ASTV - Asian Star Development, Inc. (OTC BB:ASTV) is a rapidly growing
business with significant investments and operations in Hong Kong and
mainland China.
Incorporated in 1997 as a real estate development concern, ASTV
has recently expanded into the Asian Internet gambling market, as well
as a company that manufactures a complete range of CD and DVD optical
disc products.
ASTV's fundamentals are very strong. It's a profitable company
with a very tight share structure (approximately 1 million share
float). With the Harmonic Hall Optical Disc Co. acquisition, ASTV will
be generating some impressive earnings figures in the current fiscal
year from its fortune 500 clientele.
Asian Star Development's share of the current year's earnings
will be about US $7 million; with an estimated 17 million shares
outstanding (post-acquisition), that's about US $0.41 per share in
earnings for the current year (increasing to US $0.72 in FY 2001 and
2002).
These figures suggest to us that the equity markets are currently
valuing ASTV at about 5x current earnings, and that the company is not
getting any value for either the Internet casino or its extensive real
estate portfolio.
Over the longer term, Asian Star Development will be bringing the
6-12 convenience stores on line (1,000 stores planned for Beijing), as
well as completing development of a number of commercial and
residential real estate projects in China. Collectively, they believe
that these ventures (including AsiaCasino.com) could potentially
generate as much as US $100 million in additional annual revenues.
On this basis, they believe that compared to similar companies,
ASTV's current share price is undervalued, and that the company
represents an attractive investment opportunity.
The Harmonic Hall Acquisition
On July 20th, Asian Star development announced that it had
entered into an agreement to acquire 64% of Harmonic Hall Optical Disc
Co. ("Harmonic Hall") for approximately 3.9 million restricted shares
of ASTV.
Based in Hong Kong (and poised for a major expansion into China
in the very near future), Harmonic Hall is one of the world's leading
manufacturers of optical disc storage media (CD & DVD). The company's
client base includes over 300 active customers, including fortune 500
companies such as Phillps, BASF, ACER, IBM and Microsoft.
Harmonic Hall is projecting net income of US $11 million in the
fiscal year ending June 30, 2000 (US $7 million to ASTV), increasing
to over US $19 million in FY 2001 and 2002 (US $12.2 million per year
for ASTV's accounts).
Why the Shift to CD-RW & DVD is so Important for ASTV &
Harmonic Hall
DVD is fast becoming the most important consumer-electronics
product since the VCR. In the personal computer market, CD-RW (and, in
a few years, DVD-RW) has become very popular, with an estimated 20
million units projected to be sold during 1999, increasing to 100
million units in 2002.
Harmonic Hall is well positioned to be a major player in this
rapidly-growing market, and ASTV management's strategy of developing
new blank recordable media appears to be in line with the emerging
market direction.
Gross profit margins are much greater on DVD's (they cost about
2x as much as CD's to make, but sell for 5x comparable CD-based
products.) More importantly, Harmonic Hall enjoys significant cost
advantages over their competitors, chiefly the result of extremely
high productivity rates. A planned move to expand production into
China during late 1999 and 2000 should produce further cost savings.
Experienced & Capable Management
The company's founder, Chairman, President & CEO, Stephen Chow,
has spent his entire career building and operating successful
companies throughout North America and Asia. He has the experience,
networks and connections to successfully and profitably operate in
China. Chow is very well connected in both Hong Kong and mainland
China, and currently serves as the Advisor of Economic Affairs in the
city of Taishan, Guandong Province, China.
Chow has also been appointed an Honorable Citizen of Shilong,
Dongguan, Guandong Province, China. Other notable community service
positions held by Stephen Chow include: Director of Windsor Builders
Association of Ontario, Canada; and Director, Multi-Cultural Council
of Canada.
Significant Major Shareholder -- New World Development Co., Ltd.
New World Development Co. Ltd. ("New World Development"), a
company with a US $6.5 billion market capitalization that is also a
constituent stock of the Hang Seng index (Hong Kong Stock Exchange),
is one of ASTV's largest shareholders. Asian Star's close ties with
New World Development provide ASTV with invaluable financial and
business credibility in its new and on-going business ventures in Hong
Kong and China.
AsiaCasino.com -- ASTV's On-line Gambling Venture
Asian Star Development recently launched AsiaCasino.com
(http://www.AsiaCasino.com/), an interactive website offering more
than 25 exciting casino games (including Pai Gow, Sic Bo and Caribbean
Poker). The Asia Casino Sportsbook allows betting on all of the major
leagues plus other worldwide sporting events, in addition to providing
Asian residents with access to real time betting lines from Las Vegas.
Asian Star Development's management has not made any projections
of revenues or earnings from its Internet gambling venture. However,
it's a huge potential market, and ASTV is one of the first companies
to target the Asian market. In terms of dollar amounts, DataMonitor
estimate total worldwide Internet gambling revenues of US $811
million this year, increasing to US $1.52 billion in 2000 and US $10.2
billion in 2002.
To put these numbers into perspective, last year Americans spent
about US $600 billion on baseball, movies and Disney products.
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Capital Structure & Trading Range (as of July 21, 1999)
Issued & Outstanding
(post-acquisition): approximately 17 million shares
Est'd Float: approximately 1 million shares
1999 trading Range: US $0.50 (low) by US $3.25 (high)
Current Bid & Ask: US $2.00 by US $2.38
Last Trade (July 21, 1999): US $2.25
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CONTACT: Asian Star Development
Stephen Chow, 011-852-2721-0936
info@AsianStarDev.com
Donald Loucks, 604/878-7600 (Investor Relations)
falconwest@sympatico.ca
USA Office, 415/566-2503
asianstardev.com |
