ASTV recommended as a buy:
The Doppler Report
Initiates Investment Coverage With A Buy Recommendation for:
Asian Star Development, Inc. (?ASTV? on OTC-BB)
Suite 930, East Wing, Block B - New World Office Building
Salisbury Road, Tsimshatsui, Kowloon, Hong Kong
USA Office Telephone: (415) 566 - 2503
Website: asianstardev.com
CAPITAL STRUCTURE & TRADING RANGE (as of March 21, 2000)
Issued & Outstanding: ~ 13 million shares
Est?d Float: ~ 1.3 million shares
52-week Trading Range: US$1.50 (low) by US$7.00 (high)
Current Price: US$4-5/8
ASTV has recently acquired a 46% joint venture interest in, and has been selected to construct and operate a US$2.3 billion deep-water port facility and LPG operation in Malaysia
ASTV is presently in negotiations to acquire one of the world?s largest manufacturers of CD-RW and DVD-ROM disks; the successful purchase of Harmonic Hall Optical Disk Co. could add US$19 million in net earnings to Asian Star?s balance sheets in FY 2001
Based on the pending Harmonic Hall acquisition and the US$2.3 billion LPG / Super Port deal in Malaysia, we believe that ASTV is significantly undervalued, and we recommended the company to investors seeking potential strong capital appreciation over the medium to longer term
ASTV plans to file for a NASDAQ Small Cap listing just as soon as the Harmonic Hall acquisition or SuperPort financing is completed
AN EMERGING GROWTH COMPANY
Asian Star Development, Inc. (?ASTV? on OTC-BB) is a rapidly growing company with significant investments and operations in Hong Kong, mainland China and Malaysia. Incorporated in 1997 as a real estate development concern, ASTV is presently developing and operating a number of high-quality retail shopping and entertainment / recreation / sports complexes in Hong Kong and China.
Last month, Asian Star announced that it had signed a Joint Venture to build and operate a US$2.3 billion deep-water port facility in Malaysia. ASTV through its 51% owned subsidiary, Prestasi Harmoni Sdn. Bhn., will hold a 90% interest in the JV, and Keloil Sdn. Bhd., a private company owned and operated by the Government of the State of Kelantan, Malaysia, will own the balance. Under the JV Agreement, Asian Star has also acquired control of an existing, fully-operational LPG cylinder manufacturing plant and an associated LPG bottling plant, with current clients such as Esso and British Petroleum.
Asian Star is close to announcing an agreement to acquire Harmonic Hall Optical Disc Co. (a major supplier of CD-ROM, DVD and CD-RW media), in what will be a major strategic shift in ASTV?s core business focus from real estate / construction into high tech. We understand that Asian Star Development intends to use the Harmonic Hall acquisition as the basic for rapid growth and expansion of its high-tech and e-commerce ventures throughout Asia.
We believe that ASTV has a solid future, and we recommend the Company based on its strong potential for significant capital appreciation over the next six to eighteen months.
Fundamentals of this fully-reporting OTC-BB company are very strong.
Right now, ASTV is profitable and has a very tight share structure (~ 1.3 million share float). ASTV?s management is extremely well qualified, focused on building a strong, profitable and diverse company, and intent on moving Asian Star Development up to a NASDAQ Small Cap listing by years-end.
Upon completion of the Harmonic Hall acquisition, ASTV should be generating some impressive earnings figures in the current fiscal year from Harmonic Hall?s Fortune 500 clientele.
Assuming that Asian Star issues four million shares to acquire 100% of Harmonic Hall, ASTV?s earnings will be increased by US$19 million in FY 2001 and 2002 (US$1.12 / share, based on 17 million shares o/s). These figures suggest to us that the equity markets are currently valuing ASTV at about 4x future earnings (from the Harmonic Hall acquisition), and that the value of the Company?s shares do not reflect either the Malaysian SuperPort / LNG operation, or any of ASTV?s extensive real estate portfolio in China.
In June, the ?Shilong Water World? Complex in China is scheduled to re-open for its third summer season?s operation. This past January, Asian Star diversified into the Hong Kong entertainment business by acquiring an established restaurant operation; ASTV intends to expand this division of the Company with further acquisitions in Hong Kong.
Over the longer term, we expect that Asian Star Development will be bringing the 6-12 convenience stores on line, as well as completing a number of commercial and residential real estate projects in China. Collectively, we believe that these various ventures could potentially generate as much as US$100 million in additional annual revenues. On this basis, we believe that compared to similar companies, the current valuations of ASTV are low, and that Asian Star represents a very attractive investment opportunity.
For investors seeking additional independent information and opinions on ASTV, the Company?s discussion threads on Silicon Investor and Raging Bull can be accessed at: www3.techstocks.com and ragingbull.com , respectively.
ASTV ACQUIRES MAJORITY INTEREST IN THE US$2.3 BILLION MALAYSIAN SUPERPORT
On January 27th, Asian Star Development announced that it had signed a formal Joint Venture Agreement to develop a US$2.3 billion a deep-water port facility in the State of Kelantan, Malaysia to service the natural gas and oil industries.
ASTV, through a 51%-owned subsidiary, Prestasi Harmoni Sdn. Bhn., will hold a 90% interest in the venture and 10% interest will be held by Keloil Sdn. Bhd., a private company owned and operated by the Government of the State of Kelantan, Malaysia. Because of its extensive project development experience in the region, ASTV has been selected to build and operate the SuperPort.
Capital costs to develop the SuperPort are estimated at US$2.3 billion, which includes construction of various buildings, plant facilities and the seaport. As each of these structures is planned to be built individually, financing may be spread into different phases according to the master plan of the SuperPort Project. ASTV?s projected EPCM revenues for the project are approximately US$300 million.
Under the JV Agreement, Asian Star has also acquired control of an existing, fully-operational LPG cylinder manufacturing plant and an associated LPG bottling plant, with current clients such as Esso and British Petroleum. The 1998 revenue of these plants was approximately US$1.6 million and is expected to show significant growth in the near future with the added throughput from newly-developed offshore oil and gas fields.
PENDING HARMONIC HALL ACQUISITION OFFERS SIGNIFICANT FY 2001 EARNINGS POTENTIAL
Asian Star Developments is in advanced negotiations to acquire control of Harmonic Hall Optical Disc Co. (?Harmonic Hall?), and we understand that a deal may be announced in March. Although final terms have not been set, we anticipate that ASTV would issue approximately three to four million restricted shares to acquire Harmonic Hall.
Based in Hong Kong (and poised for a major expansion into China in the very near future), Harmonic Hall is a leading manufacturing of rewritable media - products include CD-RW, DVD, CD, CD-ROM, VCD, LD, Stampers, Water Mark CD, Cassette and VHS. The company?s client base includes over 300 active customers, including Philips, BASF, ACER, IBM, MicroSoft, Mattel Toys, Polygram, Warner Music, BMG and EMI. Harmonic Hall is currently gearing up for CD-RW and DVD production, and expects to begin shipping product to customers during the first quarter of 2000.
Over the past few years, Harmonic Hall has shifted its business focus from replicating audio CD?s to CD-ROM, and is only now beginning to shift production towards higher-margin CD-RW and DVD products. During this transitional period, the company has been profitable, with annual net income (according to a comprehensive due diligence report prepared by PriceWaterhouseCoopers) on the order of US$5 to US$11 million.
Looking ahead, with the emphasis on DVD products, Harmonic Hall projects net income of US$11 million in the fiscal year ending June 30th, increasing to over US$19 million in FY 2001 and 2002.
WHY THE SHIFT TO CD-RW & DVD IS SO IMPORTANT FOR ASTV & HARMONIC HALL
The Economist magazine recently reported that DVD is fast becoming the most important consumer-electronics product since the VCR. InfoTech, Inc. reports that DVD sales are on a tear, projected to double this year, to just over 2 million units, and reach 5.6 million by 2002.
In the personal computer market, CD-RW (and, in a few years, DVD-RW) has become a very popular OEM product, with an estimated 20 million units sold during 1999, increasing to 100 million units by 2002; all industry forecasts predict continued strong growth in recordable storage media through at least 2004.
Harmonic Hall is well positioned to be a major player in this rapidly-growing market, and management?s strategy of developing new blank recordable media appears to be in line with the emerging market direction. Gross profit margins are much greater on DVD?s (they cost about 2x as much as CD?s to make, but sell for 5x comparable CD-based products). More importantly, Harmonic Hall enjoys significant cost advantages over their competitors, chiefly the result of extremely high productivity rates. A planned move to expand production into China should produce further cost savings, which we believe will be reflected on the company?s bottom line. Lastly, all of Harmonic Hall?s production lines can be quickly and cheaply switched over to produce higher margin DVD products as market demand evolves.
EXPERIENCED & CAPABLE MANAGEMENT
The Company?s founder, President & CEO, Stephen Chow, has spent his entire career building and operating successful companies throughout North America and Asia. He has the experience, networks and connections to successfully and profitably operate in China.
Mr. Chow is very well connected in both Hong Kong and mainland China, and currently serves as the Advisor of Economic Affairs in the City of Taishan, Guandong Province, China. Mr. Chow has also been appointed an Honorable Citizen of Shilong, Dongguan, Guandong Province, China. Other notable community service positions held by Stephen Chow include: Director - Community Redevelopment Agency of the City of Los Angeles; Director of Windsor Builders Association of Ontario, Canada; and, Director, Multi-Cultural Council of Canada.
SIGNIFICANT MAJOR SHAREHOLDER - NEW WORLD DEVELOPMENT CO. LTD.
New World Development Co. Ltd. (?New World?), a company with a US$6.5 billion market capitalization that is also a constituent stock of the Hang Seng Index (Hong Kong Stock Exchange), through its subsidiary, is one of ASTV?s largest shareholders.
Asian Star?s close ties with New World provide ASTV with invaluable financial and business credibility in its new and on-going business ventures in Hong Kong and China.
LONGER-TERM GROWTH WILL COME FROM SEVERAL NEW BUSINESS VENTURES IN CHINA
Over the longer term, Asian Star Development will likely realize significant revenues (potentially upwards of US$100 million annually) from a number of new ventures in China.
By years-end, we expect that China will likely receive admittance to the World Trade Organization, as well as be granted most-favored-nation (MFN) trading status with the United States. Asian Star will have a significant jump on its competitors in soon-to-be-opened Chinese markets, as several of ASTV?s high-quality retail shopping and entertainment / recreation / sports complexes (Dragon Villa Entertainment Center, Shilong City Hall Plaza and Honstar Entertainment Center - Maple City) should be completed by mid to late 2000. We also like the fact that ASTV has targeted its investments in Guandong Province, the wealthiest and most developed province in China (situated adjacent to Hong Kong).
Lastly, we believe that Asian Star?s real estate and entertainment business investments are not core holdings of the Company, and that when presented with an opportunity to divest any or all of these businesses at a profit, the Company will do so, with idea of reinvesting the proceeds in Harmonic Hall or development of the SuperPort / LPG plant.
For additional information, please contact:
Stephen Chow - President, Asian Star Development
Phone: 011 - 852 - 2721 - 0936 E-mail: info@AsianStarDev.com
U.S.A. Investor Relations
(800) 488 - 7151 or visit www.AsianStarDev.com
DISCLAIMER ? PLEASE READ !!
The Doppler Report (the ?Publisher?) is not a Registered Investment Advisor or a Broker / Dealer. Readers are advised that this report is issued solely for information purposes and is not to be construed as an offer to sell or the solicitation of an offer to buys. Reproduction of this report, in whole or in part, by any means, electronic or otherwise, including via the Internet, without prior written permission, is strictly prohibited.
The Doppler Report has independently prepared this report, drawing upon a range of public news and information sources, as well as data and opinions provided by Asian Star Development, Inc. (?ASTV? or the ?Company?). Prior to publication of this report, the Company reviewed and approved the contents hereof. The Publisher has not independently verified the Company?s representations. Any opinions expressed in this report are statements of judgment as of the date of publication (21 March 2000) and are subject to change without further notice, and may not necessarily be reprinted in future publications or elsewhere. Neither the Publisher nor its owners, employees or consultants accept any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.
The information contained herein is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. The opinions and analysis included herein are based on sources believed by the Publisher to be reliable and in good faith but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. The foregoing discussion also contains forward-looking statements that are based on current expectations and differences can be expected. The information and opinions contained herein is not intended to be a complete discussion of information regarding some of the current and/or intended business activities of the Company, and all information contained in this report should be independently verified with the Company. Readers are urged to consult with independent financial advisors with respect to an investment in the shares mentioned herein. Investors should review a complete information package on the Company, which should include, but not be limited to, the Company's annual report, quarterly report, press releases, as well as all regulatory filings.
In order to be in full compliance with the Securities Act of 1933, Section 17(b), the Publisher advises its readers that it has received a fee of 250 common shares of ASTV from Instant Digital Printing as compensation for its efforts in researching, writing and presenting the information contained herein. The Publisher, its owners, employees and consultants may profit in the event the shares of the Company increase in value. These positions may be liquidated from time to time even after Publisher, its owners, employees and consultants have made positive comments regarding the Company.
THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. INVESTORS MUST ALSO INDEPENDENTLY VERIFY THE ?BLUE SKY? ELEGIBILITY OF THE SECURITY MENTIONED IN THIS REPORT BEFORE MAKING ANY INVESTMENT DECISIONS. TIMING OF, AND ANY BUYING OR SELLING DECISIONS, ARE THE SOLE RESPONSIBILITY OF THE READER.
The Publisher encourages U.S. readers to review the investing information available with the Securities and Exchange Commission ("SEC") at sec.gov and/or the National Association of Securities Dealers ("NASD") at nasdr.com NASD has published information on how to invest carefully at its website.
ASTV is a fully-reporting company with the SEC, and readers can review the Company?s public filings with the SEC at freeedgar.com and searching the EDGAR database. Asian Star Development?s Form 10-SB filing with the SEC (dated May 11, 1999) can be viewed at sec.gov
¸ 2000 The Doppler Report |
