NIVS IntelliMedia Technology: Strong Results, Solid Outlook

| About: NIVS IntelliMedia (NIVS)

NIVS IntelliMedia Technology Group (NIV) reported its 4Q and FY08 financial results yesterday after the market close. The Company develops, produces and sells audio and video equipment and set-top box products under an established brand name in China with a customer base that includes both wholesalers and distributors of electronic products on a brand name as well as an original equipment manufacturer ("OEM") basis.

Their products are distributed on a global basis, with China and Asia currently their largest markets. NIV products include digital audio systems, televisions, digital video broadcasting (DVB) set-top boxes and DVD players as well as peripheral products and accessories including remote controls, headphones and portable entertainment devices such as MP3 players.

NIVS reported full-year revenue of $143.6M (up 85%), net income of $13M (up 54%) while 4Q08 revenue increased 58% from the year-ago period to $42.6M. The Company expanded its sales force to focus on marketing outside of China and invested $7M (of $11.8M raised in July 2008) last December to expand its LCD television manufacturing capacity in response to strong demand, including shipments to England and Spain which began earlier this year along with mass production during February.

Beyond LCD televisions, new product lines for NIVS include Blue-ray Disc players and GPS navigation systems and the Company's Mandarin speech control interface intelligent audiovisual product lines have experienced strong growth from the year-ago period. Based on investments made in new products and expected market demand for existing products, NIVS expected FY09 revenue to increase by about 20-30% over 2008 (around $172-186M).

For 2008, NIVS posted standard audio equipment revenue of $52M (versus $51M in 2007), LCD televisions revenue of $15.2M (versus just $2.8M in 2007), and intelligent audio/video equipment revenue of $25.3M (versus just $4.4M in 2007).

The cost of sales for 2008 rose in line with revenue (up 86% and 85%, respectively) to $109.8M and gross profit for FY08 was $34.3M (23.8% of revenue) versus $19.3M (24.8% of revenue) in 2007. Net income increased by $4.6M for 2008 to $13M or 41 cents per share versus $8.5M during 2007.

NIVS closed yesterday at $3..80 per share for a market cap of $140M and a trailing price/earnings ratio of 10.8X and trailing price sales/ratio of 0.97X. The PEG ratio is about 0..5X based on the lower end of guidance for a 20-30% increase in sales for 2009, driven by strong demand for the Company's LCD televisions, Blue-ray disc players, and GPS navigation systems.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.