Monday, 13 February 2017

We Are Still Long On KBSF

Shortly after our report on Catalyst Biosciences (CBIO) came out, KBS Fashion Group Limited (KBSF) took a dive from the $15's to as low as the $11's. We suppose that maybe some traders thought that meant we moved onto the next play. We did not. We currently hold more than double the shares in KBSF as we do CBIO. We have sell limit orders in small amounts and in increments of a little over $1 between $15 to $25. A few orders got filled today as the stock raced to $18 and that gave us a chance to reload around $13. Open sell orders are from $18 to $25 and we will have plenty of shares remaining after that to place at higher prices. We are in since $3 so it's understandable to take some off the table on a volatile stock even if it's still highly undervalued.

Let's remind everyone of the results of the Q3. You can see more details in the post from yesterday.

Here is the link to the Q3 SEC filing

Key highlights:
  • Cash improves from $25.9 million to $26.3 million from June to September. Cash per share increases from $14.61 to $14.85.
  • Working capital improves from $54.5 million to $56.9 million. Working capital per share increases from $30.80 to $32.12.
  • Total equity improves from $99.6 million to $102 million. Total equity per share increases from $56.27 to $57.62
  • EPS for Q3 2016 was 6.13 cents pre-split, up 53% from 4 cents EPS in Q3 2015. Adjusting for the 1-for-15 split, EPS was $0.92 
Even though EPS was $0.92, notice that working capital per share increased $1.32 per share from June to September. So the quality of earnings is strong through the increase in cash and accounts receivable being greater than the EPS number itself.

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