Why Sino-Global Shipping America, Ltd. (NASDAQ:SINO) Is Raising $4.8 Million in Equity

Sino-Global Shipping America, Ltd. (NASDAQ:SINO)

Sino-Global Shipping America, Ltd. (NASDAQ:SINO) has embarked on a fundraiser process that it hopes will yield $4.8 million in gross proceeds after it closes later this month.

The company said that it is selling its common stock worth $4.8 million to three institutional investors that it has yet to reveal. Those investors have agreed to pay $3.18 for a share of the company’s common stock, suggesting a discount of 28% compared to the stock’s closing price on the day immediately before it went public with the equity fundraise plan.

Shares of Sino-Global retreated following the discounted fundraiser announcement, with the stock plunging about 22% to $3.45. However, the stock has risen more than 520% since a year ago, oscillating between a low of $0.45 and a high of $14.20. So far this year the stock is up slightly more than 7%.

Putting the funds into use

Sino-Global Shipping America, Ltd. (NASDAQ:SINO) expects to close the equity offering by February 21. It expects net proceeds from the offering to be $4.3 million, that is, after making deductions such as fees for the placement agent and offering expenses. The company didn’t provide specific detail on how it expects to spend the funds, but said it has identified use for the money in working capital and general corporate purposes, which could drive growth.

F2Q17 revenue up 33%

Sino-Global Shipping America, Ltd. (NASDAQ:SINO) registered its fiscal Q2 2017  performance for the period ended December 31, 2016. Revenue for the quarter rose more than 33% year-over-year to $2.1 million. The company said its inland transportation and freight logistic services segments did well during the quarter.

“During the last quarter we continued our efforts to address industry challenges, and in December we completed the launch of our full-service logistics platform. Our new platform connects shippers with independent trucking organizations, and since launch the Company has entered into agreements with two major shipping conglomerates,” said CEO Lei Cao.

He added that such agreements would bring for customers to SINO and help the company into more strategic alliances.

Strong performance in the higher margin logistics services business combined with tight financial controls resulted in a significant improvement in gross margin to 85% from 55.7% a year earlier. As such, Sino-Global recorded net income of $0.8 million, reversing a loss of $1.6 million in the comparable quarter in the prior year.

Sino-Global Shipping America, Ltd. (NASDAQ:SINO) posted EPS of $0.11, up more than 161%. The company ended the quarter with cash and equivalents totaling $3.3 million. Operating cash flow in the back half of 2016 was more than $1.9 million.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

2/15/2017
Ticker Symbol SINO
Last Price a/o, 4:02PM EST  $                      3.33
Average Volume 4,467,788
Market Cap (mlns)  $27.07
Sales (mlns) $6.60
Shares Outstanding (mlns) 8.13
Share Float (mlns) 4.22
Shortable Yes
Optionable No
Inside Ownership 19.70%
Short Float 2.06%
Short Interest Ratio 0.16
Quarterly Return 86.03%
YTD Return 7.42%
Year Return 530.80%