Tuesday, 10 March 2009

Fundamental Research Issues IWG Report

International Water-Guard (TSX-V: IWG)
Basic Shares: 39.3 million
Fully Diluted: 46.5 million

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A recent upbeat Dow Jones Newswire story on International Water Guard (IWG) was tempered by an analyst's research report which predicted IWG could face a reduction in orders given the worsening economic problems.


As a result, Fundamental Research lowered its prediction for IWG's future stock price from a previous $0.35 per share to $0.30.

However, because IWG has a sound cash position, low debt levels, positive free cash flow and strong fundamentals, research author Siddharth Rajeev concluded that IWG, "will see it through the downturn."
And even if Mr. Rajeev's prediction of a $0.30 IWG stock comes true, investors who buy in at today's price of $0.07 per share will be well rewarded.

Mr. Rajeev wrote in his February 17th report that corporate jet makers should make it through this year relatively comfortable because of the large backlog of orders they built up last year.

But the analyst predicted jet aircraft production could drop in 2010 and 2011.

To view the full Fundamental Research report please click here.

In an earlier Dow Jones Newswire story, IWG President & CEO David Fox drew a distinction between his customers - the manufactures of the largest corporate jets - and the rest of the industry - manufactures of mid-size and small corporate jets.

In the Dow Jones story, Mr. Fox said he was preparing for trouble but was cautiously optimistic that the makers of large corporate jets would be able to fly relatively smoothly through today's and tomorrow's economic tempests.

However, Mr. Fox said all the credible evidence had it that the makers of mid-size and small corporate jets were facing some tough economic squalls.
A customer of IWG's, Gulfstream, a manufacture of large and mid-size corporate jets, then surprised the industry by announcing it was cutting production of its large-cabin aircraft by more than 20% this year.
Prior to the latter announcement, Gulfstream management were unwavering in their belief demand for their highest-end corporate jets would remain firm.

Out of all of this, the good news is IWG's order book following Q1F09 (Dec. 31) was at $3 million or three quarters of total revenues in F08.

It's also important to keep in mind that after 9/11, the aviation industry went into a tailspin when air traffic dropped dramatically but it bounced back.