UNILENS VISION INC (UVI.V)

I opened a small position of UVI.V this afternoon, a small Florida-based company (market cap $16 million), engaging in the manufacturing and distribution of specialized contact lens. The company's stock is traded at both OTCBB and Toronto Venture Exchange, with a very small floating (4.4 million shares). You do not see this one traded very often, so when some are offered, I take the opportunity.

The company has been growing its top line by more than 35% so far this year and another 26% of its royalty income. Net income is up by 30% and EPS up from $0.16 to $0.21. (31%). Free cash flow position and growing, with a clean balance sheet. I expect it to earn at least $0.28 for FY06 (June 30, 2006) and $0.35 for FY07, which leads to a 15X of FY06 EPS and 12x of its FY07 EPS. The company has purchased about 244K shares of its own stocks, despite the tiny floating and has paid a one-time special dividend on August 26, 2006. It also announced that it will pay a regular quarterly dividend of $0.075. Based on the currently level, that is a 7.1% dividend yield. Even without any appreciation, the dividend yield is almost sufficient return. The company is also not expected to pay cash tax until 2010 and its final results will likely be boosted due to tax recovery. The company generates a return on equity of 42% and return on capital of 38%. The only drawback is its very low liquidity. It's going to be hard to buy, and probably even harder to sell. Target for 12 months: $6.0.

Position: long UVI.V