Dr Faessel 3-1-2011

A NEW CHINESE “TOP PICK”  

 China Telecom Selects NIVS Mobile Phone

 NIVS IntelliMedia Technology Group, Inc. NIV AMEX $2.67

Market-cap $130 million

Mighty China Telecom (CHA) NYSE has selected the NIVS IntelliMedia (NIV) "E3" model mobile phone as one of its key 3G promotion products. While relatively small and not yet on the radar screen of most investors, (NIV) is very profitable, with a low P/E ratio of 4, a Price to Sales ratio of only 0.40, with quarterly revenue (year over year) growing at approximately 59%.  Having its product selected by China Telecom should set (NIV) on the path not only for more of the same, but for an ever-increasing bulge in these key valuation metrics. 

As (NIV)'s Chairman and CEO, Tianfu Li, recently remarked, “We believe that our traditional sales channels can be greatly enhanced through our multi-faceted sales initiatives with China Telecom.”

Indeed, since the China Telecom announcement on 2-10-2011, the company has had three new (NIV) contracts of particular note:

On 2-23-2011 (NIV) announced that it had won its first order from China Mobile Limited (CHL) NYSE, the largest mobile phone carrier in China with an estimated 589 million customers.http://finance.yahoo.com/news/China-Mobile-Signs-First-prnews-1565021311.html?x=0&.v=1

On 2-16-2011 (NIV) announced that it has entered the India market with a contract for a new order that represents the first expansion of its branded cell phones outside of China's domestic market.http://finance.yahoo.com/news/NIVS-IntelliMedia-Announces-prnews-762419209.html?x=0&.v=1

(NIV) then announced (2-24-2011) that it had received an additional Indian order on top of the one received the previous week.http://finance.yahoo.com/news/NIVS-IntelliMedia-Announces-prnews-2637789138.html?x=0&.v=1

Mobile phone use in China grew 36% last year, representing a mind-boggling 191,450,000 phones, and accounting for 60% of the global growth in mobile phone usage during 2010. China is now going “all in” with 3G and is revving up a major 4G program to follow. From what I hear, most mobile phones in China are about a year old but industry incentive programs, such as lowered fees, are expected to keep the growth tsunami of mobile device use in building mode. 

Among its numerous awards, (NIV) has received the distinction of “Most Popular Brand” in the Chinese acoustic industry for three consecutive years.

The market has given us a wonderful opportunity to begin positioning in these shares. Over a couple of weeks or so (NIV) caught fire and ran from $2 to $3.16, retraced back to $2.61, where it reached support near the breakout / pivot point. It's now trading at $2.67. Importantly, volume increased by a factor of about 10X during this breakout. From a technical perspective, this would be an excellent time to begin a position in the shares, as the "price" has come back to the “base” to a near optimum “buy point” as it is now forming the “handle” of the classic “cup and handle” formation.

The recent towers of volume suggests that major players are now involved on the long side and recent profit-taking gives us this exceptional opportunity to participate at more of an optimal price point. Also, the chart formation, with the long-term breakout point just above $3 and with “price” just coming out of a long 10-month base on a huge volume increase, suggests that a buy-and-hold strategy could be well rewarded.

On 10-5-2010 a Rodman & Renshaw research report reiterated coverage with a “market outperform-speculative risk” grade and tagged (NIV) with a $7 price target.

Because of (NIV)'s extreme undervaluation with a PE ratio of 4, its striking growth dynamic, the big picture of rapidly expanding Chinese audio, video, and mobile device markets, the “Most Popular Brand” classification, the just announced new orders from China Telecom and China Mobile, entry into the mega India market with an initial and then a back-up order—PLUS the exceptional breakout chart with “price” now at an optimum entry level—I'm adding (NIV) to my Top China Picks for 2011.

Visit NIV's comprehensive website:http://www.nivsgroup.com/english/