NEW YORK, Oct. 18, 2004 (PRIMEZONE) -- The following is an investment opinion issued by Investrend Research Syndicate:
Fundamental Research Corp. has maintained its fair value estimate of C$1.43 and a "Buy -- 2 (Below Average Risk)" rating on CON-SPACE Communications Ltd. (TSX Venture Exchange:CCB) after FY2004 results exceeded expectations.
The complete updated report will be available free for a limited time at www.fundamentalresearchcorp.com and http://www.investrendresearch.com.
The analyst Othello Tuason stated that, "For FY 2004, sales and net income of $5.5 million and $698,200 respectively, exceeded Fundamental's expectations of $5.1 million and $439,600. EBITDA came in at $836,400, below the $919,200 expected. EBITDA and margins were largely impacted by higher current expenditures made for future growth." The report forecasts that these expenditures will help contribute to a 15% compound annual growth rate of revenues going forward.
Tuason mentions the following specific points as potential future growth opportunities: "Homeland Security, recent distribution agreements the company has signed to go after the Chinese mining sector, articles indicating deficiencies in Canadian emergency communications, and the confined-space market which is still in the early stages of penetration.
"We reviewed our 2005 EBITDA (lowered on margins) and EPS estimates (maintained at $0.10); valuation and ratings remain unchanged as the long-term outlook remains stable."
In his report Tuason also mentions the potential risks, "Potentially difficult to maintain Revenue CAGR (5 Yr Historical CAGR: 19.5%); foreign currency sales are unhedged; continuing to be the underlying issue is execution risk. Any substantial growth (acquisition or expansion) may require capital. However, with the low leverage ratios, debt will likely be the primary source of outside capital, thus minimizing the dilution of new equity."
Tuason concludes that, "Taking other valuation metrics into account, including EPS and market P/E ratios, the following table outlines comparison statistics to that of our Fair Value estimate of $1.43. Note that at current prices, the company trades at very low multiples (7x EPS on a forward basis), and we believe CCB is undervalued at these levels."
Fundamental Research Corp. is an affiliate of Investrend Research and both subscribe to the "Standards for Independent Research Providers" at http://www.firstresearchconsortium.com
A fee of less than $25,000 was provided to Fundamental by the company for research coverage.
Complete information about this company is available at the company's InvestorPower page at http://www.investrend.com/company/list.asp?sPathParam=yes , and the full report is available at: http://www.fundamentalresearchcorp.com/PDF/ccbye2004.pdf and www.investrendresearch.com . Investors are advised to read disclosures carefully before trading in the equities of any enrolled company.
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