Talk of deals in the making to drop ship the herbs for other sales outlets on Raging Bull. This could be big!
Here is a recap of what I like about this stock and why I think it will be a good investment - mid term. The links at the end to news releases, are a must read!!! Rome wasn't built in a day. I work for the largest manufacturer in the world, and let me tell you with unlimited resources things don't always go smoothly, Madera's progress has been amazing.
Madera is greatly undervalued!!!! Their main problem is that they haven't filed their 10ksb yet, but they did the same thing last year and everything was fine. Indications are that they will file shortly, IHO, and others have kept in contact with the auditors, who seemed impressed with the operation.
This is a SEC reporting(although admittedly late again), profitable company with low debt and extensive assets that are conservatively valued at $.41 a share book value.
Each $15 you spend in stock is backed by an acre of land at these prices!!
Their main product is lumber, thus the catchy symbol: WOOD. Their logs are ecologically harvested, on their land in Brazil and Peru, and also bought from other suppliers. The logs are made into lumber at the company owned Saw Mill and then shipped to the US and Caribbean and sold in US $'s. Recently, log prices tripled in Brazil making Madera's holding and inventory worth that much more!
Lumber is in demand, and from recent articles, the demand is growing. Lumber does not become obsolete. Everyone uses it, and people actually regard finished lumber as beautiful. It is held in high regard as a building and decorative material.
The majority of Madera's assets are 708,000 acres of LAND in Brazil that has been conservatively carried on the books at less than $30 an acre. This is a land area larger than Rhode Island. Over 1100 sq miles!! If it was a square, it would be 33 miles on a side.
When referring to this land in the last annual 10ksb (Nov. 6, 1998), they stated that "It is reasonably possible that a change in the estimate (of the Brazilian 708k acres) will occur in the near term"
In January, they put up 3/4 of this land, that they don't need for logging, for sale at $180 an acre. $96,000,000 asking price.
They also have 75,000 acres in Peru that will be theirs free and clear after a $424,000 payment this year.This is 117 sq. miles. A square 10.8 miles on a side. They have been carrying it on the books as $1.5 million in assets and a $424k liability until the last payment. As before, they stated that "It is reasonably possible that a change in the estimate will occur in the near term." A bit more fore shadowing? A sale of this land at the same asking price would bring an additional $13,500,000.
The management of this company has many plans and the land sale will facilitate many of them.
They have also started to open a web site that will sell Amazonian Herbs, remedies, food supplements( they have had a delay as they work to meet the new federal guidelines on supplement labeling vm.cfsan.fda.gov ), and native arts and crafts from the Indians that reside around their land. Many think this is going to be a large revenue producer in the coming years. Natural products are a multi-billion $$ industry, and direct from the Amazon, on the internet, does have a ring to it. It had been delayed a few times, but they are now (since December) delivering retail herbs from their secured web site. With the announcement of purchasing a lab to produce these products on their own, it becomes clear that there is much more potential here.
The company has all along delivered bulk, wholesale shipment of these herbs. Harvesting the product on their own lands, processing it in their own lab, and marketing it themselves will be very profitable. It has been reported that they are looking for new outlets for the product.
The shares are selling at an 9 PE right now on $.014 earnings as reported on 7/2/99 ("the earnings for fiscal 1999 were $1,239,000, or $0.014 per share") in there ntn 10k filing (notification of late filing).
When the land is sold, it will greatly effect the fundamentals. Taking 20% off the asking price and deducting realtor's fees and Capital gains taxes, I expect the company to clear $60 million on the deal. Add $38 million that the remaining land in Brazil and Peru( 251,000 acres, 392 sq, miles, a square 19.8 miles on a side!) should be worth, and $10 million for the sawmill, inventory, and other assets and we see the company's assets at $ 108 million. $1.33 BOOK VALUE, $.74 OF IT CASH.
LONG TERM, the company has said that it is going to buy two Saw Mills, a plywood manufacturing plant, and a plant to make furniture parts. This in my opinion will increase earnings 6x. Regular shipping schedules have been a bottle neck for the company, which they feel will smooth out as production increases, allowing a regular schedule, in my opinion, will account for another 2x earnings totaling between the plants and shipping, a 12X INCREASE IN EARNINGS in the near term. The herbal supplement business will add greatly to this number in the coming times.
You can look at their Ratios compared to the rest of their industry at: yahoo.marketguide.com And decide what they look like to others in their industry and what the 12x earnings would mean if you put a realistic PE of 20 to 30 on this stock.
Look what the share price would be NOW with a 20 to 30 PE on $.014 earnings. Thats right, $.28 to $.42 -- equal to conservative book value!!!
You can see their SEC filings at
freeedgar.com
Web and lab news:
www3.techstocks.com
the web products:
www3.techstocks.com
www3.techstocks.com
land deal:
www3.techstocks.com
www3.techstocks.com
earning projections for this 10k due June 30 (but as last year late):
www3.techstocks.com
Last but not least is Kirbygo's post on why his investment group bought wood. A must see if you haven't read it!
ragingbull.com
Dave
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