Revenues for Mizati Luxury Alloy Wheels increased 34% from $1.2 million in Q2 2006 to $1.6 million in Q2 2007. The main factor behind the increase was the company’s expansion of its base of dealers and distributors. Gross margins increased 11.6% compared to the same quarter in the previous year, which can be attributed to the cost of sales being spread over a broader revenue base.
At a share price of $0.32, MZTI shares are trading at less than 1x projected FY 2008 revenues. Mizati’s strategic initiatives for FY 2007 and FY 2008 should enhance brand awareness, and significantly drive revenue and margin expansion. RedChip believes that there is tremendous growth potential in Mexico, and awarded the stock with a 12 month price target of $1.73 based on a multiple of 5x projected 2008 revenues.
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