A little more on FRAUDULENT THOMAS HEYSEK THE RAGINGBULL RAY DIRKS MESSAGE BOARD ANALYST. TOMS DAY WILL COME SOON.
Great White Marine Recreation (JAWS) Message List Raging Portfolios - Track your stocks here
By: roger_35768 $$$
Reply To: None Thursday, 18 Mar 1999 at 7:18 PM EST
Post # of 1108
Analyst report on JAWS posted by nutstoo on Yahoo board.
I talked to an analyst this morning that is doing a piece on Jaws for his company's internal clients. He is well known so others usually follow his analysis. This was not paid for by GW or anyone. He sent me the article and told me that there was leakage to the outside and that a well know market maker was already "talking down" JAWS big time. This lends strong support that there remains a large short interest in Jaws. Here is the report:
Initiating Research Coverage: Strong Buy
Great White Marine & Recreation (OTC BB: JAWS) March 18, 1999
Contact: Tom Heysek @ 212-339-2035
Recent Price: $2.25
52 Week High-Low: 4.50 - 0.71
Shares Outstg: 17.9 million (fully diluted) Insiders Own: 55%
Market Cap: $40.3 million Institutions Own: 21%
Net Income Book Market Cap To:
Sales Amt Mgn EPS* P/E Value* Sales BVPS
(mm) (mm) (PS)
1997 $14.3 $1.7 12% $0.29 8 x $0.33 3 x 7 x
1998 25.6 3.3 13% 0.26 9 x 0.51 2 x 4 x
1999 (e) 40.0 5.5 14% 0.30 8 x 0.82 1 x 3 x
2000 (e) 60.0 9.0 15% 0.50 5 x 1.32 <1 x 2 x
2001 (e) 90.0 14.0 16% 0.80 3 x 2.10 <1 x 1 x
* based upon fully diluted shares
Net
Growth Rates: Sales Income EPS BVPS
1998/1997 79% 94% -10% 55%
1999 (e)/1998 56% 67% 15% 61%
2000 (e)/1999 (e) 50% 64% 67% 61%
2001 (e)/2000 (e) 50% 56% 60% 59%
Summary & Investment Conclusion
Great White Marine & Recreation is an international distributor to a growing dealer network selling marine and land recreational vehicles. Last year was a foundation year for this Company during which it became public through a reverse merger, raised $4 million in equity to finance the expansion of its market share, and in the process, almost doubled its Net Income to $3.3 million. Further efforts to raise capital are not anticipated for the foreseeable future (see Balance Sheet Highlights, page 3).
This Company fits squarely within our investment research focus that includes overlooked and under-followed public companies exhibiting above average earnings potential. A target price of $10 per share in twelve months represents a price/earnings multiple of 20 times next year's EPS forecast…an eminently defensible market valuation for a company expected to grow, bottom-line, at no less than 60% per annum.
History & Nature of Business
Great White Marine is an international distributor for marine watercraft and recreational land vehicles (and related parts) through a network of 61 dealerships (vs 38 a year ago) in the southwestern USA, Mexico and Central/South America. The Company began business in 1980 as a Manufacturers' Representative for the sale of boats and outboard motors. By the end of the 1980's, the Company had taken over the sales territory (at the request of manufacturers) of a dozen dealerships that had run into financial problems. During the early 90's, Great White's annual sales increased to the $3 - $5 million ranges.
The enactment of NAFTA (North American Free Trade Act) is the catalyst that triggered what is now a robust fundamental outlook. When NAFTA was enacted into law in 1994, the Company's sales began to increase markedly…moreover; the Company showed a profit that year, its first-ever. Sales continued to grow, eventually tripling by 1997 to almost $15 million. Its dealership network had expanded to 20 by 1997, and quantifiable commercial prospects emerged for the Company to enhance its dealer network even further, thereby garnering market share in this $24 billion industry.
Last year represents the foundation year for the Company. In order to take full advantage of opportunities to garner market share, the Company had to raise equity capital. The absence of an Internet-buzz and the sense of urgency to recapitalize precluded a conventional IPO, so by January 1998, the Company consummated a reverse merger with a public shell, thereby emerging as a public entity itself. By September 1998, the Company had raised an additional $4 million in equity, and at the same time changed the name of the public shell with which it merged to the present corporate moniker.
Last Year's Operating Results, in Review…and Outlook
The Company reported solid achievements in both operating results and balance sheet improvements in 1998. These achievements were all the more impressive given the extensive internal corporate development underway for most of the year to pour the foundation that enabled the Company to capitalize upon its market position in the water-craft and recreational vehicle industry. Sales increased 79% last year to $25.6 million from 1997's $14.3 million in sales. Net profit margins increased to 13% from 12%. Fully diluted EPS, however, declined 10% to $0.26 reflecting an increase in the number of fully diluted shares outstanding at year-end 1998 to 17.9 million (from 5.9 million fully diluted shares outstanding the year before). The Company's book value at 12/31/98 mirrors corporate development activities all year long…increasing by a stunning $7.2 million to $9.1 million. This dollar increment in book value is comprised of Net Income in 1998 of $3.3 million plus almost $4 million in fresh equity.
As illustrated in the Balance Sheet Highlights following, most of the capital raised was used to increase Inventories of products in the dealership pipeline. The Company also used its improved Balance Sheet to obtain floor plan financing from an industry leader, Mercedes-Benz Leasing Mexico. The Company intends to remain debt-free, given that any inventory financing is geared to be self-liquidating within 90 days. Days Sales in Accounts Receivable shrunk to six, down from an already rather thin ten days.
Next year and beyond, Great White Marine appears capable of achieving top-line growth of 50% per annum and EPS growth of 60% per annum. This is largely accomplished by garnering market share (via adding more dealers to its network and increasing share-of-market in those locations where it already has a market presence) and gradually increasing its net profit margins one percentage-point per year at least through 2001.
The fact that we expect the Company to remain Long Term Debt-free bolsters our positive, fundamental point-of-view. This outlook translates into $60 million and $90 million in sales respectively for 2000 and 2001, and EPS of $0.50 and $0.80 for those same respective time frames.
Balance Sheet Highlights (Amounts in Thousands)
12/31/97, 12/31/98
Cash $1,250, $2,732
Acct.’s Receivable $409, $419
Inventory $2,204, $482
Total Current Assets $1,879, $7,633
Notes Payable Bks $245, $100
Other Current Liab's $42, $136
Total Current Liab's $287, $236
Net Working Capital $1,592, $ 7,397
Fixed Assets, net $198, $673
Deposits & Other Assets $160, $1,064
Total Net Assets $1,950, $9,134
Represented By:
Long Term Debt $0, $0
Shareholders' Equity $1,950, $9,134
Total Capitalization $1,950, $9,134
Selected Ratios 1997, 1998
Days Sales in A/R 10, 6
Return on Equity 87%, 36%
Wkg Cap/Total Capital 82%, 81%
Tot Liab's/Total Cap 15%, 3%
Sales/Tot Net Assets $ 7.33, $ 2.80
An Overview of Great White Product Lines
Glaston Boats
Skeeter Boats
Polaris personal watercraft*
Polaris All-Terrain-Vehicles (ATV's)*
Fisher Boats
Pursuit Boats
Chaparral Boats
Sea Pro Boats
Viking Sport Cruisers
Outboard Motors:
· Mercury
· Evinrude
· Johnson
Cruiser Yachts
*also sells related accessories, e.g. helmets, shirts, etc.
The tables below illustrate Great White's Operating Results by quarters for 1998 and our quarterly estimates for 1999. While we are expecting a 68% increase in sales in QI and a 67% increase in net income, EPS of 0.07 is 30% below the year ago QI, reflecting 12 million more shares outstanding (17.9 vs. 5.9 million). EPS comparisons do not turn positive until QIII, however, we expect the Company's stock price to mirror its positive fundamental outlook as early as this summer - - - if not sooner.
Quarterly Results
(amounts in millions)
Net Income Average Shares
Sales % Chg. Amount Mgn. % Chg. EPS* Outstg.
(sorry I couldn't put in the table)
* Note: 1998 EPS is based on 12.8 million average shares outstanding for the full year and therefore the total for the year does not equal the sum of the quarters.
(Voluntary Disclosure: Position- long; ST Rating- strong buy; LT Rating- strong buy)
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