China Tracker - Details for Rodobo International (RDBO)

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 Rodobo International
Shares Outstanding (MRQ): 28.27 mill
New Shares / Dilution (TTM): 6.54 mill30.10%
Cash (MRQ): 5.54 mill0.00%
Account Receivables (MRQ): 8.44 mill0.00%
Account Receivables (Q/Q): + 0.19 mill2.28% 
Long-Term Debt (MRQ): 4.74 mill0.00%
Revenue Growth (Q/Q): 0.14% 
Revenue Growth (Y/Y): 67.14%
Net Income Growth (Q/Q): -15.31% 
Net Income Growth (Y/Y): 65.14%
EPS Growth (Y/Y): 26.93%
Net Margin (Q/Q): 14.0% (16.6%)-2.60% 
Net Margin (Y/Y): 14.0% (14.2%)-0.20% 
EPS | P/E (2 MRQ Projection): $0.550.00 
CFPS | P/CF (2 MRQ Projection): $0.590.00 
Price/Sales (2 MRQ Projection): 0.00
Price/Book (MRQ): 0.00 
Auditor: Friedman 
 Forward Projections (Fiscal Year)
EPS | P/E (Estimates updated 2010-10-31): $0.450.00 
 Basic Facts and History (show more)
Reporting Type: U.S. Company (10-K Filings) 
Going Public: Reverse Merger on 2008-09-30 

 Business Outlook

Recent Chain of Events:
2011-12-30 -- Last SEC Filing
2011-08-15 -- Last Quarterly/Annual Report: Q3/FY2011 ended June 30, 2011

(Source: Trading China, 2012-09-30)

Rodobo International today announced that it has adjusted its third quarter 2011 guidance previously announced on May 16, 2011 by reducing the sales revenue from the range of $23 - $26 million to the range of $12 - $14 million, and net income from the range of $3.5 - $3.8 to net loss in the range of $2 - $4 million, due to a delay of the online publicity of the new production license which the Company received in March, 2011.

While most of our products have an average shelf life of 18 to 24 months, we find that consumers are reluctant to buy products that have only 2 to 3 months of their remaining shelf life. As a result, we often pull these products from the shelves, mark them as "obsolete", and in accordance with standard industry practice, sell these products marked as "obsolete" to manufacturers of feedstuff for animals. In accordance with this practice, in May of 2010 we entered into a sales agreement with Harbin Longxin Feedstuff Co. to sell 38 tons of our infant formula milk powder that had been marked as "obsolete". In the sales agreement, Longxin expressly guaranteed that our obsolete milk powder would only be used as feedstuff for animals. All products sold to Longxin were marked "obsolete" by Rodobo, in accordance with our standard procedures.

We have been advised that despite our express instructions and the requirements of the sales agreement, Longxin resold our obsolete products to a third party manufacturer, Inner Mongolia Jiahaili Co., who illegally used the obsolete milk powder to produce food products for human consumption. A food safety authority reviewed this matter and reported it to the local police for further investigation. After investigating, the local police determined that there is no direct link between our company and Jiahaili's illegal activities. While we were unaware at the time that our obsolete products were resold in this manner, we have actively assisted the local police and will continue to do so while the police continue to investigate Jiahaili's activities until the matter is resolved. We intend to continue to vigorously investigate this situation and take any and all actions we deem appropriate to defend and protect Rodobo and its subsidiaries with respect to the circumstances and illegal usage of our products.

The General Administration of Quality Supervision, Inspection and Quarantine of the PRC (AQSIQ) has been made aware of this matter and has conservatively decided to delay our Publicity until the police investigation is closed. This delay in Publicity does not prevent us from utilizing our production license. While we have explained to our customers and distributors that we have received and can utilize our production license, this delay in Publicity has significantly impacted our sales. As a result of this, our production was impacted due to reduction of sales orders.

(Source: PR Newswire, 2011-06-14)

Management feels confident to give its guidance for the third quarter of 2011 for revenue to be in the range of $23 - $26 million and net income to be in the range of $3.5 - $3.8 million.

(Source: PR Newswire, 2011-05-16)

    see all Business Outlook notes

 Analyst Coverage (show less)
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.

 Recent Financings
2010-06-23Private$3.00 mill1.11 mill shares$2.70

 Investor Presentations
2010-09-14 (HTML)   VIEW
2010-07-07 (HTML)   VIEW
2010-05-25 (HTML)   VIEW
2010-03-16 (HTML)   VIEW
READ: Score Cards Explained
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
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