3SOF

Hawk Associates.

According to people posting at investorvillage, the stock was sold by CHFI.  One person commented:
"The pps of UTVG was $.60 when CHFI received 1,200,000 shares for surety guarantee services July 12 2006."

This was also posted:

http://sec.edgar-online.com/2006/11/14/0001188112-06-003451/Section8.asp

Note F - Marketable Securities



As of September 30, 2006, the Company's marketable securities consisted of
shares the Company has received as payment for providing surety guarantee
services to SMEs including 2,956,795 shares of China 3C Group ("CHCG"),
1,200,000 shares of Universal Travel Group ("UTVG"), and 480,000 shares of Home
System Group ("HSYT").


The 2,956,795 shares of CHCG represent approximately a 6% interest in the
current issued and outstanding common shares of CHCG. The CHCG shares were
received as payment for surety guarantee services provided for CHCG's December
21, 2005 merger transaction with Capital Future Development Limited. The closing
price of the CHCG shares was $0.10 per share on December 21, 2005. As of
September 30, 2006, the closing price of shares of CHCG common stock was $1.83
per share. Since the CHCG shares are reasonably expected to qualify for sale
within one year, the securities are not considered restricted for the purposes
of SFAS No. 115, and, accordingly, quoted market prices have been used to
determine fair value.


The 1,200,000 shares of UTVG represent approximately a 6% interest in the
current issued and outstanding common shares of UTVG. The UTVG shares were
received as payment for surety guarantee services provided for UTVG's July 12,
2006 merger transaction with Full Power Enterprise Global Limited. The closing
price of the UTVG shares was $0.60 per share on July 12, 2006. As of September
30, 2006 the closing price of shares of UTVG common stock was $0.83 per share.
Since the UTVG shares are reasonably expected to qualify for sale within one
year, the securities are not considered restricted for the purposes of SFAS No.
115, and, accordingly, quoted market prices have been used to determine fair
value.


The 480,000 shares of HSYT represent approximately a 6% interest in the current
issued and outstanding common shares of HSYT. The HSYT shares were received as
payment for surety guarantee services provided for HSYT's August 4, 2006 merger
transaction with Oceanic International (Hong Kong) Limited. The closing price of
the HSYT shares was $1.00 per share on August 4, 2006. As of September 30, 2006
the closing price of shares of HSYT common stock was $0.51 per share. Since the
HSYT shares are reasonably expected to qualify for sale within one year, the
securities are not considered restricted for the purposes of SFAS No. 115, and,
accordingly, quoted market prices have been used to determine fair value.


A summary of the above marketable securities is as follows:


September 30, 2006
Cost: CHCG $ 295,680
HSYT $ 480,000
UTVG $ 720,000
Add: Unrealized Gain $ 5,156,055
Fair Market Value $ 6,651,735

Quote from: soxguy on March 03, 2008, 02:51:48 PM
Obviously something is really wrong here and everyone knows but us.

It's not that obvious. Pick AOBO.OB for example (later AOB):



But there was nothing wrong, the market was just inefficient ...



... and investors following the chart, believing others knew something they didn't, just missed a 10 fold advance in a couple of years.

This is just one example and it doesn't prove anything, but it goes to show that your assumption that something is fundamentally wrong with UTVG.OB because of the market action isn't that obvious because, many times, investors don't know what they're doing and are just motivated by fear and greed.

As I see it, UTVG.OB may even go down to $1-$1.5, but it will still be worth $10 in 12 months time. My expectation comes from the $0.22-$0.23 per share the company will earn in 2007 and I expect this to double in 2008, because acquisitions will contribute to a full year and they should keep growing strongly as they have been doing, also because of the 2008 Beijing Olympics.

I don't pay any attention to the chart and I'll hold UTVG.OB for the long term. 

I have the habit of comparing companies. When a big one like Sprint goes into a prolonged tailspin,management is blamed. Now UTVG goes into a decline, it's due to  the market not recognizing value. I guess it's comparing apples to oranges,but i'm frustrated nevertheless. Let's hope(there's that word again) that things work out.

QuoteWhen a big one like Sprint goes into a prolonged tailspin,management is blamed. Now UTVG goes into a decline, it's due to  the market not recognizing value.

I think you agree with me when saying there are a lot more and profound pricing inefficiencies in micro caps than in large caps.

For example, you have just one firm providing coverage for UTVG.OB (by the way, nice $0.42 EPS expected for 2008 - UTVG.OB closed at 5 times that estimate) and with S you probably have millions of shareholders and 27 analysts covering the company.

QuoteI guess it's comparing apples to oranges,but i'm frustrated nevertheless.

Me too, I didn't sleep last night, thinking "What shall I do? What shall I say?"

QuoteLet's hope(there's that word again) that things work out.

There are problems and let me share them with you right away:

1 - UTVG is perhaps growing too fast and management may not have the appropriate skills to integrate all those acquisitions;
2 - Their accountants are weak. They start accounting the acquisitions from the beginning of quarters, instead of the exact date of the acquisitions, as most companies do and GAAP rules mandate;
3 - I think the number of shares outstanding on a fully diluted basis is perhaps 10-20% higher than the reported numbers. This is because I'm not seeing them counting some shares to be issued due to acquisitions;
4 - It is possible that there will be further dilution because the company has just $2.7 M in cash.

So, as these problems maybe will be disclosed, we have higher than normal headline risk with this company (and the Main has been suffering from this).

But, even with all this, I still see UTVG.OB making $0.40 - $0.50 EPS in 2008 and probably something like $0.7 - $0.8 in 2009. The stock is way too cheap.

QuoteI have the habit of comparing companies.

Yes, let's compare apples to apples then. Take a look at UTVG's big brother, CTRP:

«Ctrip.com International, Ltd. (CTRP) and its subsidiaries provide travel related services including hotel reservation, air-ticketing, packaged-tour services, as well as Internet advertising and other related services.»

Awesome chart by the way:



This company, which does basically the same thing as UTVG, is a $3.8 B market cap company. It's price to sales ratio is 23, while UTVG's is 2. CTRP's p/e is 70, UTVG's is 9.6.

So far I would have done a lot better to just go with the leader and forget valuation.

We'll see what the the long term brings, but I'll continue holding UTVG.OB, because I maintain what I wrote yesterday:

QuoteAs I see it, UTVG.OB may even go down to $1-$1.5, but it will still be worth $10 in 12 months time.

UTVG are obviously concerned about the stock price decline as well. Just missing  2008 guidance really......

Universal Travel Group Management Reiterates 2007 GuidanceLast update: 3/5/2008 8:00:12 AMNEW YORK & SHENZHEN, China, Mar 05, 2008 (BUSINESS WIRE) -- Universal Travel Group (UTVG), a fast growing travel services provider in China specializing in packaged tours, air ticketing, hotel reservation and air cargo transportation, said today that it is comfortable with the company's 2007 guidance issued on February 7, 2008. Revenue is expected to come in between $41 million and $42 million, a year-over-year increase of 310% to 320% from $10.01 million reported in fiscal 2006. Net income is expected to be in the range of $8.3 million to $8.5 million, or $0.22 to $0.23 earnings per share, an increase of 225% to 233% from $2.55 million reported in fiscal year 2006. Universal Travel Group's Chairwoman and CEO, Jiangping Jiang, said, "We are pleased with Universal Travel's operations and the company is continuing to perform within our expectations. We plan to issue fiscal 2007 operating results by the end of March 2008."

QuoteUTVG are obviously concerned about the stock price decline as well.

Indeed Aussie, they just reiterated 2007 guidance:

Universal Travel Group Management Reiterates 2007 Guidance
Business Wire(Wed 8:00am)

QuoteJust missing  2008 guidance really......

Sorry, I don't understand, what do you mean?

Thanks

Quote from: David Randolph on March 05, 2008, 08:28:36 AM

QuoteJust missing  2008 guidance really......

Sorry, I don't understand, what do you mean?

My point was just that reiterating already public domain information is not really going to make any material difference to the stock price. That will require new information or guidance.

QuoteMy point was just that reiterating already public domain information is not really going to make any material difference to the stock price. That will require new information or guidance.

Thanks for the explanation AussieTrader

You were right, reiterating the previously announced 2007 guidance didn't make any difference in the share price, at least not until now.

I wonder if they'll provide 2008 guidance when they report the 2007 full year results in a couple of weeks?

I'm still not giving up on UTVG.OB. Here the micro-economic case (I mean, the specific company's fundamentals and valuation) and the macro-economic case (Chinese tourism sector and the 2008 Beijing Olympics) are still aligned and pointing North.

CTRP is one of the very few bullish stocks outthere and UTVG is in the same sector and growing a lot faster, I don't understand, at least not now, why this stock isn't moving up. I recognize some internal controls weaknesses, but that shouldn't be enough for investors to totally disregard this company's growth potential and value it at less than 10 times 2007 and about 6 times 2008 estimated EPS.

I still feel UTVG.OB is down due to a market inefficiency, which should be corrected when more information (like the 2008 guidance or the 2007 10-Q SEC form) becomes available.

I'll keep holding UTVG.OB.

After experiencing what's happening with UTVG.OB, a stock trading at 7.8 times trailing earnings and 4 times 2008 estimated EPS, one needs to raise serious doubts about the validity of the p/e ratio as a good indicator of a stock's future price.

I mean, everybody holding this stock knows it is very cheap, but they sell it anyway. The trend is a more powerful motivation to act or not to act than value, at least over the short and medium term.

Obviously I'm very disappointed about all this and feel somewhat lost, not knowing what to think or believe. It is also obvious that you don't pay to have this kind of advice or self doubt.

I don't know which lesson will I get from UTVG.OB, there can be several:

1 - Fundamentals are important just for a three year investment perspective and stocks can always get much cheaper before the value comes up;
2 - Fundamental value can prevent a stock from sliding much more, but that doesn't happen with micro-cap stocks or OTCBB traded stocks, because value players don't pay attention to them;
3 - If the fundamentals say "buy" and yet the chart (or the market) says "sell", then the market is right, not my personal assessment of the fundamentals.

This 3rd one seems to be the easy way out, but if one recalls the internet bubble, when stocks without any value kept going up a lot just before they blew up to zero. Then, even though it took a couple of years, fundamentalists were right and technicians ... well, they could be right too if they followed the trend, but only the good ones do that, the others keep looking for "oversold conditions".

Enough about UTVG.OB and theories. I'll keep holding the stock just to see and feel where was my mistake.

Hi David.

I don't think that the share price is a result of the company's performance or outlook but solely reflects the company's lack of credibility in the investment community. As a Chinese company they have to be more holy than the Pope to earn the trust of an investment community that on a daily basis is being bombarded with messages about Chinese companies reaping off US investors. UTVG has unfortunately made itself very vulnerable for this kind of mistrust by:

• Announcing a deal that later falls a part
• Restate earnings
• Revise guidance
• Making unexpected financing deals

It will take time for them to win the trust of the market and therefore time before the stock price will reflect the fundamentals of the company. And this will only happen if they actually deliver on the promises.

If you are convinced that the company is running a good and healthy business (and I haven't seen any information indicating the opposite) then I would certainly keep holding the stock. The fundamentals seems stellar.

Just my 2 Euro cents 

Quote from: Michael on March 11, 2008, 09:16:41 AM
Hi David.

I don't think that the share price is a result of the company's performance or outlook but solely reflects the company's lack of credibility in the investment community. As a Chinese company they have to be more holy than the Pope to earn the trust of an investment community that on a daily basis is being bombarded with messages about Chinese companies reaping off US investors. UTVG has unfortunately made itself very vulnerable for this kind of mistrust by:

• Announcing a deal that later falls a part
• Restate earnings
• Revise guidance
• Making unexpected financing deals

It will take time for them to win the trust of the market and therefore time before the stock price will reflect the fundamentals of the company. And this will only happen if they actually deliver on the promises.

If you are convinced that the company is running a good and healthy business (and I haven't seen any information indicating the opposite) then I would certainly keep holding the stock. The fundamentals seems stellar.

Just my 2 Euro cents 

Great post Michael, thanks

I was very naive on this one (well, not just this one), because I was so focused on the very long term that I opted to ignore evidence of the bearish case for this stock.

There was a moment, at the 3rd quarter results conference call, when I should have turned very suspicious about this company, but I didn't thought it was all that relevant ... this is because I didn't value "confidence" or "reliability" as high as I should.

When asked, management said they were counting revenues and earnings of their newly acquired companies from the beginning of the quarters, not the exact date of the acquisitions as GAAP mandates and all other companies do.

This means they'll probably have to restate results again. Anyone paying attention to this detail knows this is coming ...

Anyway, I wad stupid not to pay attention to it and now I'm losing 73.5% (what???) on this stock. I guess it's all priced in already.

This is embarrassing

I'll hold UTVG. 

UTVG: Q4 EPS 11c; Rev $9.95M Beats 9c Est
Monday , March 31, 2008 12:28ET

QUARTER RESULTS
Universal Travel Group (UTVG) reported Q4 results ended December 2007. Q4 Revenues were $9.95M; MISSING revenue consensus by -35.39%. Q4 EPS was 11c; BEATING earnings consensus by +22.22%.

Q4 RESULTS      Reported      Year-Ago     Y/Y Chg      Estimate    SURPRISE
----------  ------------  ------------  ----------  ------------  ----------
Revenues:         $9.95M           N/A              N/A       $15.40M     -35.39%
----------  ------------  ------------  ----------  ------------  ----------
EPS:                 11c                 N/A                N/A            9c                +22.22%
----------  ------------  ------------  ----------  ------------  ----------


YEAR-END RESULTS
Co. also reported Year-End results ended December 2007. FY Revenues were $44.29M; +342.46% vs yr-ago; BEATING revenue consensus by +4.95%. FY EPS was 26c; +271.43% vs yr-ago; BEATING earnings consensus by +4.00%.

FY RESULTS      Reported      Year-Ago     Y/Y Chg      Estimate    SURPRISE
----------  ------------  ------------  ----------  ------------  ----------
Revenues:        $44.29M       $10.01M    +342.46%       $42.20M      +4.95%
----------  ------------  ------------  ----------  ------------  ----------
EPS:                 26c            7c                  +271.43%           25c      +4.00%


......
Revenues for the year ended December 31, 2007 ("fiscal 2007") were $44,294,853 compared to $10,013,788 for the year ended December 31, 2006 ("fiscal 2006"), an increase of approximately 342%. This increase is attributable to the Company's organic growth as well as its expansion into air cargo transportation, packaged tours services and hotel booking services, through the acquisitions of SSD, XGN, SLB and FOI.

Gross Profit for fiscal 2007 was $14,775,841 compared to $5,419,412 for fiscal 2006, an increase of approximately 173%. The increase in gross profit reflects the Company's aggressive growth strategy as exemplified by continued growth in its traditional customer base and the acquisitions of SSD, XGN , SLB and FOI.

Gross profit margin for fiscal 2007 was 33% compared to 54% in fiscal 2006. This decrease is primarily due to the fact that the accounting treatment for the operations of SSD, XGN and SLB and other new operations undertaken by the Company require the deduction of cost of service to derive gross profit as opposed to the businesses the Company was engaged in during the fiscal year 2006 which recorded commissions earned on airline bookings and whose cost of service was minimal as compared to the commissions earned.

Selling, general and administrative expenses for fiscal 2007 totaled $3,229,526 compared to $1,353,434 in fiscal 2006. S, G & A was approximately 7% of revenues in fiscal 2007 as compared to 14% for fiscal 2006. The increase in S,G & A reflects the acquisitions of SSD, XGN , SLB and FOI, and the decrease in S,G & A as a percentage of revenues reflects the fact that certain expenses did not grow proportionate with the increase in the Company's revenues.

Stock based compensation reflects shares issued to certain consultants who, among other things, assisted the Company in its efforts to become publicly traded in the United States. The Company anticipates that it will not rely as much on such consultants in the future and that the amount of stock based compensation will decrease. The Company anticipates that it will look to its directors, counsel and other third parties to provide the services previously rendered by these consultants and that the fees payable to its directors and counsel will increase to reflect the added services rendered.

Interest expense for fiscal 2007 totaled $80,847 compared to $2,754 for fiscal 2006. The significant increase in interest expense reflects the fact that the Company financed a portion of the cost of its acquisitions with cash borrowed from commercial banks.

Net income was $8,695,894 or 20% of Revenues for fiscal 2007, compared to $2,558,478 or 26% of Revenues for fiscal 2006. The increase in net income reflects the continued growth in the Company's business and the acquisitions of SSD, XGN, SLB and FOI. The decrease in net income as a percentage of Revenues reflects the fact that the businesses acquired generally had lower margins than the Company's historical operations.

Thanks for posting UTVG's results la-onda

• Universal Travel Group Announces 2007 Annual Financial Results
Business Wire (Tue 2:13am)

$0.26 EPS in 2007 was higher than the company's guidance. UTVG closed yesterday at $1.57/$0.26 = 6 times earnings, while EPS grew from $0.08 in 2006 to $0.26 in 2007.

The market cap is ($8,695,894/$0.26)*($1.57) = $52.5 M.

I hoped UTVG would provide 2008 guidance, but they didn't. Maybe just at the conference call.

We know there are accounting issues with this company which weren't fully disclosed. But that will probably have implications only for the past (I guess that somewhere down the road they'll have to restate earnings - mostly due to timing issues).

I maintain that UTVG will earn something like $0.4 and $0.5 per share in 2008 (also considering the Beijing Olympics boost). This should put the stock in the $7 - $10 level under normal market conditions.

We'll see what the future brings ... I'll continue holding UTVG.OB, despite the huge loss the Main has on this holding.

Volume has increased since the earnings release, but price still didn't move.

I found a post with some highlights from the conference call:

CC highlights

CTRP should really acquire UTVG.OB. It would be cheap for them ... anyway, I hope not, since probably the price would be a lot less than I paid.