Dawson trades on the Nasdaq BB under the ticker symbol DWSC. We believe that Dawson Science
Corporation may be a once in a lifetime find as far as undervalued stocks are
concerned. The vast majority of the investment community has never heard of
Dawson but we expect that to change very soon. The exposure that Dawson
should receive over the next five to 30 days should allow the stock to
appreciate significantly from its current levels. Dawson Science Corporation is the most
financially solid Company that The Future Superstock has ever
reviewed. On Friday, May 16th, Dawson Science closed at $3.125 per share.
Before we get into the financials of the Company, we would like to tell you
exactly what Dawson Science does and how this Company came to be. Over the
past several years, Dawson has been seeking solid acquisitions in Asian
markets. In early 1997, Dawson got its big break and landed one of the most
profitable transportation companies in China. Within a few months, the
acquisition was complete and on April 8th, 1997, Dawson Science Corporation
announced that it had acquired 100% of the Shenzhen City Zhenghua Traffic and
Transportation Main Company (Shenzhen Traffic and Transportation). Shenzhen
Traffic and Transportation owns, operates and leases over 1000 taxi cabs and trucks
operating in Southern China. This acquisition by Dawson was signed
and formally finalized at the first consolidated Board meeting on March 27,
1997.
Since the acquisition was announced, the stock has consistently traded in the
$3.00 to $3.75 range on very light volume. Currently the stock is trading
with a bid of $2.875 and an offer of $3.125. The float is estimated at only
554,000 shares and there are currently 13.52 million shares outstanding. Of
the 13.52 million shares outstanding, as of May 1, 1997, 12.13 million shares
were restricted from being sold in the market. We stated earlier that Dawson
has received very little exposure and that we expected that to change within
the next 5 to 30 days. We believe that if Dawson had any exposure
what-so-ever, the stock would be trading significantly higher than the $3.00
price level. We believe that this stock is only available at these extremely
cheap levels due to the Company's lack of exposure. The only public news
source (outside of the wire services) that picked up this acquisition was The
New York Times. (April 9, 1997 issue)
During the past three months there has been one consistent buyer of the
stock: Prudential Securities. Prudential is one of the largest brokerage
houses in the United States and a house-hold name. Every week since January
1, 1997 Prudential has been a buyer of the stock. As of 4-18-97 (the last
available report) Prudential owned 28.7% of the shares in the DTC float.
Outside of Prudential Securities, the majority shareholder is a man by the
name of Mr. Wu (Zhi Jian). Mr. Wu's consolidated group currently owns 85%
(fully diluted) of Dawson Science Corporation's stock. As reported in an April 15,
1997 news release, Mr. Wu is one of the 10 richest men in China and
was given the "Top 10 Entrepreneurs" award by the Chinese government. He is
considered by many to be one of the modern visionaries for China. With the
proven support from Mr. Wu and Prudential Securities, we believe that Dawson
Science Corporation is as solid of a Company as they come. Also note that
Mr. Wu was appointed the President and CEO of Dawson Science Corporation on
March 27, 1997.
Now that we have discussed a little about the Company and the people behind
the Company, we would like to talk about the current financials of Dawson
Science. On May 5th, 1997, Dawson announced that they had hired the
accounting firm of Price Waterhouse to audit the books of Shenzhen Traffic
and Transportation. As you may be aware, Price Waterhouse is one of the Big
6 accounting firms in the United States. This audit is being completed by
Price Waterhouse so that Dawson can report the financials to the SEC
(Security and Exchange Commission) in plans of being listed on the National
Market of NASDAQ or on the New York Stock Exchange. A few days ago, we
learned that Dawson meets all the financial criteria to be listed on The New
York Stock Exchange. Now let's get into the financial results for the year
ending 1996.
For the year ending 1996, Dawson will report, through its new subsidiary, the
following pro forma financial results:
Revenues of $78.0 million
Net Income of $6.2 million
Gross Assets of $99.1 million
Net assets of $76.7 million
Earnings per share of $0.46.
Now you can see why Prudential Securities holds over 28% of the DTC float of
Dawson. The current book value of Dawson is $5.67 per share. Most stocks
trade with a book value of 10 to 12 times. If Dawson's stock traded at a
book value of 10 to 12 times, the stock would currently be trading between
$56 and $68 per share. Why is the stock trading around $3 per share? Again
the answer is that nobody knows about this Company. The Company has not done
any public relations work since the acquisition but that will change. Mr.
Wu, the Company's President and CEO, as well as the majority shareholder,
will be arriving in the United States this Monday, May 19th. Mr. Wu plans on
spending 30 days in the United States visiting major brokerage houses in
support of Dawson's stock and in search of capital for expansion. The
Company plans on raising approximately $50 million for a major expansion program
that will be implemented immediately.
Dawson Science Corporation plans on becoming the largest transportation
Company in China by extending into all 28 provinces. Transportation remains
the number one priority of the Chinese government so Dawson will need the
support of the Chinese government to fuel its expansion. On Thursday, May
15th, Dawson released news that it has obtained permits and licenses to set
up and operate its transportation business in Guangzhou, China. This news
release is extremely significant in that it shows that the Chinese Government
will support and assist Dawson in its expansion throughout China. In the
news release, Dawson said that this one city alone should produce additional
net income of $15 million per year. We expect Dawson to be granted
additional permits and licenses in various provinces in the weeks to come.
It is clear that an economic rebirth of historic proportions is unfolding in
China today. According to the Thursday, May 15, 1997 (front page) Wall
Street Journal article, 1996 foreign investment in the city of Shanghai,
China was $7.4 billion. Such companies as SmithKline Beecham, Hoffmann-La
Roche, Sony and Nike are now doing business there. In addition, General
Motors is building a $1.5 billion automobile factory in a joint venture with
a Chinese group. Mutually beneficial joint ventures with companies from many
nations are being approved by the central government. Chinese leaders are
driven by what the Wall Street Journal calls, "a relentless optimism" which
produces and sustains a highly productive energy level. This bodes well for
the future of Dawson Science Corporation and its shareholders.
We are extremely excited about Dawson Science and The Future Superstock plans
on bringing you several news releases and significant news items on Dawson Science
Corporation over the next 4 weeks. It is our opinion that buying
shares in Dawson Science at its current levels is like buying Intel
Corporation's stock at $10 per share (Intel is currently trading at $155 per
share). With revenues currently at $78 million per year and net income of
$6.2 million, we feel that there is nowhere for the stock to go but up in
price. Dawson has projected that its business will grow by leaps and bounds
during 1997 and this can be evidenced in the recent permits and licenses that
were granted on Thursday. Once fully operational, Dawson expects to add $15
million in net income to its bottom line. With its current net income of
$6.2 million (minimum) that would bring the total net income of Dawson up to
$21.2 million or $1.56 per share. Those numbers would clearly warrant a
$50.00 stock price, if not higher. This week, The Asian Growth Report set an
initial price target of $10 to $12 per share for Dawson Science Corporation.
Once investors learn and the word is spread about Dawson Science
Corporation, we feel that you will see much higher stock prices than the $10
to $12 price that is projected by the Asian Growth Report. |
