(Sept. 2, 2009) It appears that investors are beginning to take notice of Lotus Pharmaceuticals (OTC:LTUS). The GeoTeam has been tracking LTUS with some trepidation, due in part to the following issues:
- The Company comments, "We believe that our working capital may not be sufficient to fund our current operations for the next 12 months unless Lotus East pays us the amounts due to us ($23.7 million)." ** (Source: SEC Filings)
- Lotus Pharma current ratio is less than 1, which may signify a difficulty in meeting some short-term obligations.
- Lotus Pharma has been experiencing pricing pressures in its wholesale pharmacy division which are negatively effecting sales. The Company comments, "We expect our wholesale revenue will maintain at its current level with minimal growth in the remaining part of fiscal 2009." Wholesale revenue represents the majority of the Lotus's total sales.
Still, the stock has some pretty compelling valuation characteristics
- Price: $0.81 (8/31/09)
- Geo Calculated Fully Tax-Adjusted Trailing non-GAAP EPS: $0.24
- Tax-Adjusted P/E: 3.38
- Book Value Per Share: $1.09
A key determinant contributing to the attractiveness of the Lotus Pharma story depends on how the Company ultimately plans to rectify its current liquidity situation. For example, will a solution lead to significant dilution? The GeoTeam speculates that investors are betting that Lotus Pharma will take steps to solve its liquidity problems.
Although the GeoTeam will not currently code Lotus Pharmaceuticals as a GeoSpecial, we feel some of our risk tolerant readers will be interested in following this story.
Source: GeoInvesting.com
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