News Details – Smallcapnetwork
First Look Turnaround Story - Globalink, Ltd. (GOBK)
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February 2, 2024

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PDT

Good Wednesday morning, folks. Today's edition is coming to you earlier in the trading session rather than after the close for one reason and one reason only - after the close may be too late. We mentioned in yesterday's newsletter we had a new trading idea for you. It was simply serendipitous how just a few minutes ago this very company dished out some news that now makes it a very interesting speculation. Before we get to a closer look at the company though, let's paint the proper backdrop. It's not secret people are finally thinking - and eating - healthier. What you may not quite realize, though, is that the health supplement market is still accelerating. In the United States alone the supplement market is worth $37 billion. Globally, it's worth an estimated $175 billion, and growing at a clip of 5% per year. Of that whole market, gingko biloba makes up roughly $500 million in annual sales. The growth is particularly strong in China, where gingko biloba is a core piece of the nation's traditional Chinese medicine market. Gingko biloba sales are growing between 10% to 20% each year there. Those are big numbers, but surprisingly enough, the industry is highly fragmented. While there are some major operations, it's still mostly a cottage industry, with most of the supply ultimately coming from small-time growers who can personally attend to each and every tree. It's a great product, but it's not a terribly efficient way of producing the plant. Enter Globalink Limited (GOBK), which is positioning to revolutionize the way gingko leaves are collected and turned into a health supplement. Most of you have probably never heard of Globalink Limited, and those of you who have may know it as a hotel-booking software and service provider. That's the old company though. If you look closely at some of the recent SEC filings you'll see it's been transitioning into a ginkgo outfit. And if you look real closely at the most recent filings, you may be surprised to see the company has already quietly begun gingko operations. It's a big deal, because if all goes as planned, GOBK could end up being one of the dominant names in the gingko biloba business. Now, before we dive into the specifics, let's be clear about one thing... this is arguably riskier than the usual speculative penny stock trading ideas we share with our readers. The company is not only getting into a relatively new venture, it's also in the midst of fund-raising (issuing stock) to help fund its entry into the health supplement market, so it's tough to pin down an exact capitalization structure. It's also still a bit thinly traded. On the other hand, the substantial potential fits the risk with GOBK. We'll simply remind you to do the smart things you always do, which are use entry limits, apply stops to protect yourself once you're in, don't overpay for it, and protect any unrealized gains you may have by scooting up your stops as the trade progress. And as always, never allocate more to one trade than you can afford to lose. Whatever the case, there's a great story here that just hasn't been told yet. Better you know about what's coming beforehand then start figuring it out after the fact. So what's coming? I'm just going to rip this straight from Globalink Limited's S1 statement (the prospectus for would-be investors of the secondary offering) which explains things as succinctly as possible: "During the fall of 2015, we entered into leases with local residents comprising 100 acres of prime ginkgo farmland and immediately began preparing the land for planting, as well as acquiring equipment and hiring and training laborers. We completed planting ginkgo seeds during March 2016." A recent press release went on to explain: "Throughout the month of March, 2016, our wholly-owned Chinese subsidiary Globalink (Xuzhou) Biotechnologies Co. Ltd, sowed 30,000,000 gingko biloba seedlings in our 100-acre test plot plantation in Pizhou, China. Our first harvest of the gingko leaves will be in September/October, 2016. The leaves will be dried and sold to pharmaceutical manufacturers for extraction of crucial ingredients needed for the manufacturing of healthcare products. The expected yield from the first harvest would be 60 tons after the leaves have been dried. At the current market price, the in ground inventory is worth $3.36 million. The company plans to acquire additional plots of land to expand their production of gingko leaves in China." The prospectus went in on to say that over the next five years, Globalink expects to develop a gingko plantation that comprises approximately 1,553 acres, capable of producing up to 5,600 tons of dried gingko leaves per year. At current market prices, that's more than $300 million worth of gingko leaves, or roughly $17 million worth of revenue bookable by Globalink . The real story here though -- the detail that could light a fire under the stock -- is the fact that it's got money growing in the ground right now. It won't mean a thing until this fall, but once the market realizes it's already started, traders should start to price that into the stock. And today may be the day traders start doing just that. The news came out this morning... Globalink Limited already has two major buyers interested in its dried ginkgo leaves. One of them is Novel Ingredients. The other is NBTY. Both are known, respected, and big names in the health supplement world. More important, both already have existing supplement product lines and a means with which to distribute them. The full press release is below, but I can cut to the chase right here and be more straight-forward than the PR is - NBTY and Novel wouldn't be interested in dealing with Globalink if Globalink's budding ginkgo business wasn't the real deal, as there are other ways to secure a ginkgo supply. I suspect what really drew both supplement makers to GOBK is the company's quality standard. If you get a chance to read through the S1, you'll see what I mean. In the meantime though, it sure looks like revenue is already being lined up, even with just the relatively small planting Globalink Limited has done. The really nice part about the way this company's assets are arranged is that it scales up easily and cost-effectively. The company can add more production without needing a massive amount of cash up front. The sell-through of the product doesn't take long either. If the company sells all 20 million shares it's trying to sell as part of the secondary offering, it will have 65.6 million shares outstanding. At $0.035 apiece, that roughly translates into a market cap of $2.3 million... a pittance relative to the gingko it could have growing in the ground a year from now, let alone five years from now. Never even mind the fact that its hotel-booking business will also be driving revenue in the meantime. Several million in annual revenue is on the near-term radar, and that figure will be moving into the teens as the plantation expands production. Bottom line? This is a chance to own a big stake in a small company that mostly just has to flip the switch. The ginkgo market is well-established, but its fragmented nature lets newcomers in.... especially newcomers like Globalink that have impeccable quality standards. I think later this year -- after the first harvest and en route to an even bigger second-year harvest --GOBK is going to have a lot of traders saying coulda shoulda woulda. Here's the press release for your perusal. Globalink, Ltd. Provides Update on Current Company Activities Vancouver, BC / TheNewswire / May 25, 2016 - Globalink, Ltd.(OTCQB: GOBK) ("Globalink"), announces that: Revenue expectation Globalink anticipates meeting its revenue projections for its gingko plantation in 2016. One month after completing the seeding of 100 acres of our gingko plantation located in Pizhou, China, the gingko seedlings have sprouted and are healthy. We anticipate harvesting this fallapproximately 60 tons of dried leaves for gross revenue about $185,000. Our unique way of utilizing modern scientific and technical procedures to control the entire growing process has attracted attention from pharmaceutical companies, health supplement manufacturers, and industry experts. Many companies have visited our plantation and have expressed interest in working with us. We have carefully selected two global companies, Novel Ingredient Services and NBTY, Inc., to partner with us. Both have expressed interest in entering into long-term supply contracts with us. To date, we have entered into memorandums of understanding with both companies regarding long-term supply/purchase relationships with each of these companies. Novel Ingredients Services of East Hanover, NJ, is a vertically integrated leader in delivering clinically backed ingredients, best-in-class process technologies, and a full suite of manufacturing services for its nutraceutical and functional food partners. NBTY, Inc. is a global company offering a wide range of brands and has a significant presence in virtually every major vitamin, mineral, herb, sports, active nutrition and supplement product category and in multiple key distribution channels. Novel indicated that in the past years, nearly 60% of total Novel's sourcing business has come from China. Gingko biloba extract has been a key to Novel's business and it plays an important ingredient used for both pharmaceutical and dietary supplements. Both Novel and NBTY appreciate how we control the production process from planting through harvesting, and that we verify the quality of our gingko leaves. Novel says: "We are very aware of how important it will be that fully controlled and verified botanical ingredients for the dietary supplement industry because new rules and regulation for the dietary supplement in near future will increase standards and penalties for non-compliance so as to rebuild confidence and trust and eliminate adulteration." NBTY made its first official entry into China in 2006 and managed to dominate China's dietary supplement market in a rapid and comprehensive manner. NBTY's gingko extracts stand out conspicuously among their multitude of excellent productlines. NBYT noted that from the selection of seeds, to the strict control over the various indexes for remnants of pesticides, heavy metals and other harmful materials over the whole growing period, and up to the profile and fingerprint of content standard, Globalink will strictly carry out each operation in accordance with the concepts & requirements for managing the pharmaceutical enterprises. In addition, Globalink also works in all-round cooperation with China Chamber of Commerce for Import & Export of Medicines & Health Products (CCCMHPIE), which is the regulatory authority in China's medicine and dietary supplement sector. After providing the source-tracing data for one year, Globalink will be awarded a green commodity logo by CCCMHPIE in 2017. Globalink will also assist CCCMHPIE in improving and perfecting the standards for exporting Chinese gingko leaves. Our company wants to work with both Novel Ingredient Services and NBTY, Inc. from the point of plantation through the growth and harvest stages. Our goal is to achieve high quality standards for the final gingko biloba extract product. Ginkgo Bilbo - Health Benefits and Market Ginkgo has been used for medicinal purposes for almost 5,000 years. In Chinese traditional medicine, it is used to treat asthma, bronchitis and various brain disorders, improve blood circulation, and enhance memory and cognitive function. In Asia, ginkgo tree seeds are used to aid digestion and to reduce the intoxicating effects of alcohol. In Europe and North America, ginkgo extract is used for the treatment of circulatory problems, immune system dysfunction and cognitive disorders, including memory loss. The main bioactive components of ginkgo leaves are flavonoids, biflavonoides, proanthocyanidins, and triactonic diterpenes, which include the ginkgolides A, B & C. Ginkgolide B has been shown to inhibit platelets in the blood from coagulating. The flavonoids in ginkgo have demonstrated very strong antioxidant effects. Ginkgo has long been cultivated in China. Currently, growers in China produce over 70% of the world's supply. In 2014, China's domestic demand of gingko leaf extract was about 500 tonnes, whereas overseas demand was about 1,000 tonnes. It is estimated that 40 kg of dried ginkgo leaf is required to make one kg of extract. To satisfy global demand in 2014, producers needed to produce approximately 60,000 tonnes of dried gingko leaves (i.e., about 120,000 mu (1 acre = 6.07 mu) of gingko plantation). Our plantation is located at Pizhou, China. Pizhou is the central area of gingko biloba cultivation in China. Pizhou has a long history of gingko biloba cultivation in China and is the largest of the top four gingko cultivation areas in China. We anticipate our plantation will start producing quality raw gingko leaves in 2016. By the end of year 5, we anticipate our plantation will reach the desired economic scale of 9,300 mu of gingko plants, with annual production of 5,580 tonnes of dried gingko leaves. This will make us one of biggest independent player in gingko dried leaf raw material market in China. Forward-Looking Statements This press release contains forward-looking statements. Forward-looking statements are subject to risks, uncertainties and assumptions and are identified by words such as "expects", "intends", "estimates", "projects", "anticipates", "believes", "could", and other similar words. All statements addressing product performance, events, or developments thatGlobalink, Ltd. expects or anticipates will occur in the future are forward-looking statements. Because the statements are forward-looking, they should be evaluated in light of important risk factors and uncertainties, some of which are described in Globalink, Ltd.'s Quarterly and Annual Reports filed with the United States Securities and Exchange Commission (the "SEC") and British Columbia Securities Commission (the "SEDAR"). Should one or more of these risks or uncertainties materialize, or should any of Globalink, Ltd.'s underlying assumptions prove incorrect, actual results may vary materially from those currently anticipated. In addition, undue reliance should not be placed on Globalink, Ltd.'s forward-looking statements. Except as required by law, Globalink, Ltd. disclaims any obligation to update or publicly announce any revisions to any of the forward-looking statements contained in this press release. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. No stock exchange, securities commission or other regulatory body has reviewed nor accepts responsibility for the adequacy or accuracy of this release. Investors are advised to carefully review the reports and documents that Globalink, Ltd. files from time to time with the SEC and SEDAR, including its Annual, Quarterly and Current Reports. Contact: Robin Young, COO (604) 828-8822