Reasons to buy $RJDG & Real Valuation: (w corre
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Posted On: 01/25/2017 10:06:42 PM
Reasons to buy $RJDG & Real Valuation:
(w corrections to original post)
1. Valuation. First and foremost, on a valuation basis RJDG appears not just to be undervalued. It appears to be enormously undervalued. Just confirmed in the Annual report this morning is $800k in net profit on $3.8m in revenues. This is based on operations and not some sale of assets, etc.., and yet with 165m OS at a price of .008 the market cap is only around $1.3m million. That would be understandable if it has something like $10m in debt but the overall debt is only $1.2m.
2. Future Growth. The future looks bright. The $800k is for the entire year, but $600k of it is for this most recent quarter. And it's not 'one-time only' according to the company: They are projecting over $5m in PROFIT next year.
So what's going on? According to the annual report filed today, "IoSoft Inc. was acquired in June of 2016. IoSoft is a leading edge developer of software that provides accelerated payment processing for; virtual, credit card, and checks all controlled by the provider versus the payer." They are responsible for much of this profitability and growth, according to last week's PR:
The dramatic increase in revenues and net operating profit is attributed primarily to the full launch of the company's IoSoft division's exciting new software platforms in the healthcare sector.
As I understand it, the value of accelerating the payments is very high, and accounts for this growth, and expected growth next year. On June 6, soon after the acquisition the company announced a major agreement: <<the IOSOFT Division of RJD Green Inc. has reached an agreement to provide services and technology platforms for a premier provider of technology services to the healthcare industry nationally. Contracts are scheduled to be executed in June, and services launched in July of this year.....After months of research and development, IOSOFT was chosen to provide "best in class" payment technology to more than fifty TPAs, Health Plans and insurance payers.>>. This appears to have happened.
In the 4th quarter revenues jumped from around 800k to $1.5m, and it appears to be soley due to IOSOFT, with whopping margins since the expenses only increased by $200k. This is why they are able to project 50% margins and huge profits for 2017, IMO.
3. Actual revenues and earnings. Unlike so many that ONLY have projections, RJD Green reported actual earnings. Applying even just a low PE of 10 to the TRAILING 12 months puts the price at 795,000/165m * 10 = .048, which a 600% gain from the current price.
4. Projected revenues and earnings. Projecting over $5m in net profit next year, on revenue over $10m. If the OS goes up to 200m this is still a .025 EPS, which at an unlikely low PE of 10 gives a stock price of .25, or a multiple of 31.25 times a price of .008.
5. Share structure: AS 750m, OS 165m. no preferred shares outstanding. At .008 the market cap here is very small - ie around $1.2m, for a company with the revenue and net income they are reporting. The float was 37m in Feb, but of course will be higher now, having converted about 28m during the year.
6. Convertible Debt: There is convertible debt of $302,000 in this current report. The holder only converted $75,000 last year (into 15m shares), so it appears that the rate of dilution is low. However, it matured in July, 2016 so no guarantees, but with the cash flow they now have they have the resources to pay off or restructure this debt. Cash was over $150,000.
7. Irons in the fire. As mentioned by some other recent posters:
Software division - high growth referenced above
Silex division - home contracting - projecting 15% growth. This historically has made up the revenues, $2.9 million last year, so should not be ignored. It was marginallly profitable too.
Earthlink Environmental Services First, there was a contract this quarter that I didn't see announced: "The IoSoft impact is complimented by the first environmental management contract by the Earthlinc Environmental division". This may be more exciting than one might think. This technology is completed already: From an earlier PR this year: eliminating liquid, solid, and gas waste while returning the water to usable ground water on the farm at cost similar to the handling and transporting expense of current waste disposal.>>. This could be more lucrative than some may think.
Near term Accretive Acquisitions: We are in acquisition discussions at this time. We expect to continue to make acquisitions annually that are within our focus as a holding company that owns and manages growth companies within environmental services, healthcare management services, and construction / industrial specialty contracting. >> In the recent interview the CEO indicated these acquisitions are likely to happen before the end of the year, and will be significant.
CEO Experience: It is worth pointing out that our CEO has had extensive experience in helping companies get acquired. My view is that he saw great opportunity in becoming the acquirer in certain cases, where the potential is high. Here is his info on their website:
<<Mr. Brewer has served as Managing Director of Southbridge Advisory Group since 1990. Southbridge is a boutique management firm with a primary focus in management services and merger / acquisition representation. Ron has experience in a broad spectrum of business disciplines in both public and private sectors; they include: manufacturing & distribution, health services, energy, environmental, technology driven products, real estate, marketing and non- profit entities.
Management services performed by Southbridge are typically company turnaround or growth, and post-acquisition implementations. These services have been performed in both the private and small cap public sector. In turnaround situations Southbridge brings needed changes and implementations into an organization assisting them in meeting defined improvement targets. In growth or post acquisition environments the Company will implement systems and staff, creating an operating unit that meets defined benchmarks of performance. A specialty focus is consolidation of companies, in a synergistic market niche, where Southbridge services utilized include M & A, capital advisory, and management implementation.>>
8. Undiscovered. Nobody seemed to care much up until a week ago because this was a holding company with fairly boring results to far. But now that we have a filing confirming that their acquisition strategy is starting to pay off big time, people are just starting to notice, but there is a long ways to go to get this to a fair valuation IMO.
Bottom line while no OTC stock is risk free, there is a lot to like in RJDG, given it's valuation and - now - this stellar earnings report, along with a number of things on the horizon, not the least of which is more incredible growth in both revenues and profits.
(w corrections to original post)
1. Valuation. First and foremost, on a valuation basis RJDG appears not just to be undervalued. It appears to be enormously undervalued. Just confirmed in the Annual report this morning is $800k in net profit on $3.8m in revenues. This is based on operations and not some sale of assets, etc.., and yet with 165m OS at a price of .008 the market cap is only around $1.3m million. That would be understandable if it has something like $10m in debt but the overall debt is only $1.2m.
2. Future Growth. The future looks bright. The $800k is for the entire year, but $600k of it is for this most recent quarter. And it's not 'one-time only' according to the company: They are projecting over $5m in PROFIT next year.
So what's going on? According to the annual report filed today, "IoSoft Inc. was acquired in June of 2016. IoSoft is a leading edge developer of software that provides accelerated payment processing for; virtual, credit card, and checks all controlled by the provider versus the payer." They are responsible for much of this profitability and growth, according to last week's PR:
The dramatic increase in revenues and net operating profit is attributed primarily to the full launch of the company's IoSoft division's exciting new software platforms in the healthcare sector.
As I understand it, the value of accelerating the payments is very high, and accounts for this growth, and expected growth next year. On June 6, soon after the acquisition the company announced a major agreement: <<the IOSOFT Division of RJD Green Inc. has reached an agreement to provide services and technology platforms for a premier provider of technology services to the healthcare industry nationally. Contracts are scheduled to be executed in June, and services launched in July of this year.....After months of research and development, IOSOFT was chosen to provide "best in class" payment technology to more than fifty TPAs, Health Plans and insurance payers.>>. This appears to have happened.
In the 4th quarter revenues jumped from around 800k to $1.5m, and it appears to be soley due to IOSOFT, with whopping margins since the expenses only increased by $200k. This is why they are able to project 50% margins and huge profits for 2017, IMO.
3. Actual revenues and earnings. Unlike so many that ONLY have projections, RJD Green reported actual earnings. Applying even just a low PE of 10 to the TRAILING 12 months puts the price at 795,000/165m * 10 = .048, which a 600% gain from the current price.
4. Projected revenues and earnings. Projecting over $5m in net profit next year, on revenue over $10m. If the OS goes up to 200m this is still a .025 EPS, which at an unlikely low PE of 10 gives a stock price of .25, or a multiple of 31.25 times a price of .008.
5. Share structure: AS 750m, OS 165m. no preferred shares outstanding. At .008 the market cap here is very small - ie around $1.2m, for a company with the revenue and net income they are reporting. The float was 37m in Feb, but of course will be higher now, having converted about 28m during the year.
6. Convertible Debt: There is convertible debt of $302,000 in this current report. The holder only converted $75,000 last year (into 15m shares), so it appears that the rate of dilution is low. However, it matured in July, 2016 so no guarantees, but with the cash flow they now have they have the resources to pay off or restructure this debt. Cash was over $150,000.
7. Irons in the fire. As mentioned by some other recent posters:
Software division - high growth referenced above
Silex division - home contracting - projecting 15% growth. This historically has made up the revenues, $2.9 million last year, so should not be ignored. It was marginallly profitable too.
Earthlink Environmental Services First, there was a contract this quarter that I didn't see announced: "The IoSoft impact is complimented by the first environmental management contract by the Earthlinc Environmental division". This may be more exciting than one might think. This technology is completed already: From an earlier PR this year: eliminating liquid, solid, and gas waste while returning the water to usable ground water on the farm at cost similar to the handling and transporting expense of current waste disposal.>>. This could be more lucrative than some may think.
Near term Accretive Acquisitions: We are in acquisition discussions at this time. We expect to continue to make acquisitions annually that are within our focus as a holding company that owns and manages growth companies within environmental services, healthcare management services, and construction / industrial specialty contracting. >> In the recent interview the CEO indicated these acquisitions are likely to happen before the end of the year, and will be significant.
CEO Experience: It is worth pointing out that our CEO has had extensive experience in helping companies get acquired. My view is that he saw great opportunity in becoming the acquirer in certain cases, where the potential is high. Here is his info on their website:
<<Mr. Brewer has served as Managing Director of Southbridge Advisory Group since 1990. Southbridge is a boutique management firm with a primary focus in management services and merger / acquisition representation. Ron has experience in a broad spectrum of business disciplines in both public and private sectors; they include: manufacturing & distribution, health services, energy, environmental, technology driven products, real estate, marketing and non- profit entities.
Management services performed by Southbridge are typically company turnaround or growth, and post-acquisition implementations. These services have been performed in both the private and small cap public sector. In turnaround situations Southbridge brings needed changes and implementations into an organization assisting them in meeting defined improvement targets. In growth or post acquisition environments the Company will implement systems and staff, creating an operating unit that meets defined benchmarks of performance. A specialty focus is consolidation of companies, in a synergistic market niche, where Southbridge services utilized include M & A, capital advisory, and management implementation.>>
8. Undiscovered. Nobody seemed to care much up until a week ago because this was a holding company with fairly boring results to far. But now that we have a filing confirming that their acquisition strategy is starting to pay off big time, people are just starting to notice, but there is a long ways to go to get this to a fair valuation IMO.
Bottom line while no OTC stock is risk free, there is a lot to like in RJDG, given it's valuation and - now - this stellar earnings report, along with a number of things on the horizon, not the least of which is more incredible growth in both revenues and profits.
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