Stock Alert for Orsus Xelent Technologies Inc. (ORS)
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    Stock Alert for Orsus Xelent Technologies Inc. (ORS)

    Orsus Xelent Technologies Inc. (ORS) is an emerging designer and manufacturer of award-winning mobile phones for the Asian market, primarily the People’s Republic of China (PRC). The Company’s business encompasses the design of mobile phones, related digital circuits, and software development, and is a recognized pioneer in mobile phone integration technology. It introduced the region’s first wristwatch-style cellular phone, and continues to break new ground with state-of-the-art phones that include advanced features such as fingerprint recognition and touch-screen displays. The Company is also focused on developing and marketing, under its Proxlink trademark, special application mobile phones for specialized users in a wide variety of professions in business and government. Since the Company’s launch in 2004, it has established “Orsus” as a popular brand and achieved a significant share of the world’s largest mobile phone market. It maintains more than 179 service call centers across the PRC, with additional offices in Shanghai, Hong Kong, Shenzhen and Tianjin.

    ORS was incorporated in Delaware and is headquartered in Beijing, China. 

    Share Statistics (23-May-11) FY2009 FY2010 % Chg Q42009 Q42010 % Chg
    Symbol ORS Revenue, $Mn 77.39 24.41 -68.5% 15.21 4.44 -70.8%
    Current price $2.42 Gross marg. 12.2% 7.5% -38.5% 7.7% 7.2% 6.5%
    52wk Range: $0.60-$4.68 Oper. margin -133.1% -764.5%
    Avg Vol (3m): 43,171 Net margin -8.3% -194.1% 2238.6% -80.1% -1054.3% 1216.3%
    Market Cap. 6.10M
    Shares Outstanding 2.52M EPS, $ 0.05 -1.57 -3240.0% -0.15 -1.50 900.0%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    ORS shares skyrocketed over 120% in yesterday’s trading after the China-based cellular phones maker announced its first-quarter financial results. Shares reached an intraday high of $2.48 before closing at $2.42. Approximately 1.63 million shares have traded hands during the session, versus the 10-day average volume of 60.87K.

    ORS reported sales of $3.91 million for the quarter ended March 31, 2011, almost 50% less than the year-ago period’s sales of $7.6 million. First-quarter income from operations came in at $342,000.

    However, mainly due to a non-cash reversal of allowance for bad debt generating other income of $32.02 million in the quarter, the Company posted net income of $32.03 million, or $12.73 per share, a swing from last year’s loss of $446,000, or a loss of $0.18 a share. The per share figures in each period are based on 2.52 million and 2.48 million weighted average shares outstanding respectively, which are a reflection of the 1:12 reverse share split effected by ORS last month.

    The Company’s report stated that the reversal of the allowance for bad debt is a consequence of the fact that following a year-end write down of those doubtful accounts (accounts receivable) in 2010 which were not covered by an expired third party guarantee agreement, on March 30, 2011, ORS signed a Credit Guarantee Contract with Beijing Xingwang Shidai Tech and Trading Co. Ltd. (Xingwang) and Zhong Hui Guarantee Corp. (Zhonghui), by which Zhonghui renewed its guarantee for any sales to Xingwang. Under this new agreement, coverage was increased from RMB 300 million ($44.2 million) to not more than RMB 500 million ($73.6 million) up to the period ending December 31, 2011.ORS pointed out that the reversal in the quarter of the previously expensed bad debt did not generate cash, and that its most urgent concerns are cash flow and related going concern issues.

    “We are pressing ahead with our previously described plans for a strategic merger and/or a capital raise and/or a loan to resolve our cash flow problem. We believe we have made progress in this regard, but have not yet succeeded and cannot predict the final outcome of our various discussions,” ORS CEO Guoji Liu stated in the press release.  “It is only with success in securing additional cash that we will be able to move forward with plans to strengthen operations. These plans include a focus on product sales in developing regions such as Africa and the introduction of new products that conform to consumer demand and the needs of China’s telecom operators.”

    Over the last 52 weeks, ORS has seen a low of $0.60 and a high of $4.68. It is currently trading above its 50-day moving average of $1.48 and above its 200-day moving average of $1.87. Market capitalization currently stands at $6.10 million and it has 2.52 million outstanding shares.

    Visit ORS at www.orsus-xelent.com

    Financial Strength (23-May-2011) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 1.70 2.25 0.70
    Current Ratio (MRQ) 1.00 2.04 2.66 1.02
    LT Debt to Equity (MRQ) 17.89 13.69 149.66
    Total Debt to Equity (MRQ) 27.53 24.27 195.98
    Interest Coverage (TTM) -6.28 1.38 0.87 17.87

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    No consensus recommendations data available.

    Technical Analysis

    Source: http://stockcharts.com

    On Friday last week, ORS closed above its 20-day moving average. This is generally considered to be an indication of a bullish trend.

    ORS’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility.

    ORS’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    May23-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Motorola Mobility Holdings Inc. MMI 23.65 6.98B 29.20 14.08 0.52 0.46
    Nokia Corp. NOK 8.13 30.16B 12.90 10.84 0.51 0.50
    Research In Motion Ltd (USA) RIMM 43.60 22.72B 6.73 6.26 0.95 0.85
    China Techfaith Wireless Comm. Tech. Ltd CNTF 5.74 303.84M n/a n/a n/a n/a
    Qiao Xing Mobile Communication Co. Ltd. QXM 2.66 141.02M n/a n/a n/a n/a
    Communication Equipment Median 17.33 n/a 1.13 n/a
    Orsus Xelent Technologies Inc. ORS 2.42 6.10M n/a n/a n/a n/a

    Source: Thomson Financial

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