Australia | Jan 11 2007
(The original story was published at 12.41pm today. Unfortunately, we relied on a research report that mistakenly claimed the company’s fiscal year ends on June 30. Arasor’s financial year runs from January till December. We have decided to republish the story with the correct fiscal year details.)
By Rudi Filapek-Vandyck
So far, South Australian headquartered Arasor International Ltd (ARR) has remained far under the radar of many an investor in the Australian share market. If the rumour mill proves correct, however, this may be about to change.
Market rumour has it the company is about to make not one, but a few major announcements in the short term with the first one likely to come as early as next week. Since the share price has already run up more than 12% this morning, it would seem the rumour is spreading and finding fertile ground among local investors.
At around noon today ARR shares were up 27c at $2.470.
The story behind Arasor International is all about modern communication techniques and devices, wireless communications, faster data transport and increased bandwidth. The company has developed its own technologies which include a patented and unique optoelectonic chip platform that integrates several “discrete functions” into a single chip. One might describe it as 3-D chip. Arasor facilitates the likes of Texas Instruments Inc, China Network Communications Group Corp and Pirelli Broadband Solutions.
The addition of at least one new major customer from the US is part of the current market speculation.
But probably of more importance than all of the above is that Arasor should become profitable and generate very high growth figures over the next few years. Alarmed by the rumour mill, we had a look around in the Australian market and found only one analyst who actively covered the stock.
Russell Wright at Patersons Securities is equally positive about the company’s prospects, calling it “potentially one of the big surprises of the year”. According to a research report by Wright published in November last year, Arasor’s compound earnings growth in the two years to 2009 should exceed 100%.
It goes without saying that such a growth profile is not something one comes across every day. According to the IPO prospectus, Arasor anticipates to report a net profit of $6.3m in the current fiscal year to December 31, 2007. However, in a telephone conversation with FNArena, Wright said he believes the company could well beat this forecast.
Wright has put a valuation of $6.00 on the shares. The rating is Speculative Buy.
Investors should take note of the fact that Patersons Securities acted as Lead Manager and Underwriter to the company’s IPO that raised $35m through the issue of 23,333,333 shares at $1.50 per share for Arasor International in October 2006.
FNArena intends to follow up this story and keep a close eye on the company over the next few weeks.