Value Microcaps Motherboard

[abh3vt]

I mentioned CNTF (China Techfaith Wireless) a little while back as a decent low PEG play. It is a new IPO that came out in May 2005. Well, it looks even cheaper now.

Its hitting recent 52 week lows amid concerns (my guess) that its earnings won't be as strong as expected for FY05 and FY06.

Those estimates have been recently revised down to:
FY05: 0.88 (down from 1.12 1 mos ago)
FY06: 1.14
http://www.investor.reuters.com/CompanyEstimates.aspx?ticker=CNTF.O&target=%2fstocks%2fprofessio...

With the stock trading at $10 and $3 in cash on its balance sheet, the selling here seems to be out of hand. The company earned 0.28 basic in Q2 and guided for 10-15% higher revs in Q3 with similar margins as in Q2.
http://biz.yahoo.com/prnews/050816/cntu005.html?.v=9

This is probably not the bottom yet, but it could be a good rebound candidate for the next 6-12 months IF the trends continue to be strong in their business. Here's what they do:

"China Techfaith Wireless Communication Technology Ltd. (China Techfaith) provide complete design services spanning the entire handset design cycle, which involves industrial design, mechanical design, software design, hardware design, component selection and sourcing, prototype testing, pilot production and production support. The Company designs global system for mobile communications (GSM)-based mobile handsets using major baseband technology platforms, such as those developed by Philips AG, Texas Instruments, Inc. and Skyworks Solutions, Inc. China Techfaith have begun developing mobile handsets for use on wideband code division multiple access (WCDMA) and code division multiple access (CDMA) networks through cooperation with Wuhan NEC Mobile Communication Co., Ltd. and QUALCOMM Inc. The Company begun to develop smart phones, which provide significant data capabilities in addition to the normal functions of a mobile handset."

They seem poised to benefit from outsourcing of design work by international cellphone companies like Nokia, Motorola, etc.

Could be one to watch.