EastBridge Investment Group, Inc. (OTCBB: EBIG), a provider of financial services to emerging public companies in Asia, with clients similar to companies like Chinacast Education Corporation (Nasdaq: CAST) and China Education Alliance, Inc. (NYSE: CEU), recently held an investor conference call that outlined its current status and future outlook.
EastBridge Investment Group Inc. (OTCBB: EBIG), a provider of financial services to emerging public companies in Asia, held an investor conference call on July 11, 2011, which outlined its current status and future outlook. On the call, the company’s executives also revealed a number of near-term catalysts that could push the stock higher over the coming months.
Chinese IPO Markets are “Slowly Improving”
In order to obtain a favorable valuation, EastBridge clients Tsingda Education and Wonder Education have been forced to delay their initial public offerings. A number of recent accounting scandals, combined with government measures to slow the economy, has adversely affected investors’ appetite for Chinese public companies. But luckily, things are now starting to turn around.
Management indicated on the conference call that the Chinese IPO climate is slowly improving and they are in discussions with investment banks to set a date for the offerings. Meanwhile, both companies are fully reporting and continue to post strong top and bottom line growth. Tsingda Education’s net income is projected to reach $16 million in 2012, while Wonder Education has projected growth of around 20%.
In addition to Tsingda and Wonder, the company is close to filing registration statements for two other clients, Dwarf Technology and Arem Pacific. They expect to file both companies within the next 30 to 45 days. Also, they continue to work with several other clients to prepare them for the process to get listed on a US stock exchange. EastBridge’s pipeline of clients is strong and flowing.
Fizza and Cambium Provide Near-term Potential
In the meantime, EastBridge has branched out into new agreements that involve upfront payments as well as equity. Some investors are hoping that these agreements will pay off in the near-term, while Tsingda Education, Wonder Education and other clients offer longer-term potential with their equity.
Management indicated on the conference call that one of its clients, Cambrium Learning, was working with Tsingda Education to introduce English language learning software and services in China. The company is earning a fee by virtue of this introduction, and will share in the revenue generated by this joint venture (JV) between Tsingda and Cambium. Of course, this JV will also provide additional revenue for Tsingda helping to improve its net income, leading to a higher IPO valuation.
Fizza is a U.S.-based client that is developing a drink that tastes like soda but has the same healthy properties as milk. In a similar arrangement, this company paid an upfront fee in addition to equity in order to engage EastBridge. Meanwhile, management reported significant progress in setting up its manufacturing capacity and preparing its product for launch.
A Great Investment Opportunity
Due to the IPO delays and its temporary delisting from the OTCBB, EastBridge’s stock dropped some 55% over the past six months. Now, the company is relisted on the OTCBB and closer than ever to facilitating several IPOs and unlocking significant value for shareholders. In the meantime, the firm’s fee-based clients should provide a steady income to help bolster its financials.
In the end, these factors make EastBridge Investment Group (OTCBB: EBIG) an attractive investment opportunity at these levels.
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