Updated DD and information on Target Logistics :
After speaking to the Company and doing some other background research, here is some information on Target Logistics Inc:
Approximate shareholder information (at 16th February 2000)
Ticker: TARG
Exchange: NASD OTC:BB
TARG Web Site: targetlogistics.com
No. shares issued total: 11 million + 4 million preferred = 15 million (fully-diluted)
Shares in float: 3.5 million
Shares held by insiders: approx 10.5 million of the fully-diluted stock (see "major shareholders" link below)
Price (Feb 16th 2000): 70 cents
EPS: 5 cents (annualised based on last quarter's results)
Warrants o/s (TARGW): 5.07 million strike price $6.00 expiry date 28/6/01
Company Name: Target Logistics Inc.
Address: Target Logistics Inc., 112 E 25th St., PO Box 35329, Baltimore, MD 21218
Phone: 410-338-0127
Contact person: Mr. Stuart Hettleman, CEO
Reporting: Quarterly reports and company filings are available at http:.//www.sec.gov
Q2/FY 00: sec.gov
Q1/FY 00: sec.gov
Annual report FY 99: sec.gov
Q3 FY 99: sec.gov
Q2 FY 99: sec.gov
(also see filings for Amertranz for any DD prior to 1999)
Auditors: Arthur Andersen
Background information:
Target was formed from the re-organisation of a company called Amertranz. Amertranz was IPOd to the Nasdaq in July 1996 at an issue price of $6, details are available at the SEC under 'Amertranz'.
In 1998, a re-organisation of Amertranz was carried out to improve the balance sheet. The Amertranz subsidiary Amertranz Worldwide Inc, was closed and Caribbean Air Services was sold in July. Finally, Amertranz started trading as Target Logistics in November 1998.
Summary of the company's business (taken from annual report):
The Company's freight forwarding services involve arranging for the total transport of customers' freight from the shipper's location to the designated recipients, including the preparation of shipping documents and the providing of handling, packing and containerization services. The Company concentrates on cargo shipments weighing more than 50 pounds and generally requiring second-day delivery. The Company also assembles bulk cargo and arranges for insurance. The Company has a network of offices in 29 cities throughout the United States, including exclusive agency relationships in 18 cities. The Company has international freight forwarding operations consisting of strategic relationships in over 20 countries including share ownership in its exclusive agents in China, Hong Kong, Philippines and Singapore.
The current aim of the company is to increase sales in the US market and leverage on their existing systems infrastructure to achieve improved benefit of scale.
The stock price
As at 16th February 2000, the shares were trading at 61c x 70c valuing the company at $6.7 million. According to the balance sheet in the quarterly report, Target has cash assets of $6.5 million and assets of $19.4 million (59 cents and $1.76 per share, respectively based on 11m shares).
Target reached profitability in the quarter ending 12/99 and has recorded an improvement in profitability of 45c/share over the year since 12/98.
D series convertible preferred stock was converted into common stock at a price of 41c on 12th November 1999, increasing the amount of common stock from 9.3m to 11m.
The company objectives
Some of the current company objectives are as follows:
- to increase revenues by hiring quality sales people with existing customer books.
- to improve the profit margins by reducing overhead costs and using existing infrastructure to the full.
- to reduce the cost of transportation as volume increases and contracts are re-negotiated.
How have these fared to-date?
- Revenues have been rising quarter-on-quarter at approx 15-20% compound.
- SGA expenses have been reducing as % of revenue from 43% in Q4/98 to 28% in Q4/99.
What are the prospects?
- On present trends, the Co. should be able to report annualised net income in the region of 46c / share by the end of 2000.
- There is significant further scope for improvement of the cost of transportation. Peer companies
are achieving transportation costs nearer 60% of revenue; Target's costs are currently 71%. If savings of
this type can be achieved, annualised net income could be increased significantly.
- There is potential scope for the stock price to appreciate significantly over the coming year based on
the current trend, as the company becomes more realistically valued at the higher-end of the PE range (18-25)
for this sector, particularly in view of the recent growth rate and profitability.
The management
- Stuart Hettleman President, CEO, Target Logistics Inc. (parent co.)
- Philip Dubato VP, CFO - Target Logistics Inc.
- Christopher Coppersmith President, CEO - Target Logistics Services, California
Stuart Hettleman has been with Amertranz since their IPO in 1996.
(also see link below under major shareholders for some background on the management)
Some major shareholders
See the following link at the SEC:
sec.gov
Comparison with some other freight companies based on last quarter reports:
A comparison between TARG and other companies in the shipping business is shown below; data is taken from the last quarterly reports:
Co. Stock Change Val'n Assets Val'n as Last Q change EPS(1) change P/E Sh OS
Ticker price (12 mo) % assets revenue (12 mo) (12 mo)
CFWY 7-1/2 -48% 160m 278m 58% 605m +6% -$2.08 -533% NM 21.3m
USFC 35-5/8 +13% 987m 530m 186% 588m +24% $4.44 +46% 8 27.7m
EUSA 28-1/8 +4% 832m 206m 404% 167m +36.9% $1.08 +42% 26 29.6m (2)
TARG* 70c -44% 7.7m 19.4m 40% 25m +136% $0.05 +112% (3) 14 11m (4)
*Targ figures are calculated based on 11m shares of common stock (8.46m for 1998 data).
Notes:
(1) EPS is annualised from the latest quarterly results filed by each co. with the SEC.
(2) Eagle USA announced a 3 for 2 stock split in August 1999
(3) Annualised net income for Target improved from (approx) -40c/shr to +5c/shr in the year to 31/12/99.
(4) Current shares outstanding is approx. 11m following conversion of class D preferred stock in November 99.
NM - Not meaningful.
Other useful web links:
Company profile/snapshot:
stockpoint.com
Stock trend graphs:
clearstation.com
SEC filings for Target Logistics:
sec.gov
SEC filings for Amertranz Worldwide:
sec.gov
Please forward any comments or suggestions for improvement to rogue_trader@ragingbull.com (or private mail on SI).
Disclaimer: This information was researched from a variety of sources and is thought to be accurate, however it should not be relied on for investment decisions. Each investor should carry out their own DD prior to investing. |
