Saturday, March 17, 2007

Pink Sheet Companies and Sarbanes Oxley Avoiders Avoca Inc (AVOA) and Bactolac Pharmaceuticals (BTCP) Report 2006 Results

Despite the fact that both of these companies are no longer required to file with the SEC, after effectively "going private", both still send shareholders either full (Avoca) or summarical (Bactolac) results.

Avoca, owner of 16,000 acre Avoca Island, reported 2006 net income of $7.998 million, and earnings per share of $992.43 on revenue $12.2 million. The company also paid a $720 dividend. With a current bid price of $6000, the companies current price earnings ratio is 6, and the dividend yield is 12%. While both measures price Avoca at extremely cheap valuations, this is not all that surprising given Avoca's uncertain future revenue stream(primarily royalties from gas wells on Avoca Island), and lack of trading liquidity.

Avoca's balance sheet is strong with cash and securities (both long and short term)of $11.2 million, or $5.36 million ($555 per share) after subtracting out dividends payable, which represent nearly all of the company's liabilities.

Bactolac Pharmaceuticals
Bactolac (formerly Advanced Nutraceuticals), which effected it's GPT (going private transaction) this past fall, reported its first results since the transaction.

Bactolac's 2006 sales rose 22.6% TO $28.1 million, while earnings fell 14% to $1.62 million, or $169,55 per share. Based on a recent bid price of $1300, that equates to a P/E ratio of 7.7.

Bactolac's current book value of $1515 per share is quite impressive, but after backing out goodwill ($7.6 million) tangible book value is $723 per share.

We continue to hold shares in both companies, believing that they will benefit from being outside the purview of Sarbanes Oxley, which is very cost prohibitive for smaller companies.

Keep in mind the liquidity issues inherrent in the companies discussed in this report: Avoca has just 8059 shares outstanding, while Bactolac has 9554.

*The author has a position in both companies mentioned in this report. This is neither a recommendation to buy or sell this security. All information provided believed to be reliable and presented for information purposes only.


Anonymous said...

Just out of curiosity, where did you get the latest finicial information on Bactolac Pharmaceuticals (BTCP)? I checked on yahoo and, there is no link of this information.

clyde said...

Bactolac sends financial statements to shareholders (Balance Sheet and Income Statement, but not Cashflow), but is not required to file with the SEC, so it is doubtful any data providers will this information. CM