iSteelAsia.com (January 16, 2001)

iMerchants Limited (Listing fact sheet)

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Key Data

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Gem stock code

8080

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52 week H/L

$1.20/$0.31

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Current price

$0.445

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No. of issued shares

1,454,500,000

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Market cap

$647,252,500

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Rating

neutral

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Main Points

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Turnover has been increasing to 1.6B, the largest amongst the worldˇ¦s online steel trading portals.

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A third generation trading platform is in place to further facilitate processing flow.

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MOUs has been signed up with Chinese and Korean steel enterprises to participate in its online trading business.

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Burnrate (costs and losses) have been dropped over time.

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The Company

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A recent visit to the company had left us a positive impression over the managementˇ¦s strong commitment to develop a leading B to B e-commerce steel trading platform in the Asia pacific region. The companyˇ¦s business model is sound in the sense that the participants of the online steel trading would find their transaction costs be significantly cut down and information such as price, product specifications, quality, shipment and delivery lead time etc. be easily accessed.

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The company also aims at linking up with major steel manufacturers and traders around the world in order to convert a traditional way of inefficient and costly steel trading business into a era of new economy trading backed by improving technology. For example, the strategic investment in the UK based steel company, Stemcor is a move to fulfil such goal.

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The company at the moment has USD10 million cash in hand and will be continuing looking for merger and acquisition opportunities worldwide with the purpose of enhancing synergy of the company.

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Summarized Financials

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FY2000

(HKD)

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Q1

Q2

EQ3

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P/(L)

(33,000,000)

(15,000,000)

0

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Risk Factors

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The companyˇ¦s financial position is improving and revenue is increasing on either trading commission or value added services such as insurance, transportation and logistics etc. However, the companyˇ¦s business model is yet to be proved as successful and viable. While it is still in trial period, profitability of the company is not guaranteed in the future and in a sustainable way.

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Our Comment

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This stock is a buying target for investors who believe the online model can improve the efficiency and profitability of the old economy. However, players must identify that the sentiment in GEM stocks remain weak and risk remain high.

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