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Trading Alert-
Titan General Holdings (OTC BB: TTGH) |
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On August
2nd I published a Trading Alert on Network Installation (OTC BB:
NWIS). The stock was a virtual unknown at the time. In fact, in the
text of the presentation I stated: "The readers of the OTC Journal
are the first to learn of it and the first to receive any information on
this exciting situation."
Those of you who followed the situation
know the stock closed at $.80 that day, opened at $2 the next, and hit
a high of $6 within two trading days. What a ride- far beyond my expectations.
The idea was so much fun that I decided
to look for other undiscovered situations with real fundamentals that we
could pounce on before the rest of the market picked up on the story.
I have found another similar situation
which I believe is poised for market recognition. Today, just after the
market closed, the company reported a significant fundamental change which
positions this company to be a powerhouse in its industry. No one knows
about this dramatic change. We are getting the first look.
I'm not bold enough to predict a
three fold move on this stock in two days, but I believe the stock is poised
for appreciation.
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The
Time Sensitive Prototype PCB Fabrication Market |
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You are looking at a picture of three
Printed
Circuit Boards. They're in nearly every electronic device. It is estimated
$35.3 billion will be spent worldwide on PCB's this year, up from $33.3
billion last year. Most of them will be mass produced in China, Japan,
and Taiwan.
This is a commoditized market with
intense competition and low margins. Not an arena in which small companies
can compete.
In studying the business model of
Titan,
I was amazed to learn there is a huge cottage industry associated with
Printed Circuit Boards. When the engineers at Textron, Lockheed, or
Motorola design a new electronic device, they must build prototypes
long before manufacturing. They don't build the PCBs themselves. They send
the specs to a shop which specializes in fabricating PCBs and turning around
a finished product rapidly.
Titan does this high margin
work. PCB designs are received and a finished prototype is turned around
in as little as 48 hours. The service costs a substantial amount of money,
and has very high margins.
Titan turned in the best quarter
in its history in June, with sales hitting $3.27 million for the quarter,
up 42% from the March quarter.
They're customer base includes some of the following high profile names:
-
Motorola
-
Broadcom
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Textron
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Lockheed
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Analog Devices
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Raytheon
-
Flextronics
Titan has two major fabrication
facilities. Their west coast operation in Fremont, California, which is
the subject of today's news release, specializes in high volume, quick
turn around for standard consumer electronics products. PCB prototypes
can be turned around in about 48 hours, and may cost anywhere from $25,000
to $100,000.
Their east coast facility in Amesbury,
Massachusetts specializes in more custom PCB's generally associated with
military or very high tech solutions. At this facility, Titan provides
input on the design. They can also fabricate PCBs in HVR (High Volume Rigid
Flex). This specialized design costs a lot more, and is the kind of custom
PCB you would find fitted into a tiny slot in the cockpit of an F-14 fighter
jet or the Space Shuttle. Margins at this facility run upwards of 40%.
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Completed
Consolidation Chops $1 Million off Annual Overhead |
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Today, just after the market closed,
Titan
General announced it had completed a consolidation of two west coast
facilities. Titan shut down their Santa Clara operation, and consolidated
the two into one state-of-the-art facility.
More importantly, the company announced
it anticipated the consolidation would yield at least $1 million
in annual cost savings. This is very important to Titan,
because it positions the company to move into profitability in coming quarters.
Moreover, there is another important
fact the press release does not tell you. I learned this from interviewing
President Andrew Glashow. The Fremont California tech center of
Titan
is so well optimized that it is currently only operating at 30% of capacity
with much improved margins. Therefore, as additional business
flows in, it will be accompanied by even greater efficiencies which should
result in higher margins as the current fixed expenses are already being
absorbed.
The new facility has now been approved
by several major electronics companies including manufacturing behemoth
Flextronics
($13.5 billion in annual sales), which should lead to major new
business wins.
There are 14.5 million shares issued
and outstanding. Based on the $1.20 closing price, this yields a market
value of $16 million. Annual revenues are running at about $13 million,
and growing rapidly. Cost cutting from the consolidation should turn Titan
profitable,
and revenues should grow. Assuming the company achieves positive cash flow,
this stock would not be overvalued at two to three times sales, instead
of the current 1.2 times annual sales, suggesting significant upside.
As you can see from the chart, no
one knows about this situation yet. This is an undiscovered gem, just like
Network
Installation was on August 2nd. The stock has drifted down from the
$2.25 level in April and rarely trades over 25,000 shares per day. The
profit picture for the company's future changed with today's news.
Here are my thoughts for today's
trading alert:
-
Buy up to $1.40- This gives you
room to make 40% if the stock performs the way I think it will
-
Price Target- $2 short term (next
60 days)- higher longer term
-
Stop Loss- Reevaluate if the stock trades
below $1- I don't think it will, but you never know.
Unless something earth shattering comes
up, this will probably be the last edition I publish until after the Labor
Day holiday. I intend to publish several follow up editions on Titan.
Also, next week threatens to be very busy, as several of the companies
I cover are promising substantive corporate events which will be worth
reporting.
Here is the complete text of today's
news for your review:
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TTGH Announces
Successful Consolidation of West Coast Manufacturing Operations
Tuesday August 26, 4:07
pm ET
State-of-the-Art Tech Center Anticipated
to Generate Material Savings; Benefits May Exceed $1 Million Annually
FREMONT, Calif.--(BUSINESS
WIRE)--Aug. 26, 2003-- Ventures-National Incorporated, dba Titan General
Holdings, Inc. (OTC BB: TTGH), an innovative fabrication services company
committed to setting the next generation standard in high margin, time
sensitive PCB manufacturing, announced today the successful execution of
the consolidation of its West Coast manufacturing operations. The Company
noted that consolidation, which merged Titan's Santa Clara, California
operation into its Fremont, California tech center, has created a state-of-the-art
facility which will unleash significant synergies including a substantial
increase in margin -- as well as improved productivity and efficiency,
resulting in a highly competitive world-class high technology company.
"Under the stewardship
of our chairman and CEO, Bob Ciri, the consolidation was executed ahead
of schedule and below budget," stated Andrew Glashow, president of Titan.
"The estimated cost of the consolidation was less than $350,000 and is
generating significant benefits from day one. Based on Titan's internally
prepared estimates, the consolidation is anticipated to generate up to
$1 million or more annually in positive benefits through, among other things,
the elimination and consolidation of an operating facility, termination
of duplicative staff, and operational efficiencies related to the location
of the complete manufacturing process in one facility. In addition, Mr.
Ciri, with the support of the operational consolidation team lead by General
Manager Curtis Okumura, was able to successfully complete the move and
consolidation in a 45-day time frame -- without missing a single day of
manufacturing or any delays in customer delivery resulting from the move.
Numerous industry 'experts' previously estimated a six-month timeframe
and $1 million+ budget with a temporary shutdown of manufacturing."
Curtis Okumura, the Titan
PCB West Inc. General Manager said, "Consolidation of the manufacturing
operations into our state-of-the-art Fremont tech center creates operational
synergies that will allow us to improve the value and service to our customers."
Robert Ciri, the TTGH
CEO noted, "The importance of the consolidation cannot be overemphasized.
Our West Coast Tech Center is now a state-of-the-art facility. This well-orchestrated
event is a clear demonstration of the dedication of the Titan employees
and their ability to deliver a quality solution." Mr. Ciri went on to say,
"We are developing a world class team on both coasts to fully exploit what
we believe to be enormous opportunities in the high margin prototype, time-sensitive
PCB business. Titan is committed to significant growth, both organically
and through select acquisitions. The combination of our management team,
technology and process are positioned to deliver on that commitment."
Conference call
Robert Ciri, chairman,
and Andrew Glashow, president, will discuss the consolidation as well as
other aspects of the Company's operations during a conference call and
webcast scheduled for Wednesday, August 27th at 12 pm Eastern and will
be available to answer questions. Participants may ask questions during
the Q&A segment of the call. Investors may access the call by dialing
800.289.0496 or from an international location by calling 913.981.5519.
Participants should identify the call as "Titan's Conference Call."
A replay will be available
on August 27th at 3:00 pm Eastern through September 3rd at 11:00 pm Eastern.
The replay telephone numbers: 719.457.0820 and 888.203.1112 with the replay
passcode: 739070.
About Titan General
Holdings, Inc.
TTGH is an innovative
fabrication services company producing time sensitive, technologically
complex prototype, and high margin printed circuit boards. The Company
was established through the acquisition of SVPC Partners, LLC in August
of 2002 and Eastern Manufacturing Corporation in February of 2003. The
management and board of directors of TTGH are focused on significant growth
and shareholder value. TTGH operates two tech centers, one in Amesbury,
Massachusetts and the other in Fremont, California, which is the Company's
corporate headquarters. TTGH is committed to Enhanced Execution of PCB
solutions to Exceed customer and shareholder value Expectations. For additional
information on the Company, please contact Bernadette Cusack, Trilogy Capital
Partners, [email protected]. Investors who are interested
in learning more about TTGH are encouraged to visit the company's website
at www.titanpcb.com. The company's site contains current information on
the company, its operations, management and board of directors.
Cautionary Statement
Regarding Forward-Looking Statements
Statements made in this
news release, other than those concerning historical information, should
be considered forward-looking and subject to various risks and uncertainties.
Such forward- looking statements are made based on management's belief
as well as assumptions made by, and information currently available to,
management pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. Titan General Holdings, Inc.'s actual results
may differ materially from the results anticipated in these forward-looking
statements as a result of a variety of factors, including those identified
in Titan's annual report on Form 10-KSB for the fiscal year ended August
31, 2002 and its quarterly reports on Form 10-QSB filed with the Securities
and Exchange Commission.
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Contact:
Trilogy Capital Partners
Bernadette Cusack, 800-330-6540
[email protected]
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Source: Titan General
Holdings, Inc. |
Charts Provided Courtesy
Of TradePortal.com |
