RF Industries(RFIL) manufactures and distributes wireless data communications products and specialized radio frequency (RF) connectors. RFIL's products fall into two main categories produced by separate divisions the Connector Division and the Neulink Division.
Considered the company's core buisness, the Connector division produces over 500 different RF coaxial connectors and related products used in personal communications systems(PCS), radio, test equipment, PC LAN's and antenna devices. During the past year the company has added several very large distributors which should have a dramatic effect on connector sales. Two of the new distributors have sales in excess of $1 billion dollars and a third distributor has sales of approximately $800 million. In the recent first quarter earnings, connector sales rose 70%, an excellent performance considdering it's the divisions seasonally weakest quarter. Also benefitting connector sales is the emergence of the PCS marketplace which requires larger, more expensive connectors. These new connectors carry a price tag of $200-$300 each. The PCS market is expected to expand rapidly over the next several years.
The company's Neulink Division is also experiencing very rapid growth. The Neulink Division designs and markets wireless digital data transmission products. As we all know, a multitude of new uses for wireless transmisssion of data has appeared in recent years as the communications industry trends increase toward wireless applications. These wireless communication devices greatly reduce the high monthly costs of expensive telephone data lines. A few of the present uses for Neulink products include: PC to PC, Oil field monitoring, Supervisory Control and Data Aquisition(SCADA), Alarming and relay systems, Banking networks, Water and waste water control systems, Factory automation, and much more. Wireless transeivers can perform many basic functions such as turning on and off switches, vales or pumps. Golf courses and campuses have sprinkler systems which can quickly and easily link up with wireless devices to control their irrigation. Growth in the Neulink Division has been nothing but impressive. Neulink sales in 1996 exceeded $2 million, a ninefold increase over 1995. In the first quarter of 1997 sales more than tripled from the previous year.
RFIL has recently obtained a NASDAQ listing and is trading at the $3-$4 range. Net income tripled to a record $240,000 or $.08 per share, compared to $68,000 or $.02 per share a year ago. Sales jumped a dramatic 112%. Backlog also grew substancially, climbing to $3,260,000 compared to $2,660,000. In 1984 RF Industries went public and its stock price surged from $.10 to $3, a 2900% increase.
RFIL is up against two industry giants in the coaxial connector market with an 80% market share. This company has avoided earning per share dilution to support their share price. RFIL has only 2.5 million shares outstanding with over 50% of they being owned by insiders, and they have no intensions to return to the public or private market place to raise their outstanding shares. This company's ballance sheet is debt free with a current assets to liabilities ratio of 8.6 to one, not to forget they have plenty of cash at their disposal. With cash and cash investments of approximately $1,008,00 or $1.21 per share, RFIL definately has the financial strength to support their growth potential in the coming year.
New products under developement and scheduled for full production in the first half of fiscal 1997 include DCL-2400-ss, a 2.4GHz, high speed frequency hopping spread spectrum transeiver modem with over-the-air date speeds of 1Mbps. This low cost device operates in the ISM(Industrial, Scientific, Medical) band and does not require an FCC license. Also under development is a synthesized VHF, 5 watt paging exciter (transmitter) for 134MHz to 176MHz frequency range, the official paging frequency in China, Taiwan, Hong Kong and Macao. This product in particular could generate an explosive market since paging is the first step for many Third World countries in terms of cellular communications, and RFIL's products are very cost competitive compared to the high-end system entities like Motorola.
One set back to this company is that it is very thinnly traded. People need to know the high level of potential that exists here. Take a good look at this company and you will see an industry giant at its infantile stage. |
