Sunday, March 7, 2010

Rodobo (RDBO) ready for take off

Rodobo Int. the dairy producer who recently did some new acquisitions is an attractive play in the consolidating Chinese dairy market. As a producer and distributor of high quality formula milk powder products for infants, children, pregnant women, nursing mothers, middle aged and the elderly this company could benefit from the switch to a higher standard of living in China. More and more Chinese consumers get into the habit of drinking milk every day because they have realized that "milk is a kind of almost perfect food". Despite the great impact on the dairy industry, the nutritive value is still essential for the improvement of people's health and physique. As a token of the nutrition necessities and an upgraded consumption structure , dairy products are definitely indispensable for the solid market demand.

The current price of this OTC stock is $ 2.90. Diluted earnings last year were $ 0.42 with a book value of $ 1.33. The acquisitions will expand the production from 200 tons to 1.200 tons per day. A triple of sales and net income could be a possibility which could lead to an EPS of around $ 0.80 this year. A possible uplisting to a mayor exchange could lead us to a higher price. The main problem right now is the lack of liquidity.

So my target price would this year between $ 5.00 - $ 6.00

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