Aldila Inc. P/S of 0.23, COGS Decreasing, Signing Major Deals

Introduction:

Aldila, Inc. (PINK:ALDA) was founded in 1972 and is based in Poway, California. Aldila, Inc. designs, manufactures and markets high performance graphite golf shafts used in golf clubs assembled and marketed throughout the world by major golf club companies, component distributors and custom club makers, and is a leading shaft brand on the PGA Tour and among consumers. iAldila also manufactures composite prepreg material for its golf shaft business and external sales. The company sells its graphite shafts to golf club manufacturers, distributors, custom club shops, pro shops, and repair shops; and composite materials to manufacturers of composite products. It operates primarily in the United States, England, China, Japan, Canada, Australia, and Vietnam.

Stock Snapshot

As of 26th September 2012, the stock for Aldila, Inc. (PINK:ALDA) stood at USD 2.3 per share with a total market capitalization of USD 11.85 million. The stock is trading at a P/S ratio of 0.23 and a P/B ratio of 0.68.

Financial Highlights

Top line

For the 6MFY12, the company registered net sales of USD 28.1 million as compared to USD 23.3 million for 6MFY11 achieving YOY growth of 20.6%. The major reason for this performance was increase in gross unit sales which increased by 27% YOY and the composite product sales which increased by 31% YOY. The composite material sales were decreased by 10% YOY.

Gross Profit

The gross profit of the company was recorded at USD5.06 million for the 6MFY12 compared to a figure of USD 5.33 million for 6MFY11; showing an YOY decrease of 5.06%.

Net Earnings

For 6MFY12, the company reported net loss of USD 4 million as compared to a net loss of USD 0.97 million in 6MFY11. The loss per share of the company increased by 311% YOY to finish at USD 0.74 per share for 6MFY12. The net loss was mainly impacted by a consolidation charge relating to the Company’s China plant. Ignoring the impact of the plant consolidation charge for the comparative periods, the company would have reported loss per share of USD 0.16 for 6MFY12 as against USD 0.18 per share for 6MFY11.

Financial Position

As at 30th June’ 2012, the Company had USD 0.46 million in cash balance translating in a cash value per share of USD 0.09. The Company had totat debt of USD 3.15 million resulting in a debt to equity ratio of 17.29. The book value per share as at 30th June 2012 stood at USD 3.38 per share.

Outlook

Value Investors should watch out this stock due to the following reasons:

* The company’s products have enjoyed one of the best years on the PGA Tour as it shafts have been used to win 7 tournaments on the tour which bodes well for the company’s brand identity and loyalty of customer base!

* The Company has continued to strike deals with major multi-store dealers during the year!

* Production moving from China to Vietnam resulting in provision of lower cost and high quality products!