The "EPS" data in "Top & Bottom Line History" is from MoncentralMSN. I didn't use the ones in the table, because they were too little ($0.002) and inconsistent with TOMO 3Q financials ($0.245).
TOMO achieved record levels of revenues and profits in 3Q, as the Company continued to extend its lead in China's wireless internet marketplace, driven by innovative music-related wireless services and improved margins.
As the Company's major business (93.9% of TOMO's total revenue), the wireless internet service revenues increased 52.7% YoY and 6.1% QoQ.
The increase came from various fronts:
1. SMS, WAP and IVR made up 84.6% of TOMO's total wireless internet service. The Company continued to develop alliances with media partners in TV, radio and print to more effectively market the Company's core wireless platform services.
2. The launch internet music brand "Wanleba", taking advantage of its strong mobile distribution channels, created new a revenue stream. The Company expects to further develop its portal platforms to enable more user generated content services, which can be distributed to the Company's large wireless Internet user base.
3. The JV with Skype is now focusing on the development of a more localized TOM-Skype client for the mainland market and to grow user base, as at its initial stage. In the 4Q, the Company expects to develop premium services over the TOM-Skype platform.
4. TOMO joined an alliance with UMPAY and would work with UMPAY to offer more comprehensive mobile payment products to Chinese consumers and merchants. The alliance enabled TOMO to provide not only mobile content, but mobile functions, i.e. payment services, to its end users.
Besides, young Chinese have proven receptive to value-added cellphone services such as multi-media messaging and text massaging, and the CEO of TOMO said "the data penetration for mobile phone users is still very low, and this is where they see huge growth potential." China is one of the world's biggest wireless value-added services markets, and is expected to grow 51 percent this year.
Further, last year's shakeup, i.e. government cleanup of their core mobile messaging business, have now worked their way through the system, as various players work to rebuild their business and diversify revenue to avoid similar fallout to their revenue and share prices in the future. TOMO's situation has stabilised and has emerged as the leader in the fast-growing market.
Looking at the ratios, P/E is well below industry average, and PEG ratio also suggests that it is undervalued. Healthy amount of debt, liquidity needs to be improved though. Strong profitability, and is growing.
Referring to its chart, price hovering around 50DMA. SMAs are in positive trends, with 50DMA well above 10DMA. RSI and MACD are both in the negative territory, however, they both show some support, and are close to "0-lines".
Overall, I recommendations are Medium-term BUY, and Long-term STRONG BUY.
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