Avalon Technology Grp (fka AVLN)

[Hector777]

Calculations show profit margin is 60%. We can expect expenses to be $16.5 million and the EPS to be $0.275 a share. Calculations below:

Profit Margin of 60%! This is logical considering that they're in the IT business. IDWS employs over 400 employees according to their website. Making customized software for companies is a high margin business. Think about it. There is hardly any cost of good sold expenses (I'm referring to direct materials cost). Software is intangible.

Most of their expense is direct labor (the software engineers). And IDWS outsources the labor. Ask yourself, how expensive is it to employ people from Lahore, Pakistan? The average middle class worker from Pakistan earns an annual income of $8,000 USD.

400 IT technicians x $8,000 each head = $3,200,000 in annual expenses. Did I mention that English is the official language of Pakistan? So everyone they hire are educated professionals getting paid ridiculously cheap and speak English. That's outsourcing at its finest. Here's the demographics of Pakistan:

http://www.absoluteastronomy.com/encyclopedia/e/ec/economy_of_pakistan.htm

Now, IDWS is expecting $25 to $30 million in sales. They stated an EPS of $0.22 based on shares o/s of 50 million. Now we must recalculate due to the retirements and buyback of shares.

Here are their expenses calculated based on their numbers, I will use $27.5 million as sales (expected $25-$30 million):

Here is how you calculate it:
Profit divided by shares o/s = EPS
or
(Revenue minus expenses) divided by shares o/s = EPS
Here's with the numbers:
($27,500,000 - expenses)divided by 50 million shares = 0.22 EPS
= (27.5 - x)/50 = $0.22
= (27.5 - x) = 11
= -x = -16.5
= x = 16.5
So expenses are $16.5 million dollars.

Now let's recalculate the EPS with 40 million shares o/s.

(27.5 - 16.5)/40 =?
11/40 = $0.275
So now we can expect an EPS of $0.275 a share.

A conservative EPS multiple of 40 is used to calculate a realistic price target(where the PPS should be at):

$0.275 X 40 = $11
So we should be at $11 a share once we move onto an upgraded exchange. Please note that many stocks trade above a PE ratio of a multiple of 100. Take a look at SIRI for example. Bleeding cash like mad, heavily in debt, yet their PE ratio is ridiculous. So if we had a P/E ratio of 100, we'd be at $27.5 a share. Not to mention that it is most likely our EPS will continue to climb as the company grows.

Also, concerning 995ad.com. Just think about it. Once the new data center is implemented, most likely weeks, not months, there will be nothing to complain about. We already have 5x more car listings than ebay. Take a good look at Ebay. Most the listings are by dealerships. Feel free to browse for yourself. I don't believe EBAY tries to go around persuading car dealerships to list their ads on their site, dealerships do it at their own will. This is because Ebay doesn't have time to do this, they have better things to attend to. But IDWS HAS been going around persuading dealerships to list their ads. It's obviously working. We have 5x more cars than Ebay. This management is on top of things.

It is most likely that we will not be on the pink sheets for long. What we should be waiting for is Nasdaq small cap or Amex after the BBs. Only thing stopping us are all the regulations posed because IDWS is in reality a relatively small company with many international locations which complicates things. But once the company grows and has enough resources and counsel to meet the requirements of the quality exchanges, we will be there. And from there, we will be where we should be trading at: $11, $25, $50, $XXX? Then split split split? =) You know what I mean.

Best wishes to all. I sleep with a smile and very comfortably. What an opportunity to be rich because we found this early. If you ask me, this stock will mimic the price movements of TASR, from subdollar to over $100 a share. Those scenarios are rare, but have happened many times. I personally think this is another one of those.

Best wishes and good hunting.