Universal Travel Group (UTVG.OB)

The Chinese travel industry is on fire, and with the Olympics in 2008 and the World Fair in 2010…the time to scour the markets for smart trades is now. Dominica Today has reported… “Chinese domestic tourism is boosting, and is the largest of its kind in the world. The number of domestic tourists in China reached 1.1 billion in 2004, generating a total income of 471.1 billion Yuan (US$58.3 billion), rising 27 percent and 37 percent year on year.”

It is with that in mind that by serendipitous circumstances I stumbled upon Universal Travel Group (UTVG.OB). The company is positioned to capitalize on the exploding Chinese travel industry. Currently, UTVG books about 429,000 domestic airline flights along with tens of thousands of hotel rooms and leisure tours each year through its eight company-owned reservation office locations, 78 franchised locations and high volume call center facility.

The company reported gross revenues of $10,013,788 in 2006; up from $2,761,703 in 2005 (263% increase). Net income rose from $1,377,484 in 2005 to $2,558,478 in 2006 (100% increase). Net income as a percentage of sales declined from 52.6% of revenue in 2005 to 47.2% of revenue in 2006. Absent a non-cash charge for stock option expense of $950,040 the company’s net income would have been $3.5 million or $.11 cents per share versus $.08 cents for the year ended December 31, 2006.

UTVG currently has no long-term debt and requires minimal capital expenditures to remain competitive, thus dropping more dollars to the bottom line. The company also generated cash of $1.4 million from operations.

2007 Company Projections

The company’s 2007 projections are impressive and should the company meet these projections you could be looking at a potential 138% return over the next year. Here is how this breaks down:

Current Stock Price (3-30-07) $1.74
2006 EPS $ .08
PE Ratio (TTM) 21

2007 Net Income Projection $6.56 million
EPS Expectation $ .19

If the company began selling at expected earnings based on the current multiple it would be $4.13 per share…a 138% increase from the current price.

Whether the company will meet these targets remain to be seen, but the company is operating in a very high growth market where such returns are very possible.

Related Links:

Press Release - 2007 Earnings

Yahoo Finance - UTVG