Summery
Found another company very similar to the Dover Saddlery(DOVR) which I bought and sold previously. It a golf shaft producer. The number one player on the market. I feel this one is even better.
Facts:
1. Will move factory from Mexico to China in 2008. Already has factories in Vietnam and China.
2. Rank number one for 2006, 2007 in The Darrell Consumer Survey.
3. New DVS shaft launched Dec. 2007 has very good reviews.
Found another company very similar to the Dover Saddlery(DOVR) which I bought and sold previously. It a golf shaft producer. The number one player on the market. I feel this one is even better.
Facts:
1. Will move factory from Mexico to China in 2008. Already has factories in Vietnam and China.
2. Rank number one for 2006, 2007 in The Darrell Consumer Survey.
3. New DVS shaft launched Dec. 2007 has very good reviews.
4. Book value around $10 at Dec. 2007
Conclusion:
Actually just found now they paid $5 dividend at Mar. 2008. It is no more attractive since it is book value is too low now. Wait its next quarter report to see how things goes.
Updated
May. 23, 2008
Based on 2008 Q1 report:
1. Book value: $5.77.
2. Share outstanding: 5.16m
3. Current price 8.24.
4. During last four years. Their average earning is around $1.9 pre share. For last five years, average earning $1.5 pre share.
Conclusion:
When their price getting close to $5.77x1.2 = $6.92. It might be worth looking.
Updated June 04, 2008
1. Current price around $6.85.
2. According to the fact that they borrowed $8 million last quarter to pay the $5 special dividend, strong sign that the management may want to take it private.
3. According to 2001 report, at that time, it was running at a very small deficit with positive cash flow, no debt, book value around $5 and traded between $6 - $3.
4. According to 2002 report, at that time, it was running at deficit for -0.57 pre share. With positive cash flow, no debt, book value around $5 and traded between $3 - $1. That is a extreme condition.
Conclusion:
More study is needed for this case since I don't know what will happen if the manage want to buy out the company and what price they will offer. I guess they will continue to beat down the stock price. It might not be safe to buy above book value.
Mar.03,2009
Q2 Q3 2008 data
Bought at $5.50 July 2008. Down to $2.00 late 2008. Recent price around $4.00.
1.Book value $5.30 after Q2 lost of $0.1 and Q3 lost of $0.21 per share.
2.Debt $8.5m with cash $7.1m
3.Cut the $0.15 per quarter dividend since Q3 2008.
4.Early this year, they reduced their credit line from $15m to $9m with Key Bank of Ohio. Seems they don't need that much credit line.
5.Begin to ship the new Voodoo shaft which is pretty welcomed.
6.Seems bought the stock at an incorrect time. However, It is quite surprising that their price goes back to $4.0.
Mar. 13, 2009
Q4 2008 data
Today's price around $5.6
1. Book value $5.08 after Q4 lost of $0.26 per share.
2. Debt $8.2m with cash $6.2m
3. Really don't understand the current price given their last 3 quarter of negative earnings.
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Mar. 25, 2011
2010 data
Almost 2 years after I sold it with no loss and no gains. Now the price is around $4.40. Worth take another look.
Check list:
1.Major Business.
(1) Glof shafts: 80%. (2) Composite Material: 20%. (3)Arrows: <10%
Q1 and Q2 are higher. Q3 and Q4 are lower. Q3 is the weakest.
Major customers:
Callaway Golf Company (Public, NYSE:ELY) : $950m in 2010 sales. Down from over $1.1B in 2007. Count 10% of ALDA sales
TaylorMade-adidas Golf: owned by adidas(ETR:ADS), over EUR$900M in 2010 sales. Seems the no. 1 brand. from 2007. Its revenue not affected by recession, very impressive, however, since it includes apparel and in a world market, so it is hard to check golf clubs.
Major customers:
Callaway Golf Company (Public, NYSE:ELY) : $950m in 2010 sales. Down from over $1.1B in 2007. Count 10% of ALDA sales
TaylorMade-adidas Golf: owned by adidas(ETR:ADS), over EUR$900M in 2010 sales. Seems the no. 1 brand. from 2007. Its revenue not affected by recession, very impressive, however, since it includes apparel and in a world market, so it is hard to check golf clubs.
Ping: private company, unknown size. 20% of ALDA sales
Acushnet: Hold by Futune Brand(NYSE:FO) $1.24B in 2010 sales. Down from $1.4B in 2007. 10% of ALDA sales;
2.Share outstanding, Price, Market Cap, Tangible book value.
Shares 5.35m Price: $4.40. Market Cap: $23.3m Book: $4.91.
3.Current asset, Current liability, Debt, Inventory, Cash.
Current asset: $21.6m. Current liability: $7.3m. Total debt 0.7m. Inventory $10.8m Cash: $3.4m
4. Credit facility:
$3m line of credit with interest LIBOR+2.5%. 1% commitment fee. The $0.7m seems using this.
5.Revenue, Earning, FCF, Dividend, Dividend policy, R&D, Revenue/Price ratio.
| in million $US | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | Total |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 54.7 | 49.8 | 53.6 | 69.1 | 72.4 | 77 | 52.8 | 37.8 | 37.5 | 39.6 | |
| OP Income | 1.6 | (0.1) | (3.6) | 7.7 | 13.6 | 19.9 | 9.7 | 0.2 | (3.0) | (1.2) | |
| Income/s | 0.43 | (0.05) | (0.48) | 2.91 | 2.01 | 2.46 | 1.77 | (0.35) | (0.57) | (10.1) | |
| FCF | 2.7 | 5.6 | (4.2) | 4.3 | (0.1) | 8.8 | 6.8 | 3.3 | 2.1 | (0.2) | 29 |
| Acquisition | (2.3)* | 0 | 0 | 16.3** | 0 | ||||||
| Dividend/s | 0.25 | 0 | 5.3 | 0.6 | 0.6 | 2.45 | 0.15 | 0 | 0 | 0 | 9.35 |
| Net cash | 2.6 | 3.6 | (2.0) | 29.5 | 16.6 | 15.8 | 16.5 | 7 | 7.6 | 4.3 |
*Acquisition of Victory Archery
**Selling of the Carbon fiber joint venture.
Revenue is around 2 time of current market cap.
6.SG&A, R&D expense.
Cost reduced by moving manufacture to Vietnam. Doing quite well. Right now it is only running half of its capacity.
7.Insider holding, options, Insider trading info, share buy back.
Add insiders < 5%. CEO: 30k shares + 60k options.
8.Management compensation.
Top 3: 2010--2006: $800k, $850k, $863k, $932k, $850k:.
CEO around $350k to $400k
CEO around $350k to $400k
9.Employee numbers. Revenue/Employee. Compensation/Employee.
1225 at end of 2010. 580 in china, 460 in Vietnam.
1186 at end of 2009. 700 in china, 300 in Vietnam.
10.Industry comparison.
Shaft maker:
Fujikura: Japan. High end.
MAMIYA-OP CO., LTD. (Public, TYO:7991) : $159m in sales, $100m market cap. UST Mamiya as a segment of it . Japan public company, graphite shaft. High end, OEM.
Mitsubishi Rayon: Japan public. high end. OEM. $250m annual sales of carbon fiber product. 8000 tons of carbon fiber used including other stuff compare 500 tons of carbon fiber used by Aldila each year. It seems Mitsubishi is the newest gainer in market.
Grafalloy: Part of True Temper: Private, $120m in sales at 2008. Seems more low end products(<$50). True Temper produce steel shaft as well.
Graphite Design(JASDAQ:7847): $30-$50m in sales. $20m market cap. Japan public company, graphite shaft, high end, OEM.
11.Auditor
2002 and before: Deloitte & Touche LLP
2003 -2005: Peterson and Co. LLP
2006, Squar Milner.
Since 2007: Mayer Hoffman McCann P.C.. Second tier. Seems OK.
2003 -2005: Peterson and Co. LLP
2006, Squar Milner.
Since 2007: Mayer Hoffman McCann P.C.. Second tier. Seems OK.
12.Major events.
From 2000 to 2007, produced hockey sticks and discontinued it.
Dec 2010: Acquire Victory Archery for cash $2.3m plus 100k($0.5m) new shares.
2007: Sold 50% interest of joint venture of carbon fiber for $16.3m
Jan 2010: voluntarily delisted from NASDAQ ans switch to pink sheet for saving filing fee with SEC around $0.4m a year.
13.Comments.
1. For the past 10 years, all dividend paid is around $49m, excluding the $14m in acquisition cost, it is still around $35m paid, with the cash position wasn't changed too much. FCF is $29m which is not bad as well.
2. It is actually an OEM manufacture, so it is revenue is highly depending on a few customers.
3. While Callaway and Acushnet lost around 15% and 12% from it is pre-recession sales. ALDA lost 35% from its pre-recession sales. Revenue seems more versatile than its customers. However, customer sales number might include other stuff than golf clubs.
2. It is actually an OEM manufacture, so it is revenue is highly depending on a few customers.
3. While Callaway and Acushnet lost around 15% and 12% from it is pre-recession sales. ALDA lost 35% from its pre-recession sales. Revenue seems more versatile than its customers. However, customer sales number might include other stuff than golf clubs.
5. It is likely to declare dividend if cash is accumulated in the future.
6. The CEO has very few shares and is regarded as a arrogant person by some investor. However, he is quite conservative and seems to know what he is doing.
Updated at Dec. 14, 2012
Close all positions bought last year. The company will be acquired by its competitor at $4.00/share. Pretty luck to have made around 25% profit. Otherwise it might take several years. It was not really a good decision to get into this. Over all, it is not a bad business, but it is not a great business either. I won't get into similar business if it was today.
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