China Tracker - Details for Rodobo International (RDBO)


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 Rodobo International
 Analyst Coverage
2010-08-20Rodman & RenshawReiterationMarket Performn/a
 

Low end of F’4Q10 guidance assumes 5% and 10% sequential growth in revenues and net income, respectively. F’4Q10 revenues and net income are expected to be in the range of $20MM-$24MM and $3.0MM-$3.2MM, respectively. As a result of the F’3Q10 EPS miss and management’s outlook, we are lowering our F’4Q10 and F’2011 EPS estimates to $0.44 and $0.46, respectively, from $0.48 and $0.56 previously. Despite sector headwinds given the recent round of health concerns around domestic dairy products, we are standing by our Market Perform rating. RDBO is trading at a relatively compelling 4.7x our FY’11 EPS estimate of $0.46, which have incorporated a slightly deteriorating industry outlook. Additionally, RDBO shares are trading at only a slight premium (1.1x) to book value. Any recovery in the demand outlook for domestic milk powders should lift sector valuations, in our view.

2010-07-30Rodman & RenshawReiterationMarket Performn/a
 

We maintain our Market Perform rating and our full-year FY'10 EPS and FY'11 EPS estimates of $0.48 and $0.56, respectively. However, we are tweaking our F'3Q10 (ending in June 2010) to $0.12 from $0.14 to take account of the anniversary of its high-end infant milk formula (‘Peer'), which drove an outsized 51.2% topline growth to $10.3MM in F'3Q09. In conjunction, we are also tweaking our F'4Q10 estimate to $0.13 from $0.11 previously. At $2.40, RDBO shares are trading at a depressed 5.0x our FY'10 EPS estimate. Other near-term catalysts that may also help drive the stock higher from current levels include 1) Rodobo's F'3Q10 earnings report, which is expected on or before August 15, 2010; 2) participation in the Rodman & Renshaw Annual Global Investment Conference in September 2010 and any potential marketing events later this year; and 3) the stock's potential uplisting to a more visible exchange. Recall that RDBO recently hired English-speaking individuals to strengthen its communication with investors. Longer-term, in light of the fiercely competitive environment, we look forward to continued high growth rates and stabilizing margins for the company's infant and senior milk formulas as proof of their staying power before we consider upgrading RDBO shares.

2010-07-06Rodman & RenshawReiterationMarket Perform$4.50
 

We are assuming coverage of RDBO with a Market Perform / Speculative Risk Rating and a 12-month price target of $4.5, which roughly corresponds to ~9x and ~8x our FY’10 and FY’11 EPS estimates of $0.48 and $0.56, respectively. RDBO has been under-covered by analysts, and paired with the historical lack of marketing by management, has been largely flying under the radar, in our view. However, RDBO is a name to watch for in the dairy space, given that it trades at multiples that are only a fraction of that of its peers – 6.7x and 5.7x our FY’10 and FY’11 EPS estimates, respectively, vs. a lofty 24.6x vs. 19.1x consensus estimates for its Chinese dairy peers. We therefore believe that RDBO shares can potentially be meaningfully undervalued if the company can achieve at least the average ~30% EPS growth expected of its peers in FY’11. Other catalysts this year may include the stock’s uplisting to a more visible exchange and more frequent communication with investors. That said, in light of the fiercely competitive environment, we look forward to continued high growth rates and stable margins for the company’s infant and senior milk formulas as proof of their staying power before we consider upgrading RDBO shares.

2010-01-15Rodman & RenshawReiterationMarket Performn/a
 

While the value proposition is compelling we are somewhat concerned regarding the illiquidity of the shares. In addition to reservations regarding trading liquidity we are discouraged by the company’s inability to better communicate its evolving story with shareholders. The company did not issue a press release, nor did it host a conference call to discuss the quarterly results or outlook; this puts RDBO at a material disadvantage when competing for investor dollars against more mature, investor friendly companies.

RDBO
Food
SCORE
4
UNDER REVIEW
READ: Score Cards Explained
SAFETY/RISK SCORE
HIGH RISK
DETAILS: Safety/Risk Model for RDBO
Current Price:  n/a
F10k Day (2009-12-31): -100.00%$3.00
2009 Close: -100.00%$3.00
2010 Close: -100.00%$2.48
2011 Close: -100.00%$1.72
High (2012-02-29): -100.00%$1.69
Low (2012-07-03): -100.00%$0.07
Exchange:
Market Capitalization: n/a
Total Shares: 28.27 mill
Float: n/a
Avg Volume: n/a
Last Quarter: 2011-03-31
Revenue (MRQ): 25.62 mill
Net Income (MRQ): 3.59 mill
Op. Cash Flow (MRQ): 2.60 mill
all financial data provided without warranty