Rodobo Intl (PINK:RDBO)

Dutch, in respone to your message…We took a look at the RDBO transaction and without input from the company we can’t really see how this will help shareholders in the short run.

It looks like RDBO bought three companies:

EWENKEQI BEIXUE DAIRY CO., LTD
HULUNBEIER BEIXUE DAIRY CO., LTD.
HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY

The CEO had 51% interest in Ewenkeqi BEIXUE DAIRY CO., LTD and Hulunbeier Dairy.

EWENKEQI BEIXUE DAIRY CO., LTD

Purchased for $73,236 and 800,000 shares of stock

Established on April 27, 2005 is engaged in the production, processing, distribution and development of powdered milk products in the PRC.

HULUNBEIER BEIXUE DAIRY CO., LTD.

Purchased for $146,473 and 1,000,000 shares in stock

Established on March 26, 2007, is engaged in the production, processing, distribution and development of powdered milk products in the PRC.

HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY

Purchased for $87,884 and 8,800,000 shares in stock

Established on February 4, 2002, is engaged in the production, processing, distribution and development of powdered milk products in the PRC.

In addition to the shares issued above:

"In connection with the Acquisitions, on February 5, 2010, the Company entered into Securities Purchase Agreements with three British Virgin Islands companies: August Glory Limited, Fame Ever Limited, and Fortune Fame International Limited, which, as designees of the former shareholders of Ewenkeqi Beixue, Hulunbeier Beixue and Hulunbeier Hailaer Beixue, would be issued 1,250,000 shares of Common Stock, 3,050,000 shares of Common Stock, and 6,300,000 shares of Common Stock and 2,000,000 shares of Series A Preferred Stock, respectively, as consideration for the Acquisitions."

We are not sure what the relationship these firms have to each other. We noticed that all of EWENKEQI BEIXUE DAIRY revenues went to HULUNBEIER BEIXUE DAIRY. Both have minimal revenues and profits with none in the fourth quarter of 2009. Why are you diluting 11% (800 K + 1 M shares) for two firms that essentially have no operations?

Also, regarding Ewenkeqi:

“The Company has ceased production since March 2009”

HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY seems like the meet and potatoes of the transaction. Interestingly, its 2009 revenues only grew 16% while net income grew 25%. RDBO 2009 net income was $6.8 M. So, basically RDBO increased its share count by over 60% for a 30% bump in net income. Furthermore, margins of Hunlunbeier are much less than RDBO 2009 figure of 20%. What we see is a related party transaction that put money in the CEO�s pocket, albeit a possible exaggeration since the company has really not communicated on this transaction in a press release. We do know that HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY is in 20 provinces. So, maybe this acquisition increases province coverage for RDBO’s current product line.

RDBO finally sifted through its dilution issues from its original reverse merger transaction and now has to deal with it again. The company has to increase earnings by at least 60% to attain just zero EPS growth. This is a bit disparaging being that the company's first quarter EPS growth was already flat when compared to the well-performing ChinaHybrid stocks.

We need more clarification on how these acquisitions will increase the company's growth rate. Maybe they addressed it in their recent investor road show presentations, hinting that and growth will take off? We are also curious if the company is going to raise more capital to support the CEO ‘pet” projects of Ewenkeqi and Hulunbeier Dairy.

The GeoTeam is speculating that RDBO is taking moves to up list its stock from the Bulletin Board"

Rodobo announced the election of Mr. Zhiqiang E to the Company's board of directors. Mr. E is the first independent director of the Company.

Mr. E's extensive experience in China's dairy business will add great value to our board and demonstrate our continued effort to improve our corporate governance," stated Mr. Wang.

Source: PR Newswire (November 17, 2009)