NWD (New Dragon Asia Corp.)

[007]

NWD (New Dragon Asia Corp)

NWD profile:
New Dragon Asia Corp. and its subsidiaries engage in the milling, sale, and distribution of flour and related products. It produces and markets a range of wheat flour for use in bread, dumplings, noodles, and confectionary products, as well as offers instant noodles and soybean-derived products to retail and wholesale customers in China. The company also provides a range of instant noodle products, such as packet noodles for home preparation, and snacks and cup noodles for outdoor. In addition, the company offers two types of soybean products, including soybean protein powder, and soybean powder supplied principally to food and beverage manufacturers. The company markets and sells its products through distributors, supermarkets, and food stores in China. It also exports its products to Korea, Australia, Malaysia, and Indonesia. New Dragon Asia Corp. was incorporated in 1999 and is headquartered in Shenzhen, China.


Commentary:
Recently, investors were upset over a multi-million dollar stock-based compensation reward given to CFO Peter Mak. Coupled with a general uneasiness on exports from China, New Dragon's share price unraveled in the first half of 2007. The stock is currently trading at $1.20 with a fair book price around $.90. What investors need to know is that the last time Peter Mak received stock options, he doubled his money and so did shareholders. Mak has the option to buy several million shares priced between $1.60 and $1.82. Furthermore, New Dragon is HACCP certified on exports and will only benefit from any competitors being shut down. New Dragon is vertically intergrated, having its subsidiaries mill, sell and distribute its products. NWD is poised for explosive growth in the newly privatized food production market of China.

[007]

Yahoo reports the new book value per share at .99.
NWD is trading at .97.
This is absurdly undervalued, especially when one considers that NWD started 2007 trading around $1.70 with a book value per share at .82.

Edited 8-22
I read the 2006 annual report again tonight to evaluate my position. Mak's option to buy 2,000,000 shares at $1.60 expires in 2012. Mak's option to buy 6,000,000 shares at $1.82 expires in 2016. However, Mak is only under contract until December 2008.

Buildings and equipment have depreciated $8,000,000: some assets not impacting the balance sheet.

[007]

The majority holder of NWD has been dumping 500,000 shares a month all summer. This is very odd, since it would seem to go against CFO Peter Mak's attempt to capitalize on his stock options priced at $1.60 and up. The good news is that institutional buying/holding has risen this summer as well. Well over 1 million shares held by institutions.

Tangible book value per share: .85
Yahoo's book per share: .99
And Fidelity would quote book per share well above $1.00.

Yahoo quotes the float at 17 million shares.

[007]

One million shares traded today. Gapped and gained +.17. Let's see if this breakout has legs.....

http://stockcharts.com/h-sc/ui?s=NWD...d=p09200121087

[007]

3rd Quarter earnings are due next week. NWD is a seasonal stock and the next few quarters will push the trailing-twelve-month EPS into very positive territory based on my due dilligence. They need to erase the 2006 4Q -$.17 EPS stock option bloodbath which caused the 2007 downtrend.

NWD is a very undervalued China stock, in my opinion; at least worthy of watching through May of 2008.

In fact, you may see the ttm EPS jump from $.03 to over $.30 by 2008.

Watch the MACD this week.

[007]

OK
I've been hating this stock for 18 months cause it's killing me. But time for another update since it jumped 50% today.

--trading at below 1/2 book value.....HALF!!
--profitable China company, makes food stuffs....No financial mortgage turmoil here. Last time I checked, people in China are still making babies and eating. Lots of room for growth.
--Big news is insider buyback. And yes, it's started and documented. Form 4's hit today. I saw them under SEC filings on MSN money. Chairman Lu started buying in the $.30's and $.40's so hopefully the bottom is in on this sleeper.

Still lots of thing to hate about this stock----OS is growing due to some toxic financing and debt conversion. That should be over in 2010 at the latest. OS should top out between 60 and 70 million shares.

Just a heads up. Gonna hit resistance soon. It may get interesting.

[sg1efc]

Good luck with this 007. Hope it turns green for you.

[greencat]

NWD-Easy play for me here. its close to heavy support. Hold that support and it will take off. Doesn't hold I take a small loss. It has a good chance of making an upmove. Will decide tomorrow if I pull the trigger.

[KittyCat]

Oh my goodness, this is one of the first stocks I ever bought! Here is the latest Q10:

- Quarterly Report (10-Q)

[KittyCat]

I was looking for this the other day, because I want in for long-term. And my reasoning, again, is simple:

As long as the world lasts, people will be eating ramen noodles!