Also this from StockHouse, Stone report.
stockhouse.com
Chinese Internet Expansion Could Connect Gilat to Success
By Mark Stone - Syndicated Columnist
Wednesday, January 30, 12:30 PM PST
Miami, FL, January 30 /SHfn/ -- It's the time of year when telecom-based
companies strut their stuff at trade shows and investment conferences. Gilat
Satellite Networks [GILTF], an Israeli-based telecom solution provider, may be
one worth watching. It specializes in VSAT satellite network technology, and may
provide a strong trading opportunity this season.
Gilat offers enterprise networking, rural telephony solutions and
markets-interactive broadband data services. StarBand Communications
[STRB] - Gilat's joint venture with Microsoft [MSFT], EchoStar [DISH] and ING
Furman Selz Investments - may play an integral role in the company's next
project. Gilat is expanding into China to offer broadband Internet service in conjunction
with KSAT Satellite Networks [V.KSA]. This is exciting news for investors.
There are several reasons to like this company.
Gilat carries a book value of $27, and its shares recently traded in the $38 to $40 range. Its
price-to-book ratio is 1.4.
Unlike others in the business, Gilat carries a 2 times price-to-sales ratio.
There are only 23 million shares outstanding.
About a year ago, during the telecom frenzy, Gilat traded at nearly five times its current
price. Many investors snapped up the depressed shares earlier this month, some hoping to cash in on the
StarBand IPO, which was filed last autumn, but hasn't materialized.
With the return of a Bush to the White House, it appears business relationships
with China might heat up. In late October, the official Chinese news service
reported that the Chinese government will spend several million dollars to
improve its Internet services using Gilat's satellite communications technology. It
also said Shanghai will be establishing a VSAT application and research center
with Gilat. Gilat holds a 37% ownership in KSAT, which will be manufacturing,
selling and delivering Gilat's satellite communications technology. Gilat and
KSAT will be providing two-way, high-speed Internet access through satellites
throughout targeted Chinese cities.
Dr. Steve Wan, Stanford University Masters and PhD, pioneered the first venture
capital fund in China in the 1980s and has worked closely with Gilat for the past
eight years. He is also a major shareholder in KSAT and CEO of a private
company that is affiliated with China Telecom. Dr. Wan says part of the major
launch into China is likely to involve StarBand in an integral role. He is bullish
about the Chinese Internet expansion and how KSAT and Gilat would bring broadband IP
services into a country where even dial-up is out of the question. Wan says satellite dishes will be set up in
apartment complexes so residents can share broadband services for as little as $12 to $17 a month.
The KSAT/Gilat alliance may be off and running as early as this summer. Dr. Wan says
discussions are underway with a Beijing-based telecom company that has finished wiring 500,000 homes.
Dr. Wan hinted that some of the nine scheduled projects are beginning to look good. "In the first quarter of
this year, we achieved increasing numbers and dollar values in terms of sales."
Technically speaking, Gilat appears to be closing out the month on a strong note. Over the
past four weeks, it has nearly doubled in price and appears poised to rally higher in February. KSAT has put
in a similar performance, having tripled off a mid-December low. Both companies should perform well
during the January to February telecom rush. If KSAT reports Chinese expansion plans in the near future, the
companies should reap the rewards in a much shorter time frame.
Copyright © 2001 by The Mark Stone Report. The Mark Stone Report seeks to identify
leading stocks in momentum sectors with near- and intermediate-term potential. This is not a solicitation or
offer to buy or sell securities mentioned herein. No recommendations are made to buy or sell the securities
mentioned herein. Trading in securities may not be suitable for all individuals and involves the risk of all
or part of your investment. Consult your broker or other professional to determine your suitability.
Information included in this article, while considered to be accurate and reliable, cannot be guaranteed as such. |
