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  • Chief Market Strategist Issues Strong Positive Bias On NIVS IntelliMedia Tech Group, Inc. (NIV) 0 comments
    Aug 25, 2009 9:28 AM | about stocks: NIVS

    I have made a career of finding small cap stocks that are undervalued or just getting discovered. It is my passion and the profits can truly be addicting. The adrenaline jolt to my body as I watch a small cap jump 25% or more in minutes is unparalleled. There is truly nothing like it. This China play has I bring to you all has potential to double in value if it gets discovered.

    As I sit here and study the charts and fundamentals of NIV, I have yet to find the reason it is trading just above $2 per share. It looks like one of those rare discoveries that make my eyes grow wide with excitement. There are two ways to look at this stock. One is in comparison to all other Chinese stocks and the Shanghai market, the other is to look at the company individually and study the contacts, revenue growth, earnings and continued growth prospects. I will do both below to give a clear picture of why NIV is undervalued and has potential over the next few months to hit $5.00 per share.

    NIVS IntelliMedia Technology Group, Inc. designs, manufactures, markets and sells audio and video consumer products. Its products include audio and video equipment, for example, home theater systems, LCD televisions, DVD players and much more. NIVS IntelliMedia Technology Group sells its products to wholesalers, distributors, and resellers of electronic products primarily in the People s Republic of China, Europe, southeast Asia, and North America. The company was founded in 1998 and is based in Huizhou City, the People s Republic of China.

    To really analyze this company, I first started by looking at profits, revenue and growth. The latest quarter was a fantastic role model for any company looking to maximize share price. The mere fact that this company is valued under under 100 million blows my mind. In the second quarter of 2009, reported recently, NIV had revenue of $40.9 million. That was 64.4% growth from the second quarter of 2008 where they had revenue of just $24.9 million. Net income for the quarter was $4.9 million an increase of 39.9% over the same quarter last year. The company reported a profit per share of $.11. Again, let me remind everyone we are talking about a stock trading in the low $2 range, near 52 week lows, undiscovered by the masses.

    In the comments from the CEO of NIV, Mr. Tianfu Li said, "We are very pleased with our performance this quarter. Our significantly improved sales revenue reflects the success of our aggressive marketing efforts. We have now executed our product road show and advertising campaign in every province in China, improving our brand awareness throughout the country, including in regions where we where the NIVS brand name was not so strong before such as western and northern China. We are particularly happy to have so strongly extended our distribution networks. We believe that our cooperation with such big retailers as Gome and Suning will significantly improve the reach of our products and help drive future revenues. As such, we feel comfortable that we have created a strong foundation for healthy business for the remainder of 2009."

    While the latest financial results were unbelievably strong, NIV continues to be unnoticed by investors, hedge funds and money managers alike. It trades under the radar....for now.

    In continuing analysis of the most recent quarter, NIV reaffirmed the outlook of approximately $172 to $186 million in revenue. This would be a 20% - 30% increase in revenue in relation to 2008. The CEO gave additional comments that were extremely bullish. “For this type of business, the third and fourth quarters are usually stronger due to the holiday season boosting the demand for consumer electronics”. These last comments are huge due to the fact that this tells us the latest earnings for the second quarter of $.11 will be on the low end of earnings for the third and fourth quarter. I expect NIV to earn approximately $.15 in each of the next two quarters. That can put 2009 earnings at over $.50. For this type of growth stock, it is unheard of to be trading at a 2009 P/E of just over 4.

    There have been other extremely bullish developments for NIV in the recent weeks. On June 29th, 2009 it was announced the stock would be added to the Russell 3000 Index. Then, on July 15th, 2009 they received a 20 million dollar contract to supply a Hong Kong company with OEM notebooks. Furthermore, possibly the most significant vote of confidence for a foreign company was on July 30th, 2009 when it was announced that NIVS IntelliMedia Technology Group was awarded a 'AAA' credit rating by the China Export & Credit Insurance Corp. The key to this piece of news was that there were a total of 62 companies rated in the Guangdong province. Of the 62, only 4 received the 'AAA' rating. This financial vote of confidence is extremely important for foreign companies especially in China. Lastly, on August 18th, 2009, NIV signed an OEM and ODM contract with Acoustic Research. Acoustic Research is a subsidiary of Audiovoxx Corporation (NasdaqGM: VOXX). All these developments have come after the second quarter concluded and should be reflected in the coming quarters on the growth side.

    I want to reiterate that the keys are the latest contracts the company landed after the second quarter came to a close. I believe these are not fully factored into the companies guidance. In reaffirming previous guidance and earnings that they had given earlier in the year, it is clear management is being extremely conservative. These latest contracts should push revenue well past the already sizable levels the company stated.

    Now to look at the performance of China and the Chinese small cap market. Small cap China stocks continue to be hot in the massive global stock market rally we have seen of late. Many of these stocks are higher by hundreds of percentage points as the Shanghai Index bottomed last October and has risen over 100% until the recent pullback. NIVS IntelliMedia Technology Group (NIV) is hovering near the 52 week lows unnoticed. Its growth is far higher than countless other Chinese stocks that have jumped 100% or more in recent months. In my estimation, earnings could be over $.50 per share for 2009 putting the P/E of this high growth play at just over 4 this year. I think this company, should it be discovered, could run over $5.00 per share.


    By: Gareth Soloway
    Chief Market Strategist
    InTheMoneyStocks.com

    Stocks: NIVS
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