Superb BUY on Improving FundamentalsJTI is a solid buy on its superb fundamentals ,as a play on China and the world economic recovery.
The key factoids are....................................
........JITE Technologies designs, manufactures and sells electronic and electrical connection devices for security, elevator, railway, industrial control, automation, telecommunication, and power supply industries. The company has its head office in Richmond Hill, Ontario and its manufacturing facility in Shenzhen, China.
.....................JITE has invested heavilly in the most modern manufacturing technology and has built a solid reputation since incorporation by significantly reducing the costs of terminal block connectors to the world’s largest OEMs. The company can do this successfully by utilizing the technological and managerial expertise of the west, and the unbeatable production costs of the east.
...........It has just 21.1 million shares o/s most of which are tightly held
...........It has no debt , and cash and cash equivalents of $9.1 million or about
.43 per share ; hard book value os
.78 /share
..........Jite has been profitable since incorporation 14 years ago and recently purchased new operating facilities in China that will permit substantial expansion potential
........Jite has weathered the economic recession quite well , exhibiting only modest declines in sales , while introducing cost compression meaaures that have resulted in a substantial increase in gross margins , that should drive earnings growth in 2010 and beyond , as the world's economy resumes growth.
The third quarter shows just how impressive the strategic and operational initiatives taken in 2009 , have been.....
.......... net profits up by 628 per cent and 450 per cent, respectively, compared with the corresponding periods in 2008. Sales for the third quarter of 2009 moved back to $4.31-million, only just short of $4.34-million achieved in the prior-year quarter.
..............• Gross profits for the 2009 third quarter were $1.54-million (35.7 per cent of sales), up from $820,000 (18.9 per cent of sales) in the 2008 period. For the first nine months of 2009, gross profits were $3.75-million, up from $2.68-million in the 2008 period.
................ Net profits for the 2009 third quarter were $728,000 (16.9 per cent of sales) or 3.5 cents per basic and diluted share, up from $100,000 (2.3 per cent of sales) or a 0.5 cent per basic and diluted share in the 2008 period. For the first nine months of 2009, net profits were $1.35-million (11.4 per cent of sales) or 6.4 cents per basic and diluted share, up from $250,000 (1.9 per cent of sales) or a 1.2-cent per basic and diluted share in the 2008 period.
................ Cash flows generated by operation activities for the 2009 third quarter and first nine months were $170,000 and $3.30-million, respectively, compared with $1.06-million and $390,000 in the comparative prior-year periods.
Jite reported in Q3 that they had begun to see renewed customers' orders, and were confident about the ongoing development of in the coming quarters.
So, taken together , 2010 should see earnings growth continue , as the world's economies continue to strengthen.
Trailing earnings are
.09 per share, and this should improve to in excess of
.10/share in 2010 , with continued increases for 2011.
Fair value at 1.5 times book is about $1.20 which is about 12 times 2010 expected net earnings.
These are quite reasonable, if not conservative, valuations , given Jite's superb balance sheet , its demonstrated ability to squeeze out earnings under all economic conditions , as well as the return of growth to gross sales in 2010 and beyond.
As such, JTI should exit 2010 at or above $1.20 per share , and perhaps as high as $2/share , should Q3 financial metrics be enhanced by significant growth in gross sales in 2010.