By David Weissman
We maintain our Buy recommendation with a higher valuation target for Linktone (LTON) (Analyst Report), a leading provider of wireless value-added services (WVAS) in China. The company’s market capitalization is currently valued below net cash levels and down nearly 25% from its 52-week high. The company’s current market-cap of $96 million is below the company’s net cash position of $101 million.
We believe market opportunities for the company remain attractive with launches of 3G wireless services together with mobile television and flash media products/services in China. An expansion drive to Indonesia is also expected to foster long-term growth for the company.
Continued sales channel initiatives together with new content offerings are reinforcing Linktone’s position as a major player in the Chinese WVAS market. We consider this juncture as an attractive opportunity for investment consideration taking into account the strong balance sheet and the company’s established market position with an effective business model.