GeoBargain & GeoSpecial Review, November 17, 2009

Tuesday, November 17, 2009, 8:45 AM ET -

American Lorain Corp (NYSE AMEX:ALN) Closing Price Nov. 16, 2009: $2.62

Added to the GeoSpecial List on Oct. 16, 2009 at $3.10.
Reached a high of $3.60 on Oct. 19, 2009, an increase of 16% since placement on the list.

We coded American Lorain as a GeoSpecial was after meeting management at the Roth Conference in Miami in October 2009.

American Lorain intends to use a portion of a recent $12 million capital raise to support a planned nationwide commercial campaign promoting its convenience food product line.

We are not sure how to view this news. American Lorain has expressed an interest to expand its convenience food product division due its favorable growth profile. After meeting with management we postulated that the Company would contemplate a capital raise sometime in 2010, hopefully at higher stock prices.

The capital raise was completed at a price of $2.40 (below its book value per share), adding 5 million shares to its diluted shares count with the potential of an additional 2.2 million shares if the stock surpasses $3.70 when related warrants will be in the money. This translates to about a 20% to 30% increase in diluted outstanding shares.

The good news is that American Lorain feels it will begin to realize capital deployment benefits in early 2010. Current 2009 EPS estimates have the company making $0.55. Per our calculations, adjusting for the extra shares yields an EPS figure of approximately $0.47 to $0.50. Furthermore, 2010 estimates would decrease from $0.66 to a potential range of $0.46 to $0.52. Please keep in mind that we do not know the assumptions used in the determination of analyst estimates. The 2010 estimates may not include the benefits of aggressive company expansion efforts. We also need to inquire about analyst outstanding share assumptions. We will keep American Lorain as a GeoSpecial as we attempt to diagnose these developments.

Astrotech Corp (NASDAQ:ASTC) Closing Price Nov. 16, 2009: $1.75

Added to the GeoSpecial List on Oct. 29, 2009 at $2.18.
Reached a high of $2.49 on Nov. 11, 2009, an increase of 14% since placement on the list.

We actually took note of Astrotech on May 13, 2009, but passed on it based on our view that its impressive third quarter results could be an aberration. Well, on September 28, 2009 the Company reported strong fourth quarter results as well, albeit down sequentially from the third quarter. See release.

Astrotech also just reported first quarter results, which although up compared to last year’s quarter, was significantly down on a sequential basis. Although quarterly fluctuations remains an issue with Astrotech, the Company still seems optimistic about the future, giving us reason to continue tracking its story.

We are hoping a strong year end backlog of $25.4 million will bode well for 2010. The Company has indicated that it expects to fill $21.4 million of this backlog in 2010. Using last year as a guide, Astrotech began its 2009 fiscal year with an expected backlog of $18 million and ended up reporting sales of around $32 million. (Please note that this trend has not always existed).

A major concern of ours is the Company’s heavy reliance on space shuttle launches. To address this, it seems that Astrotech is taking initiatives to diversify the applications of its technology. Furthermore, the Company has engaged the investment banking firm Lazard Ltd. for advisement in exploring strategic financial and business alternatives to enhance shareholder value.

“The range of alternatives which may be considered could include strategic acquisitions, a sale of some or all of the Company’s assets or a variety of other possible transactions.”

With a book value of $2.28, investors may look at ASTC as low risk play, especially now that it is exploring strategic alternatives.

Bofi Holding Inc (NASDAQ:BOFI) Closing Price Nov. 16, 2009: $9.90

Added to the GeoSpecial List on November 3, 2009 at $8.40.
Reached a high of $11.49 on Nov. 12, 2009, an increase of 37% since placement on the list.

Bofi, an online banking company, bypassed the global economic crisis by posting solid EPS gains through 2009 and into its fiscal 2010 year. The Company’s stock is selling under its book value per share of $10.48, a fact that is a bit disconcerting given the bank’s conservative nature and stellar long-term track record of EPS growth. See our full article.

Biostar Pharmaceuticals (OTC BB:BSPM) Closing Price Nov. 16, 2009: $3.16

Added to the GeoSpecial List on August 17, 2009 at $3.80.
Has yet to perform

Biostar Pharmaceuticals announced the closing of a $3.6 million equity financing on November 6, 2009. The proceeds will be used to fulfill Biostar’s vertical integration strategy to “manage and control a large portion of its production which includes harvesting, raw material processing, pharmaceutical ingredient synthesizing and finally medicine manufacturing in our current facility.”

The GeoTeam is speculating that the end result should lead to increased sales and margins. The Company also reaffirmed its income from operations make-good targets of $15.9 million for 2009 and $21.1 million for 2010. At a share price of $2.95, the stock is selling at a meager P/E of 5.67 on the GeoTeam’s calculated 2010 fully taxed EPS of $0.52. This is a situation that value investors may find favorable.

CCA Industries Inc. (NYSE AMEX:CAW) Closing Price Nov. 16, 2009: $4.20

Added to the GeoSpecial on the Radar List on Oct. 12, 2009 at $5.20.
Has yet to perform

We are beginning our due diligence on CCA Industries, a company that has shown glimmers of growth in the past. Our goal is to determine if this growth as reached a point of consistency. CCA recently reported a 45% increase in its third quarter EPS to $0.23 and is trading near its book value per share of $4.18.

Amcon Distributing Co (NYSE AMEX:DIT)^a Closing Price Nov. 16, 2009: 70.90

Price at time of mention in “Hidden Clues” article, Nov. 2, 2009: $61.00
Reached a high of $78.81 on Nov 9, 2009, an increase of 29.2% since publication of article.

Amcon Distributing responded well to its strong fiscal 2009 year end financial press release. On November 2, 2009, we highlighted the stock as a potential “sleeper” at $60 per share due to “clues” management had provided investors. Even after its stellar run in its shares to $78.81, they are still trading at a trailing P/E of only 6. We also mentioned Hong Kong Highpower Tech (NYSE AMEX:HPJ) in the same article which also delivered strong financial results on November 12, 2009.

L & L Intl. Holdings (OTC BB:LLFH) Closing Price Nov. 16, 2009 : $5.40

Added to the GeoBargain List on May 19, 2009 at $1.90.
Reached a high of 6.39 on Oct. 14, 2009, an increase of 236% since placement on the list

Orient Paper (OTC BB:ORPN) Closing Price Nov. 16, 2009: $9.10

Added to the GeoSpecial List on May 22, 2009 at $1.68 (1 for 4 split adjusted)
Reached a high of $9.20 on Nov. 16, 2009, an increase of 447% since placement on the list

L & L International and Orient Paper took moves that may indicate near-term up-listings from the Bulletin Board.

LLFH expanded its board of directors, while ORPN executed a 1 for 4 reverse split.

Lotus Pharmaceuticals (OTC BB:LTUS) Closing Price Nov. 16, 2009: $0.90

Added to the GeoSpecial List on Sept. 30, 2009 at $0.84.
Reached a high of $1.12 on Oct. 21, 2009, an increase of 33% since placement on the list

Upon GeoInvesting’s suggestions, Lotus Pharmaceuticals issued a press release clarifying misleading statements contained in its SEC filings regarding its liquidity standing. See release.

Microfluidics Intl Corp (OTC BB:MFLU)^a Closing Price Nov. 16, 2009: $0.86

On November 2, 2009 Microfluidics International, a medical & materials products firm, reported 2009 third quarter results, recording its first profitable quarter in two years. We will continue to track the Microfluidics story, but are not able to provide potential valuation scenarios until we perform further due diligence.

Motorcar Parts America (NASDAQ:MPAA) Closing Price Nov. 16, 2009: $5.28

Added to the GeoBargain on the Radar List on August 18, 2009 at $4.99.
Reached a high of $5.51 on Nov. 4, 2009, an increase of 10% since placement on the list

Motercar, a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications, reported second quarter 2010 EPS of $0.21, easily surpassing analyst estimates of $0.13. Updated analyst estimates have not been provided yet. They had been forecasting $0.51 for the full fiscal 2010 year ending in March. At the very minimum, the new 2010 estimate will likely be $0.59, giving the stock a modest P/E of 8.83. For fiscal 2011, analysts are currently forecasting an EPS of $0.69.

Motercar is an intriguing recession play as it should benefit from consumers delaying new car purchases. Management was bullish on the conference call, indicating that sales may benefit from this trend going forward.

Mod-Pac Corp. (NASDAQ:MPAC)^a Closing Price Nov. 16, 2009: $4.34

Mod-Pac reported strong 2009 third quarter bottom line results on flat sales (EPS $0.29 vs. $0.00), benefitting from an improved product mix and increased penetration to its custom folding carton sales targeted to customers who produce private label products for the consumer staples market.

“Consumers in this economic environment are highly cost conscious and tend to buy more store brands which drives sales for our customers.”

We would like to see stronger top line growth going forward.

Quantum Corp (NYSE:QTM) Closing Price Nov. 16, 2009: $2.60

Added to the GeoSpecial on the Radar List on Nov. 4, 2009 at $2.35.
Reached a high of $2.64 on Nov. 4, 2009, an increase of 11% since placement on the list

After three years of annual and quarterly losses, Quantum Corp, a global technology storage company, has been able to post two consecutive profitable quarters in a row. See note.

Skystar Bio-Pharma Co (NASDAQ:SKBI) Closing Price Nov. 16, 2009: $11.23

Added to the GeoBargain on the Radar List on June 1, 2009 at $4.50. (2 for 1 split adjusted)
Reached a high of $11.49 on June 26, 2009, an increase of 174% since placement on the list

Skystar announced a 2 for 1 forward stock split to be executed after market close on Nov. 16, 2009.

Orchids Paper Products Co. (NYSE AMEX:TIS) Closing Price Nov. 16, 2009: $18.16

Added to the GeoBargain List on February 2, 2009 at $9.78.
Reached a high of $22.98 on Aug 3, 2009, an increase of 135% since placement on the list

We listened to a replay of the Orchids Paper third quarter conference call in which it offered some insight into when its operations may begin to realize benefits from its plant expansion initiatives. See research note.

China MediaExpress Hdg. (NYSE AMEX:TMI) Closing Price Nov. 16, 2009: $11.26

Added to the GeoBargain List on June 25, 2009 at $7.74.
Reached a high of $12.21 on Oct. 23, an increase of 58% since placement on the list

China Media Express released news confirming that it is not in jeopardy of being delisted, as well as news that it repurchased and retired 1.9 million warrants in a private transaction. This shareholder friendly move will reduce potential dilution and give more flexibility in raising capital in the future. See research note.

Sino Agro Food Inc (PINK:SIAF) Closing Price Nov. 16, 2009: $0.83

Added to the GeoSpecial List on October 16, 2009 at $0.98.
Reached a high of $1.08 on Oct 19, 2009, an increase of 10% since placement on the list

Sino Agro Food reported 2009 third quarter financial results. The stock is selling under its book value of $1.04.

Teltronics Inc (OTC BB:TELT)^a Closing Price Nov. 16, 2009: $1.62

Started to track the stock on August 24, 2009 at $0.57.

The GeoTeam finally initiated a position in TELT. We are hoping the company can continue its dramatic earnings turn-around that began in during 2009 first quarter. Thus far it has delivered as evidenced by its stellar financial results reported on November 16, 2009.

General Steel Holdings (NYSE:GSI) Closing Price Nov. 16, 2009: $4.23

Added to the GeoSpecial on the Radar List on November 6, 2009 at $4.46.
Has yet to perform

General Steel reported strong 2009 third quarter results, surpassing EPS estimates. These results can be attributable to the rebound in China’s economy. The Company is selling at a P/E of only 5 on 2010 analyst EPS estimates of $0.89, which are likely conservative.

Yayi Intl Inc (OTC BB:YYIN) Closing Price Nov. 16, 2009: $1.90

Added to the GeoSpecial on the Radar List on Nov. 9, 2009 at $1.50.
Reached a high of $1.90 on Nov 12, 2009, an increase of 27% since placement on the list

Yayi International expanded its goat milk production capacity. The new facility is designed to become the largest goat milk production base in China. The Company won’t benefit from this development until the end of 2010, when its capacity will increase by 400 percent.

We still need to perform due diligence on fully diluted shares outstanding.

Alpha Pro Tech Ltd (NYSE AMEX:APT) Closing Price Nov. 16, 2009 – $5.59

Added to the GeoBargain List on Aug. 18, 2009 at $3.50.
Reached a high of $7.60 Oct. 26, 2009, an increase of 117% since placement on the list

The GeoTeam published an update on Alpha Pro Tech summarizing comments from the third quarter conference call. See research note.

Gc China Turbine Corp (OTC BB:GCHT) Closing Price Nov. 16, 2009 – $3.50

Added to the GeoSpecial List on Oct. 9, 2009 at $1.25.
Reached a high of $4.05 on Nov. 5, 2009, an increase of 280% since placement on the list

China based GCHT, a manufacturer of 2-bladed wind turbines, closes reverser merger transaction, as shares gain momentum. See initial research note.

^aStock has yet to coded as a GeoSpecial or GeoBargain

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