NQ Mobile (NQ, Financial) looks rock solid as it has impressive growth opportunities going forward. In fact, management remains convinced about its business, financials, competitive positioning, and its business strategies that are growing rapidly and making its progress look trouble-free.
NQ Mobile no longer remains a company to participate in the evolution of the mobile platform, but it is poised to lead the way globally as it owns one of the world’s leading mobile user acquisition engines, that is not only serving the company to acquire new users, but also backing up the company to expand its products and offerings. It is also engaging and monetizing these users. The company continues to invest in many new technologies, which should enable mobile discovery and user engagement for both consumers and businesses.
In addition, the company is able to fetch a great portion of its revenue from third-party application referrals through various products and services it has such as mobile security products, mobile games, and advertising network platforms, which are driving its unmatched growth. It has accelerated the monetization of its engaged user base dramatically in just a couple of quarters.
Key customers and contract wins
NQ Mobile on the other side continues to expand and accelerate business partnership. The company has entered into more than 10 major partnerships and business deals from mobile giants to industry leaders such as Sprint (S, Financial), Samsung (OTC: SSNLF), Ubisoft, China Mobile (CHL, Financial), Huawei (SZSE:002502, Financial), The National Bureau of Statistics in China, and Telkomsel among others, in the past five months alone.
In addition, the company has secured ground-breaking enterprise deals in China. NQ Mobile has deployed and sustains more than 700,000 million devices at the National Bureau of Statistics in China. The company expects this deal to expand further in the future that should generate good revenue for the company. This deal alone has positioned it as the go-to enterprise mobility provider in China as it is helping the company to improve its business development pipeline. In fact, its pipeline has grown from just a couple hundred thousand devices a couple of quarters ago to more 1 million devices today.
NQ Mobile is expected to drive growth for the healthcare sector in China, which represents only 5% of all internet search traffic, but still accounts for a sizable portion of the entire internet traffic.
Apart from this, NQ has also built strong relationships with West China Hospital in Sichuan province, which is one of the largest single point hospital in the world. The company is working with the hospital to develop a dedicated mobile health platform. NQ is now off to this platform with a trail for stroke recovery, providing solutions to data base management system and guidance for patients and their doctors. This innovation has been designated for a national demonstration project by China's Ministry of Health that will certainly fetch new clients for the company in the future.
NQ is also working with West China Hospital as a provider of mobile device management solutions, beating the industry giants like IBM (IBM, Financial) and Hitachi for this key contract. This is a 30,000-device deal and represents the beginning of a very rewarding business opportunity for the company going forward. It offers enormous opportunities for the company in verticals such as healthcare and financial services that are growing rapidly in the country.
Opportunities ahead
The company is consistent with its performance and executing various initiatives and strategies to drive long-term growth for its business and create value for shareholders. NQ Mobile has also started the commercialization of its R&D investments, and has procured one additional tier one global carrier. Moreover, the company has broadened its monetization opportunities with in-depth engagement with its users.
Going forward, NQ Mobile will be focusing on three main focus areas. First, it is focusing on compelling and engaging products and services that address users’ needs. Second, it is strengthening its user acquisition channels to distribute products and services directly to end users, and also on behalf of third-party carriers and manufacturing partners. Finally, NQ is focusing on monetization for itself and for its platform partners.
In addition, NQ has expanded its monetization capabilities beyond direct consumer service revenue to include advertising. Now, it is planning to add insurance bundling into the retail mix by commercializing its first insurance and security bundle.
Concluding remarks
NQ Mobile has a cheap valuation with the forward P/E of just 4.57 that indicates that the company has a lot of room to grow in the future. And the investors should utilize this opportunity to buy more share as the stock is expected to gain in the future as its prospects look very bright and appealing. Moreover, the company has a strong cash position of $283.05 million that easily covers its debt of $175 million. Its operating cash flow is positive and stands at 24.27 million, while a PEG ratio of just 0.22 indicates that NQ’s earnings are expected to grow at a solid rate.
Also the analysts have estimated CAGR of 40.00%, which is more than double the industry’s average CAGR of 18.94% for the next five years, speaks a lot about its growth going forward.
