QTL unknown

Quadtel (qtl)- green alert to 6

  1. 258 Posts.
    I previously posted in mid Apr on QTL- see below. I feel there is still a green alert on qtl to 6+ based on the progress that the company is making. There has been increased interest in qtl in the last few days so hopefully we will see some action trending to our targets. The quarterly report at the end of the quarter was very good and confirmed what I thought as summarised below. Qtl is well on track to achieve total sales of $12.6m for the nine months to end of Mar compared to $8.2m corresponding quarter. This is a great improvement and they are likely to exceed revenue forecast which is what the market now like to see- remember Adultshop a few days ago with good results.

    Their China project is going exceptionally well and underway and we should get revenue flowing in from there. The Harvey Norman joint venture product is being launched and expected to provide orders in excess of $1m for the quarter- another revenue generator.

    What I really like is at the end of the report that the CEO mentioned that qtl is finalising a number of exciting developments that will ensure that our impressive growth will continue into the next year. That sounds very good and create great opportunities for improvement in the price.

    Their announcement in early May I thought was exceptionally good but market didn’t take too much notice- I think it was the timing of it. Hopefully when people read that again that will spark some more interesrt as it should. They announced agreement with Motorola re supply ofcable modems and product support to subscribers of Aust largest cable internet providers. This means that qtl will effectively supply broadband equipments for both cable and DSL subscribers ie a complete coverage, effectively making qtl a market leader. Research yourself and see if you agree.

    Bigprofit

    Quadtel has been travelling very well in the last couple of days. I recently posted a green alert on Qtl only in the last two weeks with an antipated value of 5.5cents+ based on the information I had at that time. Since then I have managed to have a better understanding of the business and I must say that I am very impressed with it and I think qtl has very good potential at this level. What first got me interested was the senior appointment of the ex senior executive of SAP Australia. That prompted me to have a further look at the potential of qtl- senior executives only move if they see potential of gains for the company and themselves. Now that I believe that I understand the business a lot more I can see the synergy that will be created with this appointment- I will give reasons why I think that’s the case later.

    First point to clarify is that qtl is not a telco- which at the moment when mention the word telco, people are scared. Qtl is a wholesale supplier of broadband equipments to various sectors of the market which includes the telco market- ie telcos are customers of qtl but that is one one market of qtl. Basically, qtl gets its equipments- only broadband equipments from companies like Alcatel, Motorola, etc and on sell to the market. We will look at qtl market in a while.

    I mentioned that qtl is only in broadband equipments. So what is broadband. Most internet users are now on narrow band because it is cheaper eg Teltra narrow band at say $25per month, broadband at $55 a month. It is expensive but I think still affordable and as more people get it should get cheaper. So this is the retail market. Companies and government will also get onto broadband for the simple reason that it is much much faster and drop out less. I believe it can transfer many times quicker than the narrow band. As documents and files get complex and big (especially those with pictures and videos), more people and organisations will have to go broadband. I spoke to a couple of IT guys in the industry and they have indicated at the moment that broadband might be say 10% of the market so we can see a potential growth in the next couple of years that people will go on bradband and hopefully that will bring down the price and there will be a snowballing effect and even more people will get on.

    Remember qtl is not a broadband supplier- people like telstras are. So there is no infratucture costs for qtl. Qtl supplies the euipments for the end users (and the network for organisations) of broadband. So example if you want to go broadband you will need a modem and other euipments and software to start. If you now go bradband you normally get a package which includes the equiment (and any modification required to your computer) from say Harvey Norman- qtl supplies the euipment to HN who then packages it up. Similarly with other organisations and government bodies.

    So we are happy that qtl operates only in the broadband market that looks to have great potential and is not a telco but a supplier of equipments. I guess the broadband equipments will be like the mobile phones when they first emerged- everyone wants it and suddenly there is a hugh market. I believe qtl is one of the few in this market if not the only.

    I do like their strategies. Qtl has owned up that in the first half of last year although the revenues were pretty it was below market expectation purely because the company had been concentrating on the telcos sector ie the company distributes the equipments purely through telcos. As we know Telcos were not doing that well anyway last year. So qtl was having to depend on the telcos strategies of pushing broadband and they were not doing too well last year. Hopefully this will improve this year as the global economy improves but qtl is not waiting for that. Qtl has now confirmed their sales strategies not only through telcos but directly to government agengies and thirdly the retail channels such as Harvey Norman. You may have read that it was just recently that qtl was allianced to Harvey Norman to sell their equipments- so this is a start.

    I also like the fact that qtl mission statement (as far as I can read) is putting service first. So not only that the euipments will be sold but qtl will continue to provide good technical support to the end users, including organisations on the broadband requirements- so thereby establishing a good reputation and also more revenue eventually.

    Qtl needs to source the equipments and then on sell to various retail groups, telcos or government agencies. This requires good contacts in the IT industry. And this is the reason that I was very happy that the senior exec from SAP Aust is on Board. As one would know SAP has been a well sought after software for the last at least 5 years. So surely this person would have very good contacts wit the right people to source new equipments and source end groups to sell to.

    The other aspects I like is geographically, qtl is in a position to explore Asia for the selling for these equipments. All the orgaisations that qtl deals with, top end and bottom end being the end user groups have connections in Asia. Qtl has just opened an office in Malaysia. Again broadband is a new thing there so plenty of potential. I believe in Asia broadband will be like the BMW and Merc of the internet. Think about how many BMW and Mercs in Asia- they will also catch on to broadbase. The only problem is the infrastructure for the telcos there but I undrerstand that broadband can be transmitted in a normal tel line as well as cable- so should not be too much problems.

    I have only brought up the critical issues for success for Qtl. I have not had time to analyse the numbers further which I will try to do over the next couple of weeks if I have time. But very quickly the revenues are very high but as we know we do need to look at expenses as well but revenues look ok. And Qtl has indicated that they will meet forecast for the year with their new strategies on their distribution channels.

    On the technical analysis basis (I am not very good with charts and I would not even attempt to try) qtl is trading about mid range. Its lowest was below 3cents and highest achieved earlier this year of 8 to 9cents. So I think we are in quite a good range at about 4.5 yesterday. I thought 5.5 to 6cents in the short term is not impossible given the potential. I have to wait to get some numbers before I could put a substantive valuation on it. I do think it has potential and it is in the right part of the cycle of growth for Broadband. Have a look yourself and do some more research and see if you agree.

    Bigprofit
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.