The effective year to year tax rate for the last quarter was reduced from 31 to 15.5% due to tax credits in Hungary based upon Zsolt's comments from the conference call. These credits will be used for approximately two more quarters upon which the rate will effectively return to normal. This contributed very significantly to the net profit picture, but not wholely as gross margins did increase and MV sales increased and carbon fiber sales were flat.
Capcity expansion is almost one year (OK eleven months) behind schedule based upon the initial announcement Jan 96 which said the two Hungarian lines would be operational by the end of the year, Dec. 96. This slid to June/July when asked in March. An now we are in Nov. and they are claiming to be shipping some materials but not how much. They indicate 70% of capacity of all five lines by the end of the second fiscal quarter, four months out.
GE Plastics has let it be known in the industry that they are shopping a large order for milled carbon fiber to which Zoltek and Akzo are in competition. During the conference call, when analysts asked about comments of product quality, Dan replied that that was pure poppy cock and then said the problems were old news. Other sources indicate that the problems may be old news, but they haven't gone away.
Neither myself, nor anyone I know currently has a short position. I was short but have covered and friends have since sold their puts. My current assessment is that the stock is still overvalued but risky as you have too many high rollers playing with recommendations, etc. You don't really know which way it is going to go, hence at these levels, it is a gamble, not an investment. Not that I mind gambling, but I like better odds in my favor.
Regards
Jake |
