Ossen Innovation (OSN) Stock Squeezing Shorts

Ossen Innovation OSN Stock News

Ossen Innovation Co Ltd (NASDAQ: OSN) is making its way for the top in a big way this morning, trading on gains of more than 85% in the premarket hours. The gains come after the company announced unaudited financial results, exciting investors and squeezing the shorts out of the picture. Here’s what’s going on:

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OSN Stock Gains Big

In a press release issued early this morning, Ossen Innovation announced its unaudited financial results for the first half of 2019. Here’s what we saw from the release:

During the first six months of the year, OSN generated revenue in the amount of $65.1 million. Revenues fell 7.1% year over year for the six months from $70 million. In the release, the company said that the decline was primarily the result of a decrease in rare earth coated products, offset by an increase in zinc coated products and plain surface and other products.

Gross Profits saw a decent year over year gain, up 2% for the si months. Gross margins increased 1.3% to a total of 15.6% for the first six months of the year.

Importantly, the company saw a large decrease in selling expenses. In fact, selling expenses were down 25.5% year over year, coming in at $130,926. General and administrative costs also fell, declining by 13.8%. Total operating expenses were down 14.5% in the first six months of the year.

Operating income found its way up 8.9% with the increase primarily due to an increase in gross profit and a dcrease in SG&A expenses. Operating margins came in at 11.2% for the first six months of the year, up from 9.6% year over year.

Net income climbed during the period, up 19.4% int he first half, with net income attributable to shareholders up by 18.7% year over year. Earnings per share, both basic and diluted, came in at $0.29 for the first half, up from $0.24 year over year.

In a statement, Dr. Liang Tang, Chairman at OSN, had the following to offer

Because of the lowest Chinese GDP growth rate in recent years during the first half of 2019, our top line decreased slightly. Nonetheless, net income increased by 18.7% as we focused on higher margin products. Looking ahead, we expect to see an increase in investment in infrastructure construction across China. The successful IPO on the Hong Kong Stock Exchange of Pujiang International Group (‘Pujiang’), a Cayman Islands company that indirectly owns 65.9% of the Company’s issued and outstanding ordinary shares, has provided an additional resource of capital for us and is expected to enable us to capture additional opportunities to win new infrastructure projects.

A Short Squeeze Is Taking Place

As a result of the strong financial results for the first half of 2019, it seems as though investors are excited about Ossen Innovation. As a result the stock quickly started to tick upward.

This is great news for investors, but horrible for shorts. After all, when a stock goes up, those who sell it short lose their shorts! As a result, shorts are starting to cover and a short squeeze is taking place, likely playing a big role in the tremendous gains that we’re seeing today.

Even without the short squeeze, OSN stock may be a strong pick to buy and hold. While revenues were down, the company is seeing incredible decreases in expenses, focusing on expanding margins, and producing strong earnings per share, making this an investment that’s hard to ignore.

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