. The GeoTeam non-GAAP figures may, from time to time, differ from company supplied figures.
Disclosure: Long CKGT