Rodobo Int. (RDBO) long term grower

Third Quarter 2010 Highlights:
-- Revenue was $19.1 million, up 86.5% from $10.3 million in 3Q09
-- Gross profit was $7.3 million, up 25.6% from $5.8 million in 3Q09
-- Net income was $2.7 million, up 32.8% from $2 million in 3Q09
-- Earnings per diluted share was down to $0.10 from $0.13 in 3Q09

For the nine months ended June 30, 2010, net sales increased to $44.5 million, up 75.2% from $25.4 million in the nine months ended June 30, 2009. Gross profit increased 47.7% in the nine months ended June 30, 2010 to $18.6 million from $12.6 million in the comparable period in 2009. Gross margin was 41.8% in the nine months ended June 30, 2010 compared to 49.6% in the comparable period in 2009. Net income for the nine months ended June 30, 2010 was $8.8 million or $0.39 per fully diluted share, up 72.6% from $5.1 million, or $0.34 per fully diluted share, in the comparable period in 2009.

Management feels confident to give its guidance for the fourth quarter of 2010 for revenue to be in the range of $20 - $24 million and net income to be in the range of $3.0 - $3.2 million.

"We are pleased to report very strong financial results, exceptional revenue growth and strong profitability for the third quarter of 2010. Rodobo has a strong operating history, achieving a very strong and consistent revenue and net income growth over the last four years," stated Mr. Yanbin Wang, the Chairman and Chief Executive Officer of Rodobo. "In addition to these results, we are very pleased with the acquisition and early results of the Beixue Group. Our formula milk products sales expanded to two new provinces, Jiangsu and Anhui and continue to penetrate into other seven provinces."

Over the next twelve months, Rodobo intends to pursue its primary objective of increasing its market share in China's diary industry. The Company is also evaluating acquisition and consolidation opportunities in China's fragmented dairy industry. Rodobo's management believes it has sufficient working capital to operate its existing business for the next twelve months by using its cash generated from its operating activities as well as part of the net proceeds from the private placement which closed on June 23, 2010.

"Our markets remain robust as the Chinese government continues to support the modernization of the dairy industry as well as support improved hygiene and food safety standards. We have established a successful vertically integrated business model and remain dedicated to continue building a nationally-recognized leading brand for our premium dairy products and create value for our shareholders," concluded Mr. Wang.

Q4 EPS should be around $0.11, so for this year we could expect $0.50. The recent price of $2.20 is an interesting entry level for the long run. The main problem with Rodobo is the lack of liquidity.

POSITION: NO