Analyst Initiates Coverage, Assigns Auto Network Speculative Buy, Target $7 to $10 in IRI's Public Analysis & Review (PAR) Program
New York --- Public Analysis & Review (PAR), the unique professional independent analyst program administered by the non-profit Investors Research Institute, Inc., announces that James F. Reda, professional analyst qualified in the PAR program, has initiated coverage of Auto Network Group USA (OTCBB: ANWK), and has assigned the company ---
a "speculative buy" rating, with a 12-month target of $7 to $10.
A summary of the report follows. PAR has authorized the company to post the full report at 12:30 p.m., following requisite NASD notifications and wire disseminations, at anwk.com , and in the interim the report
may be obtained upon request from info@mawest.com or via fax upon request to 650-588-2678.
Date of Report February 4, 1999
Shares Outstanding 17,766,667*
Recent Stock Price: $2.969
Estimated Float 8,500,000
Latest 12 mos. Price Range $0.125 to $7.00
Recommendation Speculative Buy
Industry Sector Auto Sales
Target Price (12 mos.) $7 to $10
* On a fully-diluted basis
Auto Network USA, Inc. (OTCBB: ANWK) is a wholesaler of used late model and luxury automobiles. Auto Network's strategy is to gain market share in urban areas by acquiring and consolidating the independent wholesaling
companies.
Auto Network has recently announced two electronic commerce initiatives. It currently offers an Internet site that lists its current levels of inventory, and has announced plans to upgrade this Internet site to allow for the electronic auctioning of used cars. The inventory feature is available to registered used-car wholesalers today, and the electronic auction feature will be available March 1, 1999.
Auto Network will guarantee a resell price concurrent with the trade-in. The car is then immediately delivered to Auto Network with the corresponding cash payment being made to the dealer. This allows the new-car dealer to (1) eliminate the risk of a price mismatch, and (2) smooth out cash flow.
Established in 1997, the Company achieved sales of over $30 million in the first six months and is profitable for its first fiscal year ending March 31, 1998; sales are estimated to be about $100 million for its second fiscal year ending March 31, 1999.
Auto Network is currently expanding from the original location in Scottsdale, Arizona to other urban locations. The mission of Auto Network is to consolidate the wholesale segment of the used car automotive industry, becoming the nation's largest and most efficient wholesale operation.
The Company's expansion plans of opening urban offices in Albuquerque, Denver, Anchorage, Denver, Toronto, Vancouver, and Bend (Oregon) are on track. Each additional office, while adding substantial revenue, does not
require additional capital because the office is mostly self-sufficient.
While AUTONET started operations in wholesale used-car sales in the fall of 1997, it has added dealer financing services in the fall of 1998 and is evaluating other promising lines of business and ways to improve existing
lines of business. A recent example of this business flexibility is the addition on Internet web-site which now can be used to locate inventory, and by March 1, 1999 will enable the electronic auctioning in the wholesale used car market.
Based on three valuation models - P/E multiple, EDITDA multiple, and discounted cash flow - a current composite stock price in the range of $7 to $10 is derived. This stock price is based on the Company substantially achieving its business expansion with respect to regional offices and the financing subsidiary.
--- James F. Reda, Analyst
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James F. Reda has over 15 years of financial analyst experience, and currently works as a consultant with Hewitt Associates LLC in all areas of financial analysis for public and private companies, including valuations,
mergers and acquisitions, and tax matters. He has a BS degree from Columbia University, an MS from the Sloan School of Management, MIT, and is a member of the New York Society of Security Analysts and the Association
for Information Management Research.
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Public Analysis & Review (PAR) is a program of the Investors Research Institute, Inc. (IRI), a non-profit membership organization for individual investors and others advocating higher standards of "accessibility", "scrutiny" and "disclosure" for public companies. Continuing quarterly coverage by an independent analyst is a requirement to meet the "scrutiny" requirements for the elite "Seal of Best Practices in Investor Relations" standard. Anyone, including a company, may enroll a company for coverage. PAR analysts are responsible only to the public, and are qualified and assigned solely by the Institute, separate from the fiduciary entity, which is IRI, Inc. (IRIK), a public company in registration and financial administrator for the non-profit Institute. PAR analysts are paid in advance to eliminate pecuniary interests and insure independence. PAR enrollment fees are $15,000 per annum.
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See full disclaimer at website before investing. Information, opinions or recommendations contained in this report are submitted solely for advisory and information purposes. This report or study is not intended as an offering or a solicitation of an offer to buy or sell the securities mentioned or discussed.
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