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Undervalued Dog, Volume 3, No. 10, March 23, 1998
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MediaConcepts, Inc. (OTC BB, MDCE)
Recent Price: $0.20/share
Daily Average Volume: 250 K
97 EPS: $0.03/share*
97 PE:7
Estimated 1998 EPS:$0.47/share
Trailing PE:0.42
Book Value:$3.15/share
Price/Book Value:0.064
Div/Shr: None
Yield: None
52-week Range: $0.06-1.00/share
Outstanding Shares: 22 M
Floating Shares: 8 M**
Profit Margin: 25-30%
1997 revenue: $ 3.5 M*
Estimated 1998 revenue: $ 50 M
SEC filing:Yes
* 10K for 1997 will be released very soon.
** Total floating shares are 11.3 M, but 3.3 M shares, held by the
previous management, can not be traded in the market, because of the
ongoing litigations. These shares are not registered with the SEC
and the previous management members are being sued by the current
management for the illegal issuance of these shares.
MDCE is extremely bullish. Tendencies for prices to advance are
extreme at 95-100% with a short term (3-6 months) upside potential of
$2.00 and a long term (12-24 months) upside potential of $5.00. Buy
under $1.00.
BUSINESS SUMMARY AND CORPORATION BACKGROUND: Through the development
of a new corporate structure, MDCE has the following subsidiaries:
Parthenon films, a theatrical and television production arm, Mindware,
an interactive corporate training and educational component, Pasadena
USA Ltd, and Pasadena International, a line of cosmetics and skin care
products. The company has also acquired a West Hampton sand and
gravel pit with over 1.7 million cubic yards with a lifetime value of
over 480 million dollars.
MDCE, with subsidiaries, produces movies, videocassettes and
television specials from its library of historical and stock film;
rents its stock footage to the video industry; and converts
educational materials into interactive media for home study. MDCE has
obtained the rights to do a movie production of the late Harold
Robbins novel Dr. Dan and the Plates of Gold. MDCE has the right of
first refusal on all of Mr. Robbins novels not yet made into motion
pictures or television productions. Mr. Robbins was one of the best
selling novelists in the world having sold more than 750 million books
in 23 different languages.
In addition to its core business, MDCE recently acquired a Canadian
cosmetic company, Pasadena International Inc.. Pasadena has full
distribution rights in Canada for such highly recognized names as
Sears, K-Mart, and Wal Mart, along with several other major Canadian
chains. In addition to their cosmetic line, Pasadena distributes a
wide range of bath products and other decorative bath related items.
Pasadena had $4 million revenues in 1997. It is expected that
revenues from Pasadena in 1998 will add a minimum of EPS $0.10 per
share to MDCE with gross sales of 10-12 million dollars. MDCE intends
to increase sales by expanding Pasadena into the United States with
some of the same stores for which they are already on an approved list
of cosmetic suppliers in Canada. Generally a company's sales in
Canada represent about one-tenth of the same stores equivalent for the
United States market.
RECENT DEVELOPMENTS AND ANALYSIS: The acquisition of Pasadena is the
first in the efforts of the management to provide a consistent flow of
regular earnings to enhance shareholder value in this company with
solid earnings per share on a regular basis. The management is
looking to increase earnings in MDCE through a few key acquisitions,
which would provide hard assets, and strong growth potential for its
shareholders, and give the company recurring per share earnings with
substantial cash flow. Currently, MDCE is actively working on several
acquisitions and product distribution rights. These acquisitions and
distribution rights will at least double revenues and earnings
generated by Pasadena in 1998. For example, Pasadena is negotiating
with Nike for a right to distribute a new line of five fragrances and
other exclusive distribution rights for cosmetics and skin care
products in Canada. Combination of these acquisitions and exclusive
distribution rights is expected to generate at least $25 million
revenues and to add at least EPS $0.25 for 1998.
In its core business, MDCE is working on production of several films
as co-producers by providing its producing services and consulting.
MDCE owns a library of historical and stock film footage, whose assets
were valued by an independent appraiser and determined to have an
asset value of $16 million. For example, one of the film projects in
Turkey has the budget of $70 million, MDCE will receive $9-10 million
for its involvement in the project. These fees and loyalties from
these film projects are expected to generate at least $25 million
revenues and to add at least EPS $0.22 in 1998.
Technical analysis indicates that MDCEs shares temporarily peaked at
$1.00 last April, as its Relative Strength generated a bearish
overbought reading. Since then, its trading is best described as
quietly basing, which is not surprising because MDCE underwent a
complete reorganization of its management last year. MDCE is getting
ready for the next move now. Its Relative Strength remains oversold
despite any real decline. Its On Balance Volume implies its shares
are under heavy accumulation, adding to its positive technical
picture. There is solid support in the $0.15 area. In the final
analysis, although few clues as to when its current consolidation will
end and its next leg up will begin, MDCE is in an ideal technical
state for a further advance to new highs.
Managements unique background of finance, communications,
entertainment, and education will position the company to aggressively
seek a broad range of U.S. and international markets and maintain a
leadership position in the worldwide business arena. We are very
impressed with the aggressiveness of the new management in conducting
their businesses. The new management took the company over last year
after its several tumultuous years. Since then, the company has
steadily taken all necessary and aggressive steps to restore its core
businesses and to pursue new businesses. We strongly feel that the
current management is very able and competent. The management is
excited about the company future. They firmly assure us that they
want to do right things for their shareholders. Namely, they intend
to grow the company by aggressively acquiring other profitable
businesses and to become a fully reporting company. They are
confident that their stock will be adequately appreciated by investors
as soon as investors realize the new direction that MDCE is heading
and its extremely strong potential.
Recent litigations between MDCE and its previous management members
will not have any significant material effects on MDCE earnings no
matter how the litigations will be concluded. However, our legal
expert in the security laws suggests that MDCE would have a great
chance to win the case and recover the shares or receive monetary
compensation, having reviewed and analyzed the lawsuits filed by both
parties. A settlement in favor of MDCE is expected before the
litigations are going to trial.
With these recent developments, MDCE may turn out to be one of the
greatest turn-around stocks, maybe last opportunity that we will be
ever able to grab before the 21st century. We advise accumulating its
shares now just in case the next leg up of this dynamic little
companys shares begins that we believe is going to happen very soon.
Contact:
Ed Broday, Corporate Communications
1555 S. Palm Canyon Dr., Suite D-201A,
Palm Springs, CA, 92264,
TEL: 760-320-9720
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STATEMENT OF DISCLAIMER: The information presented in the Undervalued
Dog is not an offer to buy or sell securities referred to herein. By
no means is the above company information complete. One should obtain
financial statements and a full due diligence package, including
chronological news releases, from this company prior to reaching any
investment decision. One should also use the full battery of
available technical analysis, including stock charts, moving averages,
etc. and consult a licensed financial advisor for an independent
opinion. The Undervalued Dog is not in the financial advisory
business. The Undervalued Dog is not responsible for the outcome of
anyone's investment decision. |
