UTVG.OB

[realcoolhead]

True. I didn't mean to buy big-cap. And eBay's buisiness is very unique too.

I guess I just "hate" .OB stocks. 

On another note, I think you may want to expand market-cap a little bit: between $1-$5 billion there are still many high growth companies, like GIGM, TBSI in the portfolio now. I think they are more or less "proven" business so there is less risk, yet still with 5-10 bagger possibility, see where RIMM, GRMN were a year or so ago...

First of all let me say thank you for your contribution to this thread realcoolhead, on a stock you don't have an interest.

That's a solid argument in favor of large caps. But I think EBAY's case is different from UTVG's. In EBAY's industry it was a matter of the winner takes all ... moreover the competitors you're talking about weren't profitable and when the stock market funds dried, the companies died. UTVG is profitable (at least if one believes the financial statements, which is a long shot as we know).

A good question also is: Where is EBAY now?

[David Randolph]

True. I didn't mean to buy big-cap. And eBay's buisiness is very unique too.

I guess I just "hate" .OB stocks.

I'm starting to share that feeling too realcoolhead. Check the new "Watch List" board, no OTCBB or PK allowed. I'm going to take them out of my radar for good.

On another note, I think you may want to expand market-cap a little bit: between $1-$5 billion there are still many high growth companies, like GIGM, TBSI in the portfolio now. I think they are more or less "proven" business so there is less risk, yet still with 5-10 bagger possibility, see where RIMM, GRMN were a year or so ago...

You've read my mind, I've been thinking about it ... it seems it is easier for a mid-cap to achieve a "fair" multiple than for a small or micro cap. Or else it is just that at this particular moment small caps are out of favor ... for example, in a "normal" market CIMT would have gone up 50% due to yesterday's earnings news. In this type of market it went up just 3.6%. But I'm not worried because over the long term value always gets recognition. And I remain a long term bull in the US stock market.

[la-onda]

fyi; nice seeking alpha summarization:

The Fast Ascent of Universal Travel Group
posted on: November 16, 2007 | about stocks: UTVG.OB   

A year ago, Universal Travel Group (UTVG.OB) was a small travel company is southern China, taking in $1.5m in revenues for Q3 2006. Its main asset was this company called Yu Zhi Lu ("YZL") which provided hotel reservations, packaged tours, and air delivering out of Shenzhen. Since then, much has happened. It has gone on an aggressive acquisition strategy, gobbling up companies to diversify its service offering as well as geographical reach.

In April 2007, it acquired Shenzhen Speedy Dragon, an international and domestic freight forwarding firm. In August 2007, it bought Xi'an Golden Net Travel Service Company, a travel services outfit with operations in western China. Also in August, it acquired Shanghai Lanbao Travel, a centralized real-time booking system providing hotel bookings, air ticket and tourism information via the internet and mobile phone. Shanghai Lanbao owns and manages the award-winning China Booking Association website, which receives about 200,000 visitors daily. Finally, in October, it snapped up Foshan Overseas International Travel as well as Tianjin Golden Dragon Travel, both leading travel services companies in their respective cities.

What made this fast growth possible was that all the acquisitions were engineered via a combination of equity and non-interest bearing promissory notes, with no cash at all, and all the targets ended up as fully-owned subsidiaries of YZL (except for Tianjin, which YZL owns 90%). This would only have been possible with the company's liquid shares, which became OTC traded via a reverse acquisition in mid 2006.

The real question here is how the companies are integrated into the overall group operations and if synergies are realized. I suspect its most important national (as opposed to regional or city-wide) platform going forward is the CBA Hotel website, which could position the company to compete with Ctrip and eLong. And with the Beijing Olympics coming up, on top of China's fast growing tourism rate, this is a great sector to be in right now.

With five major acquisitions in the space of just over 6 months, it is no wonder that the company chalked up record financial results for Q3, released earlier this week. Some highlights are:

    * Record revenue of $20.4 million, an increase of approximately 1,252% from Q3 2006 and 190% sequentially from Q2; and
    * Net income of $3.1 million, or $0.09 earnings per share, up approx. 219% from Q3 2006 and 86% from Q2 2007.

The company is expecting net income for FY2007 of $8.2 m-$8.5 m, or EPS of $0.23-$0.24, an increase of over 220% from 2006. EPS for 2008 was projected by Maxim Group (research dated 10/23/07) to be $0.39.

With its current share price of $3.70, this works out to a P/E of 15.7 (for 2007) and 9.5 (for 2008). For a company that is growing so fast, this is really one of the cheapest stocks on the market. Compare these figures to the 2007 P/E of Ctrip (CTRP) (81.6x) and eLong (LONG) (>100x) and you will see what an amazing buying opportunity this is.

Disclosure: Author has a long position in UTVG.OB

[David Randolph]

Thanks for that analysis la-onda

I fully agree with the author, but the market, at least over the short term, doesn't.

UTVG.OB made $0.09 EPS in Q3 2007 so with the acquisitions it recently made I see no less than $0.5 EPS in 2008. And yet the stock closed yesterday at $3.84, down 2.8%. It should close 2008 at $10, if everything goes as expected.

I'm a bit more optimistic in UTVG.OB remaining for a long time in the Main (when compared to CHME.OB) because management said it is actively trying to list on the AMEX or Nasdaq, that should be a great improvement for the stock in terms of investor's confidence.

I'll keep holding UTVG.OB.

[buddjas1]

UTVG is following the same trend as CHID, Hawk Associate's last pump and dump.  I will never touch another one of Hawk's stocks again.  Hawk made CHID look like a great company with growing earnings, solid acquisitions, and the possibility of AMEX listing.  Now CHID is at 15 cents, no earnings, and the acquisitions were a fraud. 

[terainvestment]

thanks for the good news...we need it...

[buddjas1]

No offense; I own UTVG too.

[tokyopua]

China just ordered like 110 jets from airbus, gotta figure they are expecting some Chinese people to be doing some traveling lol, gotta be good for this stock longer term.

Nice doji today, Im thinking of getting in....

[David Randolph]

Chinese stocks went from loved to hatred over the last couple of weeks and I believe that's the main explanation to why UTVG.OB is down so much. Also management said the past quarter was the strongest from a seasonal standpoint.

It's hard to face the fact that I'm losing 46% in this stock, and this in just about a couple of weeks. I don't know if it serves of any consolation, but the people who bought at the April highs were also losing 56% one month later, and yet they were winning 60% six months later.



So, will I be winning 60% six months from now?

I don't know, but given this stock's volatile history and financial information, it's possible.

I'll keep holding UTVG.OB for the long term.

[David Randolph]

I've been studying UTVG's business and various subsidiaries at the company's website.

I also note that the company earned 9 cents per share in Q3 2007, which annualized gives me $0.36 EPS. But, these results still didn't count with the company's latest two acquisitions, which were made in Q4:

• Universal Travel Group Signs Agreement to Acquire 90% of Tianjin Golden Dragon International Travel Service Company
PR Newswire (Wed, Oct 17)

• Universal Travel Group Closes Acquisition of Foshan Overseas International Travel Service Co. Ltd.
PR Newswire (Mon, Oct 29)

Because both these companies are profitable (according to the company's information) I would expect them to add up to the 4th quarter earnings of UTVG.OB. Say UTVG.OB will earn $0.12 EPS in Q4 2007 and that would mean $0.48 annualized.

A company growing EPS this fast should be awarded at least a p/e of 15, so UTVG.OB should be trading at $7.2, say, in Q1 2008. I believe this isn't just possible but likely and I'll continue holding UTVG.OB for the long term.

[buddjas1]

http://www.businesswire.com/portal/site/home/index.jsp?epi-content=NEWS_VIEW_POPUP_TYPE&newsId=20071203005730&ndmHsc=v2*A1196686800000*B1196720803000*DgroupByDate*J1*N1000837&newsLang=en&beanID=202776713&viewID=news_view_popup

Universal Travel Group To Restate Previously Issued Q3 '07 Financial Statements

"Revenues for Shanghai Lanbao in the quarter ended September 30, 2007 as restated were $916,467 compared to the $8,453,949 previously reported for the period. Restated revenues of Universal Travel Group for the period were $12,813,942 compared to the $20,351,424 previously reported. Significantly, gross profit and net income are not affected by the change in reporting methodology and remain $4,505,579 and $3,066,475 for the third quarter of 2007."

They were only wrong by about 90%.  Now we know the reason for the retrace.  I hate being the last to know.

[la-onda]

additionally:   
As a result of the restatement, management is adjusting its fiscal 2007 guidance, which now reflects the recent closing of both the Foshan and Tianjin acquisitions in the fourth quarter. Fiscal 2007 revenue is expected to come in between $44 million and $45 million, an increase of 340% to 350% from $10.01 million reported in fiscal 2006. This guidance is up from the previously issued range of $35 million to $36 million reported in August 2007 for FY'07. Net income for fiscal 2007 is now expected to be in the range of $8.5 million to $8.8 million, or $0.23 to $0.24 earnings per share, an increase of 233% to 245% from $2.55 million reported in fiscal year 2006. This is an increase from the range of $8.2 million and $8.5 million previously announced for FY'07 in August 2007.

Universal Travel Group Chairwoman and CEO, Jiangping Jiang, stated, "We remain committed to growing our company for the long-term and I continue to be encouraged by the numerous opportunities we see in the near future as well as the performance of our subsidiaries. The restatement will not in any way impact our ability to continue serving our customers and the Chinese travel market successfully."

Universal Travel Group plans to restate its third quarter financial statements and file them with the SEC today. The nature of the accounting adjustment and the effect on the financial statements and earnings per share for the relevant period will be discussed in the Amendment.

The company also announced that as of today, the current CFO, Xin Zhang will be re-assigned to another position in the general staff of the finance department.

Until the company files the restated financial statements with the SEC, investors and other users of the company's SEC filings should not rely on the company's third quarter 2007 financial statements or any communications relating to such periods.

[David Randolph]

They were only wrong by about 90%.  Now we know the reason for the retrace.  I hate being the last to know.

I don't think it matters. What's the meaning of revenues? Just EPS matters and that was unchanged at $0.09 in Q3 2007. Revenue declined but profit margins rose. Furthermore they increased guidance for the full year.

I don't think this news should have any impact on UTVG's share price.

[David Randolph]

I remember that when UTVG issued its first press release about Shangai Lanbao acquisition that this company had a very high net profit margin:

«Shanghai Lanbao, had unaudited revenues of $1.3 million and a net income of $770,707 for the first six months of 2007.»

Then when they reported Q3 Shanghai Lanbao appeared as a low margin business:

«In Q3 FY'07, Xi'an Golden Net and Shanghai Lanbao reported $4.5 million and $8.5 million in revenue respectively, or approximately 22% and 42%, respectively, of overall company sales.»

Now they came back to the original accounting method. I actually prefer the business this way ... better to have a high margin than high revenue numbers, the market likes it better that way.

Anyway, UTVG may go down today due to the headline, but I believe nothing has changed in the company's investment story.

[buddjas1]

You may not be concerned, but there are two huge problems here.  (1) We cannot trust the accounting; and (2) There was a pre-public release of the information.  I had little trust in this story before because of Hawk Associates and the PR was the last straw.