Re: July 1998 Profile of UPCA by FNTT
UNIPRIME CAPITAL ACCEPTANCE, INC.
OTC BB: UPCA
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The growth of Wall Street over the past decade has opened the door for many industry groups that, 10 or 20 years ago, might not have been considered suitable candidates as public companies.
An industry group that has recently become a new target for Wall Street money is the automotive dealership. There is definitely a reason that Republic Industries (NYSE: RII) under the direction of the master of consolidation in fragmented industries, Wayne Huezinga, has been paying top dollar for car dealerships all over the country. To date, Republic Industries has acquired approximately 300 of the 25,000 car dealerships in the U.S. today. The reason? For a man with the incredible track record of Huezinga there is only one reason, BIG MONEY! Therefore, if you believe in the theory of follow the leader...
It is common knowledge that well-run car dealerships are enormously profitable businesses. Twenty years ago it was unthinkable for a car dealership to be a public company. The "Big 3" U.S. car manufacturers ruled the roost, and wouldn't allow dealerships into the public arena. The Japanese changed that policy. The Asian manufacturers allowed their dealers to be public companies, forcing Detroit to adopt the same policy.
Car dealerships are no longer the simple sales and service departments of the 50's and 60's. They have become immensely complicated cash flow machines that require constant technology updates in order to compete effectively.
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Corporate Profile
Uniprime Capital Acceptance (OTC BB:UPCA) is a true David and Goliath story. Go to their Corporate Web site at uniprimeinc.com for complete information on this Company.
Uniprime Capital Acceptance began trading as a public company on June 30th of this year, and first traded at $1.25 per share.
We are very excited about the opportunity to profile this company for our Privileged E-Mail Subscribers. We have always believed that the most important factor in the long-term success of a Small or Micro-cap Company is the quality of the management team. Uniprime Capital Acceptance (OTC BB:UPCA) should be successful because the management team is seasoned and extremely experienced.
Uniprime (OTC BB:UPCA) is about to begin acquiring car dealerships throughout the country. They could have a competitive edge given that for the past 25 years they have operated a very successful company called National Dealer Consultants, an automobile dealership consulting firm. NDC is now a part of Uniprime.
If this Company can execute the business plan that they have provided for us, in 1998 they will acquire 3 car dealerships, and earn $1.34 million during this year. This will translate into $.224 in earnings. At a conservative PE ratio of 15, this would put the value of the stock at $3.36, a 330% increase from current levels. This Company gets really exciting in 1999, when they have acquired even more dealerships. They anticipate achieving $21 million in pre-tax earnings with the acquisition of 12 additional dealerships by the end of 1999. This could easily translate to a $17.00 stock.
Why is it possible for this company to actually achieve these numbers? Because of National Dealer Consultants, which is now a part of Uniprime. Over the past 25 years, NDC has been hired by over 400 car dealerships in the US, Canada, and Australia to come into the dealership, evaluate every facet of their business, and put new systems in place to maximize the dealership's profitability. They have been enormously successful with their program.
Under the guidance of Gary Tabb, the President and CEO of Uniprime, NDC has developed a system to maximize the profitability of car dealerships.
After spending several weeks evaluating the current state of a dealership, NDC can completely revamp every aspect of running the business.
Their in-depth training program focuses on Line Sales, Closing the Sale, Running the Desk, the Finance Department, Sub-Par Financing, Advertising and Marketing, Used Car Sales, and General Sales Management.
Their program focuses on the all-important CSI (Customer Satisfaction Index). This is the measure of repeat customers the dealership can generate. This index has proven to be a big key in the long-term success of a car dealership.
The following is an abbreviated list of car dealerships that have recently undergone the NDC Program:
Latham Chysler/Dodge/Jeep: Twin Falls, Idaho
Pierce Dodge: Great Falls, Montana
Parkview Chrysler/Plymouth: Detroit, Michigan
Metro Chrysler/Plymouth: Orlando, Florida
Dana Lincoln/Mercury: Staten Island, NY
Jacobs Nissan: Rapid City, South Dakota
Donnaly Ford: Ottowa, Canada
Toyota By the Bay: San Diego, California
Toyota West: Las Vegas, Nevada
Royal Chrysler/Plymouth: Orlando, Florida
All of those dealerships, plus many more, have used the services of National Dealer Consultants and instituted their "OK Deal" Program. Each dealership experienced a considerable improvement in their business as a result of retaining NDC.
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Expansion Plan
Uniprime (OTC BB:UPCA) plans to now begin acquiring car dealerships for itself. They expect to acquire three (3) dealerships by the end of 1998. Projections for their growth can be found on their corporate web site at uniprimeinc.com
Uniprime (OTC BB:UPCA), after 25 years in the industry, is in the unique position of being able to accurately identify those dealerships which represent the best values available.
This is where the David and Goliath story comes into play. Republic Industries (NYSE: RII) is buying the most profitable dealerships for top dollar with potentially questionable returns on investment. Uniprime (OTC BB:UPCA), on the other hand, is positioning itself to identify and purchase dealerships with the most upside potential that they can acquire at very favorable prices. Once acquired, the NDC division of Uniprime (OTC BB:UPCA) goes in with the "OK Deal" program and maximizes the dealership's potential. Remember that NDC has been consulting car dealerships for 25 years, and has turned around over 400 dealerships in that time. Go to uniprimeinc.com and look at their "Testimonials" section.
Initially, Uniprime (OTC BB:UPCA) intends to finance the purchase of these dealerships through limited partnerships. Uniprime will act as the general partner and own 60% of the dealership. The limited partners will own 40%.
Once Uniprime has achieved a reasonable valuation for its stock, it intends to finance the future purchases of dealerships through a combination of cash and stock. At today's prices, Uniprime feels that the use of its stock for acquisitions would be too dilutive to shareholders.
A second facet of their business, which will be launched in the future, is the highly profitable sub-par lending business. Once Uniprime owns dealerships, it will be able to create a division that will finance car loans for sub-prime borrowers. This has also proven to be a highly profitable business over the years.
Now that we've covered the company, let's move on to our "Big 6" rating system.
***** Excellent
**** Very Good
*** Good
** Average
* Poor
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Management (Five *****)
Management is the whole story here. It is as strong as it gets.
Gary Tabb, the President and CEO heads up the management team. Mr. Tabb's career in the automobile dealership industry spans 35 years. He has owned four successful car dealerships. He is the Co-founder of National Dealer Consultants (NDC), which is now Uniprime. NDC has turned around over 400 dealerships with its "OK Deal" program, widely recognized as the best in the business. He will take his extensive background and expertise in the car dealership business, and use it to the benefit of Uniprime.
Henry Williams, a Vice President of the company, has been in the automobile finance business since 1986. He founded several finance companies that specialized in sub-prime lending, one of the most profitable areas in the business.
Financial Strength and Growth (Two **)
The date, the Company has no debt, but the Company is not overloaded with cash either. Their total focus is now on making the first dealership acquisitions, which we hope to be able to inform you about in a very short time frame.
Market Capitalization (Three ***)
There are currently 5.3 million shares issued and outstanding on this Company. With the stock trading in the neighborhood of $1.00, this puts the value of the Company in the $5.0 Million range. In our opinion, the system developed over the 25 years of running NDC should be worth more than $5.0 Million. Therefore, if they can take the NDC systems they developed, apply it to dealerships they will own, they can create values that will exceed $5.0 Million.
Corporate Exposure (Two **)
To date, this Company has had virtually no corporate exposure of any kind. The stock first began to trade in June of this year with no fanfare. Part of our philosophy at Small Cap Digest is to find undiscovered Micro-cap companies with great potential, and give our subscribers the opportunity to participate ahead of Wall Street. Uniprime (OTC BB:UPCA) fits this description perfectly.
Sex Appeal (Three ***)
Consolidation in fragmented industries is a formula that Wall Street loves. Consumer durable's and large ticket items have been selling like crazy in this strong economy. The "Big 3" auto makers are now trading at all-time highs. While Uniprime (OTC BB:UPCA) might not be as sexy to some as say an Internet or technology sector stock, Wall Street knows what consumers are buying.
Public Float (Five *****)
The effective Float of Uniprime (OTC BB:UPCA) is only 1.2 million shares. A public float this small could lend itself to a high degree of volatility, as there will be a minimal supply to fill demand. This is the type of stock that could trade 30% to 40% valuation swings on high volume days. With the acquisition of several car dealerships, the market could easily place a $20 million value on this Company, which might put this stock in the $4.00 range. Investors could then be forced to fight over the few shares that are in the public market.
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Conclusion
An investment in the common stock of Uniprime (OTC BB:UPCA) is a bet that the management team can execute its business plan. Uniprime has to acquire car dealerships at rock bottom prices, and apply its 35 plus years of expertise towards making those dealerships prosper. When you factor in the 400 dealerships that they have turned around, you have to like the odds of this management team executing their plan. We feel that with a little patience, investors that own Uniprime (OTC BB: UPCA) at today's levels should prosper.
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DISCLAIMER
Small Cap Digest is an independent newsletter committed to providing our readers with factual information on certain public companies. Companies are chosen on the basis of selected financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. All statements and expressions are the sole opinions of the editors of Small Cap Digest and are subject to change without notice. This profile is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The editor, members of the editor's family, and/or entities with which they are affiliated, may own stock in and have other financial dealings with Uniprime Acceptance Corp. SSP Management Corp. has received no compensation for the dissemination of this profile, to date. It is possible that the company may receive some form of compensation in the future although none has been agreed upon. However a Company that could be considered an affiliate has received an option to purchase up to five hundred thousand common shares at ten cents per share for Internet marketing and web development services it has rendered to Uniprime Acceptance Corp. This profile contains forward-looking statements relating to the expected capabilities of the Company mentioned herein.
THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN THE SECURITIES MENTIONED HEREIN IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF SSP MANAGEMENT, CORP.
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