Gediminas Jasionis

Golden Dragon Holdings (PinkSheets: GDHI) Sounds Promising

by Gediminas Jasionis January 25, 2010
Golden_dragon_imports.jpgInvestors surely got excited on Golden Dragon Holdings' (PinkSheets: GDHI) announcement stating the company expanded their products to 300 convenience stores. Share price added 28% during Friday's trading whilst the overall market declined on threat of possible strong banks regulations and disappointing job market update.

The announcement came out coinciding with the release of their conference call log discussing 2009 results and 2010 expectations. On highlights, the company's CEO stated they will continue pursuing contracts with major supermarkets within the Beijing area, as well as look for new distribution contract opportunities including the supply of new products like garlic.

Counting on the potential buying power growth among middle class consumers, the company expects to carve their place among other US products importers. With just over $27 thousand in sales for 2009 the company is still confident they can make $1 million by the end of 2010. Knowing the number of retail stores offering their imported products have gone up significantly the goal seems pretty real. The bottom line is not guaranteed to grow positive though.

Speculating the possible share price target for 2010 we cannot count on existing numbers and they suggest the company is already overpriced. For example looking at the food wholesale industry's current P/S ratio of 0.18 and applying it to the company's would be $1 million in sales suggest a share price of 0.0001. Even with the recent decision to retire 1 billion of their common stock the company still has an enormous 1.54 billion outstanding which will keep the price per share low if not dealt with.

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