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Gold/Mining/Energy : UNIQUE BROADBAND SYSTEMS (UBS:VSE) -- Ignore unavailable to you. Want to Upgrade?

To: R.A.K. who wrote (70)	1/29/1999 10:27:00 AM
From: burner	Respond to of 682

From Canaccord: 2. SPECULATIVE BUY Unique Broadband Systems (UBS : VSE : $0.23 : Issued 65.8M) Grossner * First half revenues exceed all of last year by 21% * Company turns the corner to profitability * Major near term opportunities in digital radio * Lucent co-development agreement gearing up * Shares are very inexpensive, given current fundamentals Unique Broadband Systems (UBS : VSE : $0.23) SPECULATIVE BUY Very strong Q2 results Target: $0.60 52-week price range: $0.70-$0.17 Shares O/S: 65.8M Float: 59% Market cap./sales (f99): 1.8X Market capitalization: $15.1M basic UBS reported significant sales and profits over Q2, ending November 30. Revenues reached $3.1M and net income came in at $0.6M. For the first half, revenues are $4.1M, which is well ahead of the $2.4M recorded last year. In fact, first half revenues exceed f1998 (12 month) revenues of $3.4M by a factor of 21%. Net income for the first half was $0.5M, compared to a loss of over $1.0M last year. This positive 1.5M swing in profit, combined with good top line growth, indicates UBS efforts to commercialize new wireless broadband technology and capitalize on its digital audio broadcast (DAB) technology is meeting with success. DAB accounted for the majority of Q2 sales, but consulting revenues with Lucent were also booked. UBS key contract to date is with CD Radio. The company noted that $3M in backlog remains outstanding, with respect to CD Radio. When this order is combined with other contracts, UBS should be able to exceed $8.0M in f1999 (May 31) revenues. Further, the company should be able to generate close to 1.0M in net income. Valuation Given 65.8M (basic) shares, UBS generated $0.01 in EPS over Q2. UBS has minimal market capitalization, i.e. $15.1M basic and about 18.0-19.0M fully diluted. For the full year, EPS could approach 0.016, meaning the shares are trading at only 14X the currently forecasted f1999 EPS and approximately 2X sales, fully diluted. UBS is a leading supplier of technology used in the DAB field. There are significant opportunities ahead, which if secured would represent a sizable multiple on existing sales. UBS hopes to be a major supplier to both nationally licensed DAB networks in the US, in addition to Canadian based and international sales. Further, the joint collaboration between Unique and Lucent in digital video is proceeding as planned. As previously disclosed, Lucent will globally market digital video products (including HDTV components) co-developed with Unique. We continue to be very impressed with the technological capabilities of UBS and view the current share price as excessively low. While certain development projects have not panned out (e.g. Microcell - ComDev - Unique), UBS has exhibited a very high level of product design competence, across an impressive array of applications. This is "unusual" for a small company. Given its partnership arrangements and growing commercialization of new technology, UBS deserves to trade at price levels considerably above the current market. The shares remain a strong speculative buy.