Linkwell Corporation (LWLL) is China's Disinfectant Answer
Linkwell Corporation (Public, OTC:LWLL) has picked up the slack in China where Johnson & Johnson (NYSE:JNJ) has failed. Believe it or not, the all powerful J&J (which happens to be a great stock and company) failed to penetrate into the Chinese market a few years ago. They were not able to deploy their network of relations with the Chinese medical system (hospitals, clinics and doctors). However, the darling acquisition candidate for JNJ would be my subject of discussion today - Linkwell Corporation.
Speculation aside, LWLL is an impressive company for trading at just 15 cents a share. Over the last 20 years Linkwell Corp. has been involved with the production of disinfectant health care products primarily for the medical industry of China. China has shown a significant willingness and responsibility to increase the public awareness about the health and living standards and to educate its citizens about the proper sanitation procedures. These factors above provide the disinfectant industry with a tremendous potential growth during the upcoming years and can contribute to strengthen the revenue and the profits of the respective business sector with a steadily rising pace.
The disinfectant industry is an emerging industry in China and there are many anonymous manufacturers of such products. Linkwell claims they are the No. 1 Disinfectant Brand in China (according to their website), so can they back up that up? To be honest, time will tell. However very few of the disinfectant players have have nationwide coverage with a diverse variety of products like LWLL has on one hand, on the other hand the Chinese government became stricter in terms of the necessary manufacturing requirements since 2002. That being said, few companies remained in the game after the government put the smack down and LWLL is among the survivors because their certified facilities were constructed on specific governmental quality and safety standards. These certified facilities are called GMP (Good Manufacturing Practices) certified workshops.
LWLL has three subsidiaries:
1. Wholly owned (100%) subsidiary Likang Biological is a recent acquisition and LWLL plans to diversify its portfolio with pharmaceutical products for human and veterinary use as well as cosmetic and biological products this way.
2. The profitable subsidiary Likang Disinfectant is involved with the disinfectant products and LWLL completed its acquisition in Q2 of 2007. Linkwell has recently acquired the remaining 10% of Likang, so the respective results will be accounted during Q3 of 2007.
3. Likang International Trade Company is the last profitable subsidiary and was founded in December of 2006. There's no question Masters that their is a bright future in the Chinese export industry, even if there is a bubble growing in China's stocks. Likang deals with the export of an array of products like light weight construction materials, chemical raw materials, furniture, medical equipment, medical instruments, computers and more. Since the trade between China and many countries globally is steadily developing, this corporate initiative can consistently expand during the upcoming years.
Linkwell has recently signed an agreement for the acquisition of the profitable "Jinmeihua" which is involved with the gene diagnostics for early detection of human diseases like tumors, cardiovascular diseases, diabetes and genetic disorders. The earnings for 2007 will be about $1.7 to $1.8 million which make the one digit P/E as low as 7 at the current price of 17 cents a share. The current P/BV is only 2 and the current ratio (current assets / current liabilities) is almost 3 so apparently its balance sheet is particularly strong for further expansion.
The directors of Linkwell currently own almost 70% of the outstanding shares (according to a corporate announcement in November 2006) and their most recent purchases were done back when the average price was around 24 cents a share. The exercise price of the remaining warrants for the directors have an average price of 25 cents within a period of 3 years from now.
The small caps fund managers have yet to discover LWLL, so there are no placements thus far. The last Google News to come out on LWLL was way back in July when Linkwell appointed a U.S. representative office to increase the accessibility of its shareholders at corporate events and to reveal its future projects. Bottom line - LWLL is a gamble, it's an OTC stock trading at 15 cents a share and there are 73 million shares outstanding. This company hasn't been in the news because if you don't trade on a major exchange, no one cares about you. I have high expectations for LWLL and the volume trading can swing this stock all over the place until they really get grounded. I recommend using caution when trading this stock and I believe the long-term potential for Linkwell Corporation is the true value, versus the penny stock swings.
Fellow Masters, as an FYI, my next researched stock pick will be available via WallStNewsletters.com next month, thank you for reading. Part of the reason is I need to protect my neck and ensure readers understand the Disclaimer of this site. By having a paid subscription, there are terms the reader agrees to, it's in the best interest of all parties to accept stock advice for what it is -- advice. I like stocks that are low key, unheard of by the general public, but those are also risky investments and I've gotten enough attention as has the Stockmasters that the best course of action is a paid monthly newsletter for my publications. Plus, I'm not letting them sell it for more than 25 bucks a year, Rock on Reeves.
Article written by: Steve Reeves
Article posted on: October 10th, 2007
Disclaimer: The Author has held various positions in the securities mentioned and is currently long on LWLL.
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