j,
If you'll remember, I questioned currency devaluation as part of my call to Mr. Lau. They keep cash in $US and all sales are based on $US or Deutschmark. They only convert to $US to $HK to pay HK expenses, and to Rmb for payroll and other expenses in China. Most other expenses (raw material. etc.) are in $US. Devaluation would have minimal effect on reported earnings, on expenses, on entire operation.
I believe they will not allow the $HK to be devalued near term, but will let it slowly slide down if the HK economy continues weak, or if China sees they will not get the targeted $140B export/import excess. At no time do I expect a sudden devaluation like China did with the Rmb a few years ago.
Earnings - I posted $3.2M revs earlier for 4Q and see no reason to change it. Dilution may increase to 5.6M. Full dilution on my projected $13.2M earnings for the year would result in $2.35. It would be reported closer to $2.45 on average (pro forma?) dilution.
I haven't really put much thought in the 2Q, but a quick guess puts revs at 5% over 3Q and similar margins. At higher dilution, 75-80 cents for the Q. Similar numbers for 2Q, If the Mita deal gets approved, and there's no reason to think it won't, the 3rd and 4th Qs should show major growth. I had projected $3.00 before I knew about the Mita contract. Now thinking $3.50 is possible.
Then again, I've been too low on the last 4Qs.... I wish!
For what it's worth,
Ron
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