WR Hambrecht analyst Andy Van Vleck initiated coverage of Global Sources (ticker: GSOL) last week with a buy rating. Here is an extract from his note to clients:
With 35 years' experience matching global buyers with Asian sellers, ten years in online B2B, and five years as a public company, Global Sources boasts track records that humble other Nasdaq-listed China plays.
Fees collected up to one year in advance provide strong cash flow, revenue predictability and near-term growth that we feel the market has overlooked during 2005 -- a year of transition and investment.
With aggressive trade show expansion currently underway, requiring current expense recognition but deferral of cash payments already collected, we expect conservative accounting to surprise in the form of strong revenue growth starting in second quarter 2006.
Potential longer-term drivers include a new alliance with eBay (ticker: EBAY) that is starting to kick in, as well as strategic vertical and geographic acquisitions with a war chest of $108 million net cash.
Global Sources offers what in our opinion is the broadest, deepest, most comprehensive marketing solution available to Chinese exporters, which in turn exposes investor to multiple, complementary income streams.
You can read more of the note here (courtesy of Barron's -- subscription required).