Aquagold International, Inc. – A Chinese Cash Machine?

I enjoy getting emails from my subscribers.  They are interesting.  Sometimes they are positive (thanking me for a trade alert or one of my blog’s), some negative (There might be children reading this so I can’t share details – it is amazing how mean people can be in anonymity of email) and others want me to comment on a certain stock.  Since I am not an investment advisor, I DO NOT make recommendations, but I do comment on occasion.

One stock that a reader wanted me to take a look at was Aquagold International, Inc. (AQUI). I am a skeptic by nature and try to do my due diligence before I share any information on a company.  Unfortunately, there isn’t much info beyond their website and a plethora of press releases (Their IR guy has been very busy).  Even though there isn’t alot of info on the company, I still want to share it with you.

The company is a  Canadian Corporation distributing and exporting its proprietary brand of premium natural spring water solely to the Mainland Chinese market. The company actually shipped its first order to China in late June under an open purchase order/contract with a leading trading company in China.  I was unable to determine the size of this initial order, but the contract amount is specified as $197.5 million (it is not clear from the press release if that is $U.S or $CN – that does make a big difference) and runs until 2016.  Since the shipment was under an irrevocable letters of credit, then I guess you could say that the company has revenues.

What the company does have are lots of press releases and a new updated website.  You are welcome to check them out.  I did talk with their Investor Relations person and he confirmed what was written in the releases and he did give me some more details about their big marketing push into China.  That push revolves around a television show done in Mandarin for the Chinese market.  He said it is akin to “America’s Top Model” and the name of it is “Aquagold Superface Model Contest”.  Aquagold’s product is prominently displayed during the show and is the title sponsor.  The company expects to get a great deal of notoriety and attention by sponsoring this show.  According to my contact, over 35MM viewers tune in to the show weekly.

My contact also stated that they are working diligently to become a fully-reporting SEC company, but completion date of that task is unknown…..Not that historical financial statements will tell you a lot about the future prospects of the company.  Since they made their first sale in June of 2009, I am more interested in future statements.

The stock is trading for only 1 1/2 cents and the chart isn’t compelling at all, in fact it is bearish.  But with a stock at this price range, any news or PR could send it “to the moon”.  Try as I might, I was unable to get any intelligence out of my contact about what is coming up for the company.  The company line is that they are executing on the plan and expect to be profitable and successful.

I must admit that I am intrigued by the company and its prospects.  Everyone knows that China has massive problems with its water supply and intuitively one would think that shipping water to China would be a profitable idea.  AQUI’s water is not water for the masses.  It is a premium water (oxymoron, anyone) that they are trying to build a cachet around.  I wouldn’t count them out and I am going to watch them closely.

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