Tongxin Intl (PINK:TXIC)

Rodman & Rensahw on TXIC

Termination of Coverage: Effective immediately, we are terminating coverage on Tongxin International Ltd (Nasdaq: TXIC) due to the restructuring of our coverage universe. We currently have the company under review from a ratings stand point. 

Company Description 

Tongxin International Ltd. (TXIC) is the largest independent and the only integrated supplier of engineered vehicle body structures (EVBS) in China. The company designs, manufactures and sells EVBS for light, medium and heavy duty commercial vehicles. The company also designs, fabricates, and tests stamping dies that are used in the fabrication of vehicle body structures. The company conducts operations through its wholly owned subsidiary Hunan Tongxin Enterprise Co., Ltd. (Hunan Tongxin), with limited exports to Vietnam and Middle East. The company is strategically located in Changsha, one of the main centers of Chinese automotive production, and has regional manufacturing facilities in Dali, Ziyang and Zhucheng. 

Recent Financial Updates 

The most recent update was the company’s preliminary FY09 results and FY10 revenue guidance.In February 2010, the company announced a preliminary unaudited FY09 revenue for $121MM to $124MM, with 4Q09 revenue ranging from $29.5MM ~ $32.5MM. FY2010 revenue guidance was within the range of $150MM ~ $160MM, an approximately 25% growth from FY2009.

Missed Extension Date For Filings

TXIC was unable to file its Audited Consolidated Financial Statements within the extended timeframe of July 15, 2010. Management stated that it was still in the process of obtaining adequate documentation to support and determine the appropriate accounting treatment of certain related-party transactions of approximately $7.7 MM with a related party, Meihua Bus. Meihua Bus was incorporated in July 2007 by the company’s operating subsidiary, Hunan Tongxin Enterprise Co. when Tongxin International attempted to acquire Hunan Tongxin. Hunan Tongxin spun off its bus manufacturing business in order to obtain approval from government for being acquired by Tongxin International.

Valuation

On July 16, 2010, we put our rating under review, mainly due to the unavailability of financial statements from the company for over six months due to auditing related delays. We also removed our financial projections for 2010.

Risk: a) Price volatility in steel prices b) lack of long-term supply contracts, and c) highly competitive nature of the market.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.