Institutional Analyst: Special Situation Research
IA's Special Situation Report. Friday 4/13/2012
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1.UNR Holdings (UNRH) $1.55, Signs on as New Client.
2. December 31, 2011 Financial Highlights.
3. Auditor Opinion.
4. Technical Data.
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1.UNR Holdings (UNRH) Signs on as New Client.
Gentleman start your engines (due diligence). Here are a number of links (below), all in one place to speed your research efforts. Of course, start with the most recently filed 10K. The company has been in existence since 1967 -- so this is not a "start-up." Looks to us (as the stock price fell, while both earnings and revenues surged) that it got genuinely lost in the cracks. For real.
There was talk (and an S-1 filing) in October of 2010, of a $25 million raise and intention to list on the AMEX. This was right around the same time that the Dow had fallen over 1,000 points from 11,200 in May, to near 10,000 in October (and it is a real estate company) and the offering was withdrawn -- which can often leave a company in both an informational and trading void.
No one can really trade the stock during an offering and then once an offering is withdrawn, the investment bankers (and their brokers) go on to their next deal. And welcome to the Wall Street home for orphans. And if you're a foreign based company, it's tough sledding. Which is of course, good for value players. If that hadn't gone wrong, the opportunity at hand may not have materialized. Really.
$25 million raise: http://www.nasdaq.com/markets/spos/filing.ashx?filingid=7000473
We have discussed the company with a number our of "best and brightest" contacts on Wall Street -- and the initial consensus after a quick glance is typically "too good to be true." What they are referring to of course, is a single digit P/E ratio and a share price less than cash (and marketable securities) of $73 million. There are only 24 million shares outstanding. Yes, you heard it right.
The only way to find out if this is for real of course, is to begin digging yourself. Now that we are on their "team," we had the good fortune and opportunity to speak their auditor, something which is typically not available to either current or prospective shareholders.
Auditors as a rule, just don't talk to the investment community (retail or institutional). Too much liability. As a rule, if an investor has a question, they will simply tell the investor to review the audited financial's filed with the SEC. Just like we do. And that's pretty much what they told us. We mostly spoke about Russia, in general. And how long they had been working with the company. Nothing that you wouldn't find in the public filings.
We did however take the effort to look into the firm, as they audited the company's numbers.
Madsen & Associates was founded in 1987 and has operated a full service CPA firm since inception. The founders, Ted Madsen and David Madsen are both Members of the AICPA and UACPA. Ted previously worked for Ernst & Ernst CPA's as a Staff Accountant Supervisor and David was the Vice President of Auditing for GE Consumer Finance as well as a CPA Manager for Ernst & Young.
The firm has 48 publicly traded clients ! So they must be (continually) doing something right. Auditing numbers, means to audit the numbers a company puts out.
Client Roster: http://www.otcmarkets.com/service-provider/Madsen-&-Associates-CPAs-Inc.?id=109&page=5&pageSize=50
We are familiar with one of their clients, Brazil Fast Foods (BOBS) which is up 90% since we added it to the Restaurant Stock Review Watch List at $5.65 and now trades at $10.75. It reported revenues of $124 million last year. Of course with $230 million in sales, UNR is twice as big, but it's still nice to see a familiar name.
UNR Holdings majority owned sub, "494 UNR" commenced operations in 1967 as a construction/infrastructure services component of the Russian government construction operations. In 1998, the operation of 494 UNR's business was transferred to an Open Joint Stock Company (OJSC) 494 UNR, which was incorporated in Bronnitsy town, Moscow area, under the laws of Russian Federation -- meaning "un-privatized."
In addition, the Russian Federation owns 25% of 494 UNR. That's nice to hear. So is this too good to be true ? Read the filings and decide yourself.
Here's the 10K that came out a few days ago: http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=8170176
All SEC filings: http://www.otcmarkets.com/stock/UNRH/financials
S-1 Filing (June 2010 -- our "this is the real deal" document): http://www.faqs.org/sec-filings/100624/UNR-HOLDINGS-INC_S-1/
Yahoo Profile http://finance.yahoo.com/q/ks?s=UNRH.OB+Key+Statistics )
2011 Year End Press Release ($230 million in revenues): http://markets.financialcontent.com/demo/?GUID=21045609&Page=MediaViewer&Ticker=UNRH
2010 Year End Press Release ($107 million): http://markets.financialcontent.com/demo/?GUID=18465122&Page=MediaViewer&Ticker=UNRH
2009 Year End Press Release ($64 million): http://markets.financialcontent.com/demo/?GUID=12757884&Page=MediaViewer&Ticker=UNRH
UNR Holdings Announced Trading Symbol (2009): http://markets.financialcontent.com/demo/?GUID=12757884&Page=MediaViewer&Ticker=UNRH
News Archive: http://markets.financialcontent.com/demo/?Page=NEWS&Ticker=UNRH
Ladenburg was to do a $25 million offering (in 2010) that was later withdrawn. http://www.nasdaq.com/markets/spos/company/unr-holdings-inc-67097-64550
Ladenburg IPO's http://ipo.nasdaq.com/IPO_History.asp?recs=25&cid=944&total=83&startrec=1
Website (english): http://www.unrholdings.com/en/start.html
About UNR Holdings, Inc.
UNR Holdings is a holding company that has a 68% ownership in its subsidiary, 494 UNR.
494 UNR is a diverse construction company with more than 40 years of success serving the Russian construction market. The Company specializes in housing and commercial construction developments. UNR also supplies and oversees the installation of its proprietary road and slopes stabilization material Prudon to infrastructure projects in various parts of Russia. While UNRH is involved in complex construction projects, the Company also assists the Russian government with infrastructure projects for oil and gas corporations, such as GAZPROM and TRANSNEFT. 494 UNR is one of the oldest and most established construction companies located and operating in Moscow and the Moscow area of the Russian Federation.
2. December 31, 2011 Financial Highlights.
UNR Holdings, Inc. Announces Year End Financial Results for 2011 (Press Release: http://goo.gl/yq6RI )
-- Revenues for the year ended December 31, 2011 totaled $230,978,646, an increase of 115.2% from $107,298,408 compared with the year ended December 31, 2010.
-- Net income attributable to UNR for the fiscal year end 2011 totaled $26,496,966, an increase of 64.6% from $16,107,720 for the year ended December 31, 2010.
-- Basic and diluted earnings per share for the year ended December 31, 2010 was $1.08 per share, an increase of 63.5% from $0.66 per share for the same period a year ago.
-- Gross profit (sales minus cost of sales) for the year ended December 31, 2011 increased to $44.76 million from $27.7 million in the prior year's period, representing an increase of 71.8%.
-- Cash and cash equivalents and marketable securities totaled $71.9 million as of December 31, 2011, up 32.9% from $54 million as of December 31, 2010
3. Auditor Opinion.
To the Board of Directors of
UNR Holdings, Inc.
We have audited the accompanying consolidated balance sheets of UNR Holdings, Inc. and Subsidiary (collectively, the "Company") as of December 31, 2011 and 2010 and the related consolidated statements of income, equity, comprehensive income and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements as of and for the years ended December 31, 2011 and 2010, referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2011 and 2010, and the restated consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, all assets of the Company are located in the Russian Federation and the entire revenue is earned in the Russian Federation.
As discussed in Note 8 to the consolidated financial statements, the Company is a plaintiff in a lawsuit against its debtor, the Russian Ministry of Defense, to recover approximately $33.5 million of accounts receivable. The court of primary jurisdiction accepted the Company's claims. In September 2011, the Russian Ministry of Defense paid approximately $30.2 million to settle the debt. At present, the ultimate outcome of the litigation for the balance of the claim cannot presently be determined. However, management believes that they will ultimately prevail and collect substantially all of the amounts due from the Russian Ministry of Defense. Accordingly, no provision for any losses that may result upon adjudication has been made in the accompanying financial statements.
/s/ Madsen & Associates CPA's Inc.
March 29, 2012
4. Technical Data.
Barcharts: http://www.barchart.com/opinions/stocks/UNRH (13 buys and one sell)
StoockTA: http://www.stockta.com/cgi-bin/analysis.pl?symb=UNRH&cobrand=&a... (Bullish, bullish, bullish and very bullish)
Disclaimer: UNRH: The above letter and/or news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based. UNR Holdings is a client of Institutional Analyst Inc., and has been compensated with one hundred thousand restricted shares.
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