UTVG.OB

[David Randolph]

Good bounce from the 200 days SMA. We're in a battle between the 200 days SMA support and the 50 days SMA resistance. I expect the longer term moving average to win.

Still holding just above the 200 days SMA ... the only reason why the stock doesn't rally right away is the general market weakness, in my view. I'm still confident on the long term fundamentals.

[soxguy]

reminds me of chid.

[buddjas1]

Yup, reminds me of CHID too.  Another Hawk Associates pump and dump.  Mad at myself for buying this one.

[David Randolph]

reminds me of chid.

The only similarity I see is that they're both Chinese and OTCBB stocks. Do you see more similarities? Thanks

Yup, reminds me of CHID too.  Another Hawk Associates pump and dump.  Mad at myself for buying this one.

Ah, ok, buddjas1 has another: both are Hawk Associates clients (CHID.OB doesn't appear as a client anymore, though). If you're mad for buying, why don't you sell buddjas1? Because you're losing? Well, the stock doesn't even know who you are or at what price you bought. The way it will go has nothing to do with your buying price, so if you want to be objective and open to know where it will go, you need to free yourself up for all possibilities, inclusively the possibility of taking a loss, no?

Anyway, I respect your strategy.

Other than these similarities, CHID.OB and UTVG.OB have nothing to do with one another. The first did caps for batteries, the second operates tourism websites. The first saw its business deteriorate rapidly due to competition. The second has been expanding at a torrid pace and will reach $44.5 M in revenue in 2007 (CHID's highest full year revenue was 2006 with $12 M):

«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.»

It appears to me that UTVG.OB trades at 11.3 times 2007 EPS, while net income grew 200% plus from last year. Anyway, it isn't the only stock trading way out of line with fundamentals ...

I have some accounting worries on UTVG.OB, but they're not enough to throw me out of board. I continue to be a believer, despite the, let me see ... 53% loss (look who's judging you buddjas1!!!)

[David Randolph]

We have to move back above $2.75, UTVG.OB is trading at about 5.5 times my 2008 EPS estimate of $0.49.

Unless you think tourism in China will be affected by a US recession ... I don't see why UTVG.OB won't keep growing rapidly. I never thought stocks could get this cheap.

[soxguy]

Watch List Profilesutvg
Universal Travel Group: Hit the road, Jack

Crystal D. Vogt  |  Jan 24, 2008 5:22pm EST  |  User Rating N/A

Universal Travel Group (OTCBB: UTVG)
New York, N.Y.
http://www.chutg.com/

52-week low / high: $0.51 / $5.72
Shares Outstanding: 35.7 million
Market Capitalization: 96.7 million

Gone are the days when going on vacation meant the obligatory trip to visit your obnoxious in-laws in Hoboken. For the adventurous spirits traveling to, from, or in China, Universal Travel Group (OTCBB: UTVG) is the new kid on the tourism-industry block.

The small cap serves domestic and international business and leisure jetsetters by providing an array of travel services that include airline tickets, hotel and restaurant reservations, packaged tours and air cargo services. While Universal Travel has eight company-owned reservation office locations, 103 franchised locations and a call center facility, it is headquartered in New York City, after recently relocating from Los Angeles, Calif.

Through its November 2006 alliance with TravelSky, a leading provider of IT solutions for China's air travel and tourism industries, Universal Travel has secured access to more than 3,000 domestic and international hotel booking services. Couple that with the fact that the company has partnerships with British Airways, Virgin Atlantic, Air France, Swiss International Air Lines (formerly Swissair), Iberia (Spain's national airline), Cathay Pacific and others, and travel-savvy traders are left with destination: invest.

For the third quarter ended Sept. 30, 2007, Universal Travel reported record revenue of $20.4 million for the third quarter, an increase of approximately 1,252% from $1.5 million for the comparable quarter in fiscal year 2006 and 190% sequentially from the second quarter of 2007. Net income for the quarter was $3.1 million, or $0.09 earnings per share, up about 219% from $962,633 in Q3 FY06.

For those uncertain about the long term, the China travel boom is deep rooted. Of all the reasons for the travel bull market, the forthcoming 2008 Beijing Olympics and 2010 World Expo in Shanghai are two high-profile events that will surely add a spark to the domestic and international travel business in the Middle Kingdom.

While the air travel market in China has seen exponential growth, increasing by three million air travelers per year since 1980, according to Martin Craigs, president of the industry lobby group Aerospace Forum Asia, by 2025, China's current 187 million flyers will swell to a mind-boggling 780 million. (Between now and 2010, China's online travel business is expected to surge at least 70% annually.)

Now may be the time to pack your bags and invest in Universal Travel. The outcome could provide a nice respite from hearing about your mother-in-law's ever-recurring bunions

Getting some notice today because of this perhaps?

[David Randolph]

Getting some notice today because of this perhaps?

Maybe that was it soxguy, that article is a nice summary of UTVG's investment story.

Let me copy/past the following paragraphs:

«The small cap serves domestic and international business and leisure jetsetters by providing an array of travel services that include airline tickets, hotel and restaurant reservations, packaged tours and air cargo services. While Universal Travel has eight company-owned reservation office locations, 103 franchised locations and a call center facility, it is headquartered in New York City, after recently relocating from Los Angeles, Calif.

Through its November 2006 alliance with TravelSky, a leading provider of IT solutions for China's air travel and tourism industries, Universal Travel has secured access to more than 3,000 domestic and international hotel booking services. Couple that with the fact that the company has partnerships with British Airways, Virgin Atlantic, Air France, Swiss International Air Lines (formerly Swissair), Iberia (Spain's national airline), Cathay Pacific and others, and travel-savvy traders are left with destination: invest.

For those uncertain about the long term, the China travel boom is deep rooted. Of all the reasons for the travel bull market, the forthcoming 2008 Beijing Olympics and 2010 World Expo in Shanghai are two high-profile events that will surely add a spark to the domestic and international travel business in the Middle Kingdom.

While the air travel market in China has seen exponential growth, increasing by three million air travelers per year since 1980, according to Martin Craigs, president of the industry lobby group Aerospace Forum Asia, by 2025, China's current 187 million flyers will swell to a mind-boggling 780 million. (Between now and 2010, China's online travel business is expected to surge at least 70% annually.)»

This is very interesting information and some things are new to me, like the company having 103 franchised locations. Also that estimate of 70% CAGR expected for China's online travel business. So thanks a lot and applaud soxguy

I've extrapolated UTVG's various businesses growth rates and net profit margins from 2007 into 2008 and got a $0.49 EPS estimate, up from $0.23 - $0.24 EPS in 2007. This would represent a 108% jump in EPS and yet ... the trailing p/e multiple is 12.2. And if you use my estimate and consider the forward p/e multiple, then it is just 5.9.

These metrics probably make UTVG not just one of the fastest growing companies in the World, but also one of the cheapest

The future will certainly be interesting, because something has to give: there's something wrong with the company or else its stock price will have to rise several fold to value UTVG correctly.

For now we're back above $2.75 and I'll keep the faith!

[David Randolph]

I don't have the link here but I've read somewhere that the ultra-bear Jim Rogers is investing in China (probably this isn't new to you), particularly in the Chinese tourism sector.

Indeed, if there's a sector that is completely uncorrelated with the US economy and consumption is tourism in China, which depends on local demand. Since the Chinese save between 40 to 50% of their income, they have the cash and the desire to travel more.

The only problem is that UTVG is an OTCBB traded stock, with all the issues and tricks that may carry. But so far I haven't seen anything to complain.

The stock had a big correction but it has been holding better than the general market lately. Maybe investors looking for bargains and uncorrelated assets are finding UTVG attractive.

I just love it and will keep holding the stock for the long term.

[soxguy]

The market doesn't like this.
       

Press Release Source: Universal Travel Group


Universal Travel Group Announces $3.5 Million Financing; Unwinding of Tianjin Golden Dragon Acquisition and Revision of 2007 Guidance
Thursday February 7, 11:49 am ET


NEW YORK & SHENZHEN, China--(BUSINESS WIRE)--Universal Travel Group (OTCBB:UTVG - News), a fast growing travel services provider in China specializing in packaged tours, air ticketing, hotel reservation and air cargo transportation, today announced it has signed an agreement for $3.5 million in financing from three Chinese financial institutions in exchange for 1,301,481 shares of Universal Travel common stock at a price of $2.70 per share. The proceeds will be used exclusively to reduce debt from past acquisitions. The funds are being paid in three installments. The first installment of $600,000 was paid upon execution of the agreement. The second installment of $1.4 million is to be paid no later than February 28, 2008 and the balance, $1.5 million, is to be paid no later than ten days after the filing of the company's 2007 annual report. The company is under no obligation to register the shares on behalf of the purchasers.
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The company also announced that it is in the process of unwinding the previously announced acquisition of 90% of the outstanding capital stock of Tianjin Golden Dragon. Universal Travel Group said information has come to its attention since the acquisition was announced that indicates the value of Tianjin Golden Dragon is significantly below the original purchase price of $7,889,000. Universal Travel and Tianjin Golden Dragon have agreed to unwind the acquisition. As a result of this development, management is marginally lowering its previously issued fiscal 2007 financial guidance. Revenue is now 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 now 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. The company plans to issue its fiscal 2007 operating results by the end of March.

Universal Travel Group's Chairwoman and CEO Jiangping Jiang said, "While we are disappointed that the acquisition of Tianjin Golden Dragon ultimately did not work out, it is incumbent upon us on behalf of our shareholders to evaluate acquisition opportunities that not only best fit our needs as an evolving travel services provider, but appropriately reflect a reasonable and fair purchase price based on the target company's financial standing and outlook. Upon further due diligence, we determined that the operations of Tianjin Golden Dragon did not meet our parameters and the acquisition of the company was not in the best interest of shareholders. We will continue to judiciously evaluate acquisition candidates in an effort to expand our market share across strategic geographic locations within China.

Jiang continued, "For fiscal 2008, our focus will primarily be on packaged tours and e-commerce as a way to accelerate the growth of our air ticketing and hotel reservation businesses, while enhancing overall industry credibility and brand recognition. As we have noted repeatedly in the past, we continue to view this summer's Beijing Olympics as a strong catalyst for Universal Travel Group's performance in the intermediate-term and through the end of the year."

[David Randolph]

The market doesn't like this.

Yes, down 8.3% as I write

The news isn't positive, it is negative, but not significant for UTVG's long term investment story.

I actually prefer that they're being honest with shareholders and disclosing these bad news (they could sell the shares and show the increase in the # shares outstanding just in the 10-Q). I think it adds to their credibility.

But I'll make a more complete analysis after the close, not a reason to sell UTVG.OB here.

[buddjas1]

Remind anyone of CHID and the Sono acquisition? 

[berloga]

Need to go down to below $1 to match up CHID. I think that the best thing is to capitalize on explosiveness of such Chinese stocks, not hold them and hope. CIMT is a different story. I believe Israeli businesses are more mature and honest in overall.

[David Randolph]

I think that the best thing is to capitalize on explosiveness of such Chinese stocks, not hold them and hope.

I'm not hoping. I base my holding decision on the fundamentals of the company.

Moreover, if we think of companies instead of stocks, each one is unique.

CIMT is a different story. I believe Israeli businesses are more mature and honest in overall.

I agree.

Now concerning yesterday's news:

• Universal Travel Group Announces $3.5 Million Financing; Unwinding of Tianjin Golden Dragon Acquisition and Revision of 2007 Guidance
Business Wire (Thu 11:49am)

This press release can be divided in three parts:

1) The $3.5 M financing

«... it has signed an agreement for $3.5 million in financing from three Chinese financial institutions in exchange for 1,301,481 shares of Universal Travel common stock at a price of $2.70 per share. The proceeds will be used exclusively to reduce debt from past acquisitions. The funds are being paid in three installments. The first installment of $600,000 was paid upon execution of the agreement. The second installment of $1.4 million is to be paid no later than February 28, 2008 and the balance, $1.5 million, is to be paid no later than ten days after the filing of the company's 2007 annual report.»

As I see it, the three banks bought 1,301,481 shares at $2.7 each, totaling a $3.5 M investment. I'm sure the banks analysis was more profound than the one yesterday's sellers below that price did, which was probably none.

The 1,301,481 new shares represent 3.65% dilution, which is nothing special.

2) The Unwinding of Tianjin Golden Dragon Acquisition

«The company also announced that it is in the process of unwinding the previously announced acquisition of 90% of the outstanding capital stock of Tianjin Golden Dragon. Universal Travel Group said information has come to its attention since the acquisition was announced that indicates the value of Tianjin Golden Dragon is significantly below the original purchase price of $7,889,000. Universal Travel and Tianjin Golden Dragon have agreed to unwind the acquisition.»

Here's the initial announcement of that acquisition in December 3, 2007:

• Universal Travel Group Acquires Majority Ownership of Tianjin Golden Dragon
Business Wire (Mon, Dec 3)

Tianjin Golden Dragon is just one of four companies UTVG acquired in the packaged tours segment:

«Universal Travel Group's Chairwoman and CEO Jiangping Jiang said, "The majority holding with Tianjin Golden Dragon cements our commitment to the packaged tour market in China, which was established with our acquisitions of Xi'an Golden Net, Shanghai Lanbao and Foshan Overseas International earlier this year. We are ensuring our company's competitive edge as we continue to integrate all six subsidiaries. We expect that the packaged tours segment will drive the growth of UTVG's air ticketing and hotel reservation segments in the future."»

Unwinding this acquisition will save UTVG $4,289,000 in cash and the issuance of 1,053,800 new shares, almost completely unwinding the dilutive effect of the announced financing.

3) The revision of the 2007 guidance

«As a result of this development, management is marginally lowering its previously issued fiscal 2007 financial guidance. Revenue is now 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 now 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. The company plans to issue its fiscal 2007 operating results by the end of March.»

The prior guidance was:

«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.»

So, the revenue guidance declined $3 M and EPS is now expected to be $0.225 instead of $0.235. One penny less of EPS translated into a $0.43 decline in the share price.

I continue to see UTVG trading at 11.4 times earnings while it grows them by ... a lot!

Due to the unwinding of the Tianjin Golden Dragon Acquisition I'll shave $0.04 EPS of my 2008 estimate, cutting it to $0.45. According to my estimate UTVG is trading at 5.7 times forward earnings and I find this very attractive.

On this basis I'll continue holding UTVG.OB for the long term.

[David Randolph]

The February 7 sell off didn't get any follow through, as I expected.

I wonder if UTVG will provide 2008 guidance when they release 2007 full year results. If they do and their expectations match mine, that would surely put UTVG.OB on fire, since I'm expecting EPS to double in 2008 versus 2007, to about $0.45.

UTVG trades at 6.3 times my 2008 EPS estimate. I forecast 100% growth, driven by acquisitions and the 2008 Beijing Olympics. So there's absolutely no doubt that there's no way I could sell UTVG here. It would be illogical, I would be insane.

I'll just hold.

[soxguy]

Obviously something is really wrong here and everyone knows but us.