INTRODUCTION to ORS

INTRODUCTION to ORS

This will be alot of info....so please take your time reading through it. The info is on a chinese telecommunication stock.Orsus Xelent Technologies is a profitable Beijing-based designer of economically priced feature-rich mobile phones. The Company’s business encompasses the design of mobile phone and digital circuits, software development, R&D of mobile phone integration technology, as well as mobile phone quality control and project management. Orsus Xelent management is very impressive with their aggressive business strategy, their long-term vision for the Company and their ability to adapt to changing market trends. Their expertise in both hardware and software development is impressive. Since its business inception in April 2004, Orsus phones have sold more than 600,000 units, which accounted for over one percent of the total cellular phone market in the People’s Republic of China. Today, Orsus offers eleven mobile phone models with high performance-to-price ratios to satisfy its customers’ needs. Orsus owns its own proprietary platform, named Spreadrum and MTK, which enabled the Company to develop a series of low cost mobile phones with innovative functions. Orsus’ products have received several awards for their innovative features and design. INVESTMENT HIGHLIGHTS Explosive Revenue Growth: Orsus experienced a stunning 457% and 776% comparable quarter revenue increase in Q1 and Q2 of FY2006 respectively. Revenue in Q3 of FY2006 also increased 56% compared to the same period in FY2005. Its revenues are anticipated to grow at an annually compounded rate of 30% over the next 3 years, while its EPS is anticipated to grow at an annually compounded rate of 70% during the same period. 200% Earnings Growth: Third Quarter 2006 net income was $2.3 million, compared to $1.9 million for the same period in 2005 and EPS of 0.08 cents, compared to EPS of 0.07 cents for the same period in 2005. For the nine months ended September 30, 2006 net income was 0.16 cents per share compared to 0.05 cents per share for the same period in 2005, representing a 200% increase. Platform Technology Provides Important Competitive Advantage: Orsus has developed a unique software platform for the PRC’s Ministry of Commerce that could result in a recurring revenue stream of more than $60 million annually within the next 24-36 months. January 11th Orsus Xelent Announces Cooperation Intent Agreement for the first 20,000 Handsets From the State Administration for Industry and Commerce (SAIC), Hebei Province of the People's Republic of China (PRC) This software integration technology will position them as more than a pure cell-phone commodity player giving them an edge over many of their competitors. FINANCIAL ANALYSIS Strong Revenue Growth: Orsus experienced sharp growth in the first half of FY06. Revenue reached $8.3 million and $17 million respectively in the first and second quarters of FY06, representing a 457% and 776% increase compared to the same period in FY05. This dramatic increase is can be attributed to distribution to new markets and CDMA handset sales. The proliferation of the first half of FY06, served as a primary growth driver for the Company. Overseas sales amounted to $8.5 million, accounted for nearly fifty percent of Q2 FY06 revenue, and approximately thirty-two percent of the first half of FY06 revenue. Meanwhile, sales of CDMA handsets reached approximately $7 million in the first half of FY06 compared to only $1 million in the entire FY05. Sales of CDMA handsets continued to ramp up in Q3 of FY06, to $11 million, representing 55% of Q3 revenue. Q3 FY06 revenue reached $20 million, representing a 55% increase compared to the same period in FY05, and a 20% increase compared to the previous quarter. Revenues increased by 176% for the nine months ended September 30 compared to the same period in 2005. In addition, the revenue growth can be partly attributed to a heightened demand for GSM based phones as a result of telecommunication industry reform in China, which in turn led to a reduction of monthly charges for GSM based phones. Orsus experienced a decline in revenues in FY2005. Revenues decreased to $28.7 million in FY05, a fifty-nine percent decrease compared to the same period in FY04. The decrease was primarily due to the proliferation of a black market for cell phones as well as fierce competition in the RPC mobile phone market. In recent years, mobile phone manufactures invested heavily in R&D and production capacity to speed up launches of new mobile phones. As a result, a product’s lifecycle has become shorter resulting in an oversupply of old models. In addition, competition from counterfeit products also adversely affected sales volume and contributed to an overall difficult market environment. Orsus’ has demonstrated an ability to adopt new strategies quickly and effectively to maneuver through difficult situations. The Company developed a new platform SpreadTrum and MTK in the second half of the 2006, which allowed Orsus to manufacture a series of low cost phones with advanced features. As a result, revenue increased from $3.4 million in the first half of FY05 to $25.2 million in the second half of 2005, representing an 88.02% in FY05 revenues. 200% Earnings Growth for Nine Months Ended September 30 2006 Third Quarter 2006 net income was $2.3 million, compared to $1.9 million for the same period in 2005 and EPS of 0.08 cents, compared to EPS of 0.07 cents for the same period in 2005. For the nine months ended September 30, 2006 net income was 0.16 cents per share compared to 0.05 cents per share for the same period in 2005, representing a 200% increase. VALUATION AND CONCLUSION We believe that Orsus is attractively valued compared to other companies in the industry. It is currently trading at a P/E (ttm) of 11.2 compared to the industry average P/E of 20.7 times. It has a P/B (mrq)of 3.7 compared to the industry average of 4.9. Orsus has a PEG ratio of 0.46 which indicates that the Company’s growth potential is higher than the market’s expectation. The Company’s revenue is expected to grow at a minimum annual compounded rate of 30% in the next three years, while EPS is expected to grow at a compounded annual rate of 71% on a fully-diluted basis over the next three years. We believe that Orsus has the potential to grow in excess of our estimates if they continue to penetrate overseas markets and execute on several large market opportunities, such as their specialized software applications for the SAIC of the PRC. Orsus may also have an opportunity to secure a contract with the PRC to provide cell-phone units for 3 million automobiles. These units would provide an important security link for the 2008 Beijing Olympics by transmitting data on a real-time basis to law enforcement officials in the event of a security threat. A contract of this magnitude could drive revenues far beyond our estimates. Orsus anticipates generating $120 million in annual recurring revenue by FY09 from its integrated software solutions.Important Disclosure: This information is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. As such, the information should not be construed as advice designed to meet particular investment needs of any investor. Any opinions expressed herein are subject to change. In the purview of Section 17(b) of the Securities Act of 1993 and in the interest of full disclosure, we call the readers attention to the fact that DreamTick-IR is an investor relations. DreamTick-IR has been compensated $5,000 cash a month for a 1 year period along with 50,000 stock options at $4.00 for the promotion of TSTC. DreamTick-IR has been compensated $4000 cash a month for a 1 year period along with 100,000 stock options at $2.00 for the promotion of ORS. 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