EastBridge Investment Corp (OTC-BB: EBIG), a provider of financial and related services to Asian companies seeking to list on U.S. stock exchanges appears to be set for success ahead of client Tsingda Education’s initial public offering, which is a company similar to China Education Alliance, Inc. (NYSE: CEU) and ChinaEdu Corporation (Nasdaq: CEDU).
EastBridge Investment Corp (OTC-BB: EBIG) is a financial services company that assists Asian clients with auditing, legal and investor relations processes to help them become public companies listed on U.S. stock exchanges. As its client Tsingda Education completes its registration filings with the SEC, the company appears to be well-positioned to profit from the proceeds.
Tsingda Files S-1 Registration Statement
Earlier this year, Tsingda Education filed its S-1 registration statement with the SEC indicating that it intends to offer 8,079,740 shares of common stock at about $1.60 a piece for proceeds of $16,287,584. After the initial public offering takes place, the company will have approximately 10,179,740 shares outstanding and will be trading on the AMEX stock exchange.
With pre-tax net income of $7,120,130, or $0.69 per share, in 2009, the company will trade at just 2.31x its trailing 12-month earnings, if it IPO’s at $1.60 per share. Meanwhile, the company disclosed generating $18,732,271 in revenues and pre-tax net income of $10,897,164 during the nine months ended September 30, 2010, representing significant year-over-year top and bottom line growth.
EastBridge’s Significant Stake in Tsingda
EastBridge owns some 2,079,740 shares of common stock, according to Tsingda’s latest S-1/A filing with the SEC, valued at approximately $3,327,584 at the $1.60 per share proposed offering price. With a market capitalization of just $8.88 million, the stock appears to be significantly undervalued given this equity and the potential for near-term appreciation with its low multiple.
Assuming Tsingda eventually trades at the same multiple as China Education Alliance (NYSE: CEU), the stock could be worth $3.26 per share based on its trailing 12-month earnings alone. Ultimately, this could equate to EastBridge’s ownership registering in at closer to $6,779,952 in value, representing more than 75% of its current market capitalization.
EastBridge Shareholders are poised to Profit
Under its unique business model, EastBridge intends to offer 300,000 shares of its 2,079,740 shares to its own investors as a dividend on a pro-rata basis, according to Tsingda’s latest S-1/A registration statement. With approximately 148 million shares outstanding, this means that its shareholders will be entitled to approximately one share of Tsingda for every 493 shares of EBIG they own.
At a proposed offering price of $1.60 per share, the dividend amounts to approximately $0.003 per share for shareholders. However, if the stock appreciates to industry multiples of around $3.26 per share, as suggested earlier, the dividend could be worth closer to $0.006 per share – or an 11% yield. Meanwhile, EastBridge’s shares will benefit from the sale of the remaining 1.8 million shares.
In the end, Tsingda Education’s move to complete its registration filings and undergo an initial public offering could pay big dividends to EastBridge shareholders, making the stock one worth considering for growth investors seeking exposure to Asia’s fast growing economies!
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