The CEO of RedChip Blogs on the Topsy-Turvy World of Small-Caps, Micro-Caps, and Nano-Caps
One wrong financing can kill a stock; so far ORXT has not done a financing. Smart. The merchant bankers behind this Chinese telecom deal take Chinese companies public that are generating at least $20 million in revenues and that will not need a financing for at least two years. I like those rules and so should investors. ORXT, Orsus Xelent Technologies, (I am trying to get them to change their name) is a fast-growing China based telecom company with a smart and disciplined management team. More than just a pure cell phone commodity player, they have developed a unique software platform for the Ministry of Commerce in China that could result in more than $60 million in annual recurring revenue.
My Director of Research, Dr. Jason Chen, and I met with them for four hours last October in their Beijing office. Why I like the Company:
1) Profitable – The Company has experienced 200% earnings growth for the nine months ended September 30, 2006.
2) Explosive Revenue Growth – 457% Q1 Revenue growth and 776% Q2 Revenue growth and is expected to grow at minimum 30% over the next 3 years.
3) Undervalued in Peer Group – ORXT should trade at 16 x forward 2007 with earnings of $0.33 (this could be conservative) as they have a government contract potentially worth $120 million.
I note that GSHO, General Steel, was $1.12 four months ago when RedChip’s affiliate, Aurelius Consulting Group, began representing them, the stock is now $5.00 and we no longer represent them. The fact is they don’t need us any longer. When my team began telling our network of brokers and fund managers to consider positioning in the stock, we often heard this objection: “It’s not liquid. I can’t buy enough to make it worthwhile.” Our answer: “You’re right. It’s not very liquid and that’s why you want to buy the stock now before it becomes liquid, before the institutional money gets in.” The “Very Smart Money” got in below $2.00, thanks to RedChip. The stock is now liquid and money continues to pour into the stock. We told our network that this is a company whose revenues should grow from $100 million to upwards of $500 million over the next 24-36 months and to buy now and buy often. Some listened. Those who did doubled, tripled even quadrupled their money in 6 months.
By way of comparison, I make the same argument for ORXT. I believe ORXT is at minimum a $5.25 stock in 6-12 months or sooner. See our research on ORXT by clicking here: http://www.redchip.com/visibility/investor.asp?symbol=ORXT. Also note my company was paid to write research on them and is also paid to provide investor relations services. Does that mean I am biased? Yes. Does that mean our research is biased? No, but read the report and you be the judge.
Disclosures
This blog should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. In the purview of Section 17(b) of the Securities Act of 1933 and in the interest of full disclosure, we call the reader’s attention to the fact that ORXT paid Red Chip Visibility, a division of RedChip Companies Inc, $34,500 for the RedChip Research Report. The Company has also hired RedChip’s affiliate company, Aurelius Consulting Group Inc., to provide investor relations services for a fee of $10,000 per month.