Micro CAP. RESEARCH REPORT
Follow up Report
BUY Recommendation
April 14, 1999
Technologies Corp.6 Pearl Court Allendale, NJ 07401 (201) 818-2889 |
4.53 Million.Estimated Float: 2 Million Recent Price: $3.875 Average Daily Trading Volume 10,000 est. |
Brighton Technologies Corp. “Brighton” is a technology systems integration company with operations in the Greater China market. The company operates two main subsidiaries BIC and BECL. The BECL subsidiary is an investment and holding company that is involved in all aspects of computer and industrial equipment, and wireless telecommunications. BIC is a distributor of third party manufactured industrial equipment primarily to customers in China and other Pacific Basin countries.
The Beijing Brighton-STAQ Electronic System (“Brighton-STAQ”) is a Peoples Republic of China joint venture that was formed to design, develop, install and maintain a computer network for the trading of securities in China (the “STAQ On-line Network”). The Company owns a 90% interest in the Brighton-STAQ. The Brighton-STAQ, which is modeled after NASDAQ presently has 550 member firms located in 65 cities throughout China. The excess capacity on this state of the art system can generate additional profits by processing other applications such as hotel reservations, credit card clearing, and any other transaction where information exchange and confirmation is required.
Recent Developments:
Since the publishing our our initial report on Brighton Technologies Corp. ‘BGHT’ there have been several positive developments that should have a positive impact on Brighton Technologies Corp. The Japaneese government has finally decided to undertake badly needed economic reform designed to create the economic growth needed to revitalize the Japanese economy. This economic reform is very similar to the reform enacted in the early 1980’s within the United States. That economic reform included deregulation of the economy combined with tax cuts, and is largely responsible for creating the growth that we are still experiencing today. This approach has been successful throughout the world in creating and sustaining economic growth. As a result the prospects for its success with the Japaneese economy is very encouraging. This is very important because the Japanese economy is one of the largest economies in the world. A healthy and growing Japanese economy will provide a badly needed spark to reignite the south east asian economy.
The Chinese government has recently applied for membership in the World Trade Organization (WTO). While the Chinese membership in the WTO was recently denighed, it seems fairly certain that the Chinese will reapply and eventually become members of the WTO. The membership in the WTO will bring several positive benefits. In order to gain membership in the WTO the Chinese will need to reform their political system. This should begin the process of further opening up the Chinese economy and begin the deregulatation process. China is the most populous country in the world. As a result it represents the largest market in the world. The opening of this market represents a tremendous business opportunity. As with most new markets, those who get their first generally see the greatest reward from the market.
Brighton Technologies Corp. recently announced the successfull launch of STAQ-Online Trading System. The system is currently operational in 4 Chinese cities, and will be expanded to 50 cities during the first half of 1999. This system is designed to be the “NASDAQ System” of the Chinese market. The system has been designed to allow the excess capacity to be used to provide Internet access for the Chinese.
Comparables:
Since the publication of our original research report on Brighton Technologies we have located several companies that we feel are reasonable comparables for Brighton Technologies Corp. ‘BGHT’.
The first company is Asia Media Corp. ‘ASMC’. This company recently completed a reverse merger with TecnoChannel Technologies Sdn Bhd. TecnoChannel, operating as MyWeb, produces a system that allows customers to use their televisions to connect to the Internet via a set-top box and a remote control or wireless keyboard. This acquisition brings the company into the Internet Access market in southeast asia. While exact figures are difficult to come by due to the fact that this company is not currently a “fully reporting” company, it is estimated that there are approximately 9.5 million shares outstanding in Asia Media Corp. ‘ASMC’. The most recent closing price for ‘ASMC’ was $21.50/share. At this price level the market capitalization of Asia Media is estimated to be approxiamately $204 million dollars.
The second company that we have located that is involved in the Internet in southeast asia is Intermost Corp. ‘IMOT’. The Company is an Internet service provider in China, focused on business-to-business content hosting and maintenance. The company recently launched a Chinese language Internet search engine. The company recently announced an agreement with Yinwen Book Import and Export Company to begin plans for one of the world’s largest online bookstores of Chinese titles. The company plans to launch an Internet site to sell chinese books. While exact figures are difficult to come by due to the fact that this company is not currently a “fully reporting” company, it is estimated that there are approximately 8.2 million shares outstanding in Intermost Corp. ‘IMOT”. The most recent closing price for the shares of ‘IMOT’ was $6.25/share. At this price level the market capitalization of Intermost Corp. is estimated to be approximately $51 million dollars.
The third company that we have located is ZiaSun Technologies, Inc.. This company is an Internet Holding Company that has recently made acquisitions involving online trading, an Asian Barter Company, and an online investment training company.
While exact figures are difficult to come by due to the fact that this company is not currently a “fully reporting” company, it is estimated that there are approximately 10. million shares outstanding in ZiaSun Technologies, Inc.. The most recent closing price for the shares of ‘ZSUN’ was $16.875/share. At this price level the market capitalization of Intermost Corp. is estimated to be approximately $169 million dollars.
The fourth company that we have located is Pacific Internet Ltd. This company is an Internet Serivce Provider (ISP) based in Singapore. This company recently went public through an Initial Public Offering (IPO). The lead underwritter on the IPO was Bear Stearns Securities. This company currently reports its financial results in the Singapore currency, making a direct comparrison difficult. But what is clear is the fact that this company is not profitable. With slightly more than 12.3 million shares outstanding and a recent share price of $90/share, the market capitalization of Pacific Internet is approximately $1.1 billion.
Our Analysis:
Brighton Technologies recently announced that the STAQ Electronic System (“Brighton-STAQ”) has began operating in 4 major Chinese cities and is on schedule to be fully operating in 50 major Chinese cities by the end of the first half of 1999. This is very significant because the excess capacity of this system is intended to be used to provide Internet access. It is currently estimated that there are approximately 2.2 million Chinese with Internet Access. It is estimated that over 10 million Chinese will have Internet Access by the end of the year 2000. The Chinese government has recently passed legislation designed to improve the quality of trading in the Chinese stock markets. In our opinion this creates a tremendous growth opportunity for Brighton Technologies.
We have identified four companies that are involved with the Internet in South East Asia. Three of these four companies are not fully reporting, while Brighton Technologies is. With the information that we have been able to obtain, we have calculated the approximate market capitalization of these companies. In comparison of these four companies with Brighton Technologies, it is apparent that Brighton Technologies has the lowest market capitalization. If Brighton Technologies were to move towards the average market capitalization of the first three companies listed it would see a tremendous increase in value.
| Company | Brighton Technologies ‘BGHT’ | Asia Media Corp. ‘ASMC’ | Intermost Corp. ‘IMOT’ | ZiaSun Technologies, Inc. ‘ZSUN’ | Pacific Internet ‘PCNTF’ |
| Shares Outstanding | 4.5 million | 9.5 million | 8.2 million | 10 million | 12.3 million |
| Share Price | $4.75/share | $22.00/share | $6.375/share | $16.875/share | $90/share |
| Market Capitalization | $21.4 million | $209 million | $52.3 million | $168.8 million | $1,107 million |
Our Recommendation:
Sterling Investment Services, Inc. is continuing to recommend the purchase of shares in Brighton Technologies Corp. (OTC Bulletin Board ‘BGHT’) at their current price levels. We believe these shares are undervalued when compared to other companies involved in similar business activities in South East Asia.
Notice of custom research
Sterling Investment Services, Inc. is an independent investment management and research firm. Sterling Investment Services publishes four different newsletters, three of which are broadcast on a nightly basis. Sterling Investment Services, Inc. received compensation for the production of this report. Additional information on these newsletters can be obtained from our web site at ‘www.sterlinginvestments.com’. Sterling Investment Services, Inc. was paid a consulting fee in conjunction with the production of this report.
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