DAWK is a supplier of ultra-clean manufacturing environment, or
clean rooms, to the semiconductor industry. The company provides its customers
with services to integrate the design, installation and servicing of clean
rooms, including architectural engineering and design, installation, testing,
certification, tool fit-up and continuing on-site and support.
For the fiscal year ended 12/2000, revenues rose 16% to $52.6
million - net operating income $2,648,000.
Book - $1.23
Cash - .24 Debt - .22 shares outstanding
- 16,393,000 fully diluted. 52 week range - $.40 - $2.25
Select Financial Data Year
ending Dec. |
|
1999 |
2000 |
2001E |
Revenue |
$45 mil |
$52.6 mil |
$59 mil |
Net Income/sh (Loss) |
(.70) |
.15 |
.18 |
from operations only |
|
|
|
Shares outstanding |
|
|
|
fully diluted |
12.5 mil |
16.4 mil |
16.4 mil |
The company attributed its improved financial performance to
several factors, including rigorous cost-cutting measures begun in early 2000
and efforts to diversify the company's business, both geographically and among
industry segments, and a top to bottom restructure of the company's
operations.
According to the newly appointed president, Michael J. Shea, "We
have taken extreme measures during 2000 to return to profitability, and our
financial results for 2000 show that those measures have begun to pay off.
At present, DAWK's backlog as of 12/00 was approximately $28.3
million, as compared to $19.7 million at the end of 99, and $12.8 million at
the end of 98.
Overview
Even though the market environment is very troubled, which has
created increasing volatility, cheap stocks should not be avoided. In our
opinion, DAWK has produced results that clearly demonstrate a strong
turnaround. We believe that "new" management has taken the reigns from a
"tired" and "wasteful" management and streamlined the whole show!
At present DAWK trades 20% below book, has a trailing 12 month
PE of 6.6, sports a PSR of only .3, has increased its backlog by 43% and, of
course, has very little exposure.
If we assigned a conservative PE valuation of 15x and base it
upon our trailing 12 months operating earning of .15, a resulting share price
of $2.25 results. If DAWK were to trade at 1.5x sales, DAWK would trade at
$5.00 trailing. At 3x book, which is very conservative, DAWK would trade at
$3.69.
Based upon 01 estimates, DAWK has the potential to appreciate
200% to 300% from current levels.
On March 20, 2001, DAWK announced it had signed a letter of
intent to form a joint venture company to provide integrated clean room design,
engineering construction and manufacturing services in China. The press release
could over time be a huge revenue and earnings producers, which, of course,
could accelerate DAWK's growth well in the 21st century.
We rate DAWK as a strong buy for aggressive micro-cap investors.
We see little downside risk, while the upside potential could easily approach
200% - 400% during the next few years.
We intend to monitor DAWK for percentage gain performance.
Broker contact: Michael Chesler at 1-800-890-1629. |