Value Microcaps Motherboard

[abh3vt]

Anyone following TBYH.ob? With a lot of Chinese stocks up strongly the past month, I'm surprised that this one appears to have slipped under the radar.

They reported a huge increase in net income last quarter on flat y/y revenue growth:
http://biz.yahoo.com/prnews/051121/lam078.html?.v=28

That translates into fd eps of 0.08 for Q2 only (taxed at 14%). Q1 was merely break-even, so perhaps its just a one quarter wonder, but they are in the business of designing handsets for the Chinese market (CNTF is listed as a competitor). Their primary customers are CECT (XING); Panda Electronics, and Siemens Mobile.

Quote:
""We are pleased to report an exceptional quarter for our shareholders while we witness favorable business trends for our company," stated Mr. Xiaofeng Li, Chief Executive Officer of T-Bay Holdings. "For the quarter, our cost of revenue declined from $7,167,000 to $4,513,000 which is an extremely favorable trend for our business. Revenues from design fees for the quarter were about 60% of total revenues, in which our design business operates with much higher margins than our manufacturing operations in Shanghai."

Murry Zuhe Xiao, Chief Financial Officer of the Company added, "We are seeing more and more design wins in the marketplace. This quarter represents a significant increase in revenues from our designing operations. Our design fees consist of the fee from the overall design and also a royalty stream from the sale of our clients' products. Therefore, the increase in revenues could also be attributed to strong sales increases of our designs in our clients' products."

Not sure if annualizing is appropriate, but the the China market for cellphones is expected to grow tremendously over the next few years with the advent of 3G licenses. That should provide some demand for the company's design services.

Last year, the company earned 0.15, using 30MM shares as a proforma count. (The company only recently came public in the US via a reverse-merger shell deal, similar to CXTI, AOBO, and many others).

I have them as earning 0.22 fd, ft on a trailing 12 mos basis. With the stock at 1.38, that puts the PE at 6.3x. If they can match Q2's results for the rest of the year, the company could earn around 0.24 for FY06.

Might be worth a look. I think its a decent buy here in the 1.30s and should deserve to trade closer to 10x earnings.