A Report on VALH by llccman
LLCCMAN’s Report on VALH
This is a portion of a report I prepared for members of our group I call the “Crew”. The Crew* is a group of five investors that have been investing in stocks online and corresponding with each other for a little over two years, but the average experience in investing in the stock markets of the Crew members is about 15 years.
The original report was dated December 1, 2000, but a few items been updated since then.
Value Holdings, (VALH.OB) Over the counter, Bulletin Board.
Shares Outstanding 159 million
Buy Rating ***** (Strongest buy for immediate action).
Value Holdings is a holding company that seeks to acquire profitable companies in select market niches. Just two years ago, VALH was an obscure “shell” with a small chain of seafood restaurants called “Cami’s” in Florida. From these humble beginnings, through several acquisitions in the lumber industry in Canada, VALH has grown in annual revenues from less than $1 million in 1998 to over $125 million in two short years…
In a happy circumstance for VALH investors, the company has managed to acquire several companies and still report positive earnings. In the OTC world it is rare enough to find companies that are profitable, but to find one that is profitable and growing rapidly through acquisitions is very rare…
To give the reader an idea of the rapid growth of VALH in both revenues and earnings, the following is a snapshot of the results reported by the company for the past year:
 In their annual statement for the year ended 10-31-99, total annual revenues increased from just $348,434 in 1998 to $46,065,939 in 1999. Net income increased from a loss in 1998 of ($2,900,118) to a net positive income in 1999 of $1,218,629.
 In the quarterly statement for the Q ending 1-31-2000, VALH reported an increase in quarterly revenues from $97,785 in 1999 to $24,521,702. Net income increased from a loss in 1999 of ($166,886) to a net income for the quarter of $1,918,376.
 In the quarterly statement for the Q ending April 30, 2000, VALH reported an increase in quarterly revenues from $9,032,049 in 1999 to $30,411,910 in 2000. Net income for the period reflected acquisition costs and decreased slightly from $219,847 in 1999 to a net loss of ($116,114) in 2000. (Not bad considering the acquisitions).
 In the quarterly statement for the Q ending 7-31-2000, quarterly revenues increased from $15,780,478 in 1999 to $35,786,027 in 2000. Net income increased from $971,783 in 1999 to $1,438,912 in 2000.
 The next report due out is for the period/year ending 10-31-2000. That report is due out on or before 1/31/2001.
So, VALH has shown substantial revenue growth and earnings growth for the year 2000.
Recent Acquisitions:
The primary engine of this growth was the February 1999 acquisition of the John Ziner Lumber Company (JZL) through its subsidiary Network Forest Products (NFP). Network is now a leading manufacturer and distributor of lumber and remanufactured lumber products in the Canadian market and has some limited market in the US. JZL itself is growing rapidly. …(See earlier report on JZL 9-12-00).
In August of 2000, VALH completed its acquisition of Cutler Forest Products and Seabright Wood Fabricators, both located in Mississaugh, Ontario for $15.9 million Canadian Dollars. (Revenues from Cutler/Seabright will be partly reflected in the 10-31-2000 report to come). Cutler/Seabright provide wholesale distribution of sheet and cut-to-size composite wood products, manufacturing of sub-components for other wood manufacturers, pre-manufacturing of kitchen cupboards, bathroom vanities, shredder boxes and other products. They are also distributors for Nevamar and suppliers to major building material retailers. Cutler has approximately 1500 customers including Home Depot, Ontario Store Fixtures, Revy Home Centers and Ace Hardware. …
For the year ending 12-31-99, Cutler/Seabright had combined annual revenues of $24,409,145. In a press release about the acquisition, the company estimated that the Cutler/Seabright acquisition would add about $3 million Canadian dollars per month in revenues. (About $2 million per month US or $6 million per quarter US)…
In February of 2000, the company purchased Herron Home Hardware which had $13 million C in revenues in 1999. This acquisition opened up new markets to VALH such as the 230 store Castle Building Centers all across Canada…
In September, 2000, VALH announced a planned acquisition of ABS woodworking, Ltd. which had annual sales of $9 million C in it’s most recent fiscal year. The ABS acquisition is expected to close shortly.
The company is growing rapidly. It is expanding its main facilities on an 18 acre site on Passmore Ave. in Toronto. In May of 2000, the company announced construction of an additional 5000 square feet of office space, almost doubling their existing office space. Their manufacturing facilities are also being expanded to handle the growth. Early in 2000, the company leased an additional 4 acres near its existing facility in Toronto to house a new strip line capable of “a 300% increase in output”. …
The rapid growth of the company is starting to show up on the radar screens. In 2000, for the first time, VALH occupied various positions on the Dimgroup TOP 100 lists for both revenues and earnings. At this writing, VALH is #105 in revenues and #83 in earnings out of the 2979 companies currently on the OTC:BB which report.
VALH and Network Forest Products are good corporate members of their respective communities. For example, among other public service, in February 2000, Network endowed a scholarship in science and technology at the University of Toronto. Network also sponsors the annual John Ziner Golf Classic in Toronto benefiting Canine Vision Canada, a charity that trains seeing eye dogs for the blind…
(Portions of report omitted to avoid repetition)
They currently have about 5000 shareholders…
They currently have about 170 employees…
Looking Forward to 2001
We think VALH shareholders have interesting possibilities to look forward to in 2001. To highlight a few of these possibilities, we look forward to:
 The closing of the ABS Woodworking acquisition.
 Substantial increases in revenues and possibly earnings year/year with each new report.
 Recovery of lumber prices, which have been hammered in 2000.
 Other possible acquisitions. The company is still actively seeking additional acquisitions.
 An updated and improved website and e-commerce initiative.
 A Public Relations campaign to increase awareness of the company. The company just announced that it has hired Rubenstein Associates of New York Rubenstein boasts an impressive client list and is well known in the public relations arena…
 A possible “graduation” of VALH to a “major exchange”.
 Re-entry into the market of investors that sold out at the end of last year due to tax loss selling.
 (Also remotely possible would be a buyout or takeover of VALH due to the very low stock price and ongoing consolidation in the wood products industry.)…
Conclusion:
VALH does have considerable debt from the recent purchases and acquisitions and the number of shares out is large at 159 million. However, compared to other OTC:BB companies, its current share price is extremely low. One need only to do a check using the price screener at the Dimgroup website to compare VALH to others in its price range to see that this company has no business at current levels.
I attended a recent shareholder’s meeting of the company in Miami and met the principals. They seem committed to growing the company and to doing a better job of communicating their success to the general public. I feel that the coming PR campaign will have a decidedly positive impact on the share price. For these reasons, I give VALH my highest rating for immediate investment (*****).
(Portions of the report are omitted due to length, and portions have been modified from the original to reflect current conditions.)
(…the above was complied by #### ######### “llccman”. Information was obtained from various sources, including SEC filings, news reports, interviews with company employees and officers, and other sources which are deemed reliable. However, no warranty or guarantee of the accuracy of the information is expressed or implied.)
*The Crew has accumulated a considerable number of shares of VALH since November of 2000. They invest in other OTC companies as well. |
