The whole NWLL story from |
NEW TEL LTD SPONS ADR: (NWLL) $23 1/2......... HERE'S WHAT WE TOLD YOU ON TUESDAY..... You won't believe the story on NWLL! This one comes to us from the same source who gave you Ballard Power Systems @ $35.....so buy NWLL and enjoy the ride to the upside. Yesterday's weakness is a perfect buying opportunity. The stock trades on the Australian stock exchange for 1/10 of the value of the American ADR's. Stock was weak yesterday because of a private placement. Look for strength today. The company will be China's #1 internet provider. NWLL is in bed with the Chinese government, as they have a deal with the gov. to purchase all of the gov. owned ISP's - (18 in all). The numbers are big on this, at least a $100 to $200 number and possibly higher. We'll have the complete story within a few days.
HERE'S WHAT WE TOLD YOU ON WEDNESDAY..... As we reported yesterday, this stock trades on the Australian stock exchange for 1/10 of the value of the American ADR's. NWLL will be China's #1 internet provider. NWLL is in bed with the Chinese government, as they have a deal with the gov. to purchase all of the gov. owned ISP's - (18 in all). The stock was halted yesterday due to an upcoming news release about the private placement we told you about. We see nothing negative on the horizon. If additional weakness occurs, we would use it as a buying opportunity. Look for a full report within the next few days.
HERE'S WHAT WAS IN YESTERDAY'S AUSTRALIAN FINANCIAL REVIEW: "The suspension of NewTel on the ASX yesterday is reportedly ahead of a $30 to $50 million placement to the domestic clients of brokers Findlay's and Scott Foster, to pay for the upgrading of its recently purchased Chinese ISP and portals. The company is expected to still proceed with the $A200 million US raising later in the year." It's our understanding that this is normal procedure for the Australian stock market to halt trading on news. Hopefully, the stock will be trading again either today or tomorrow. We plan on telling you the NWLL story in tomorrow's Whisper Stock section...
HERE'S THE REST OF THE STORY..... New Tell comes to us from the stock broker subscriber who gave us all Ballard Power Systems. After performing our own due diligence, we have come to the same conclusion as our subscriber that this stock has the potential to become a big winner, having the potential to literally change the way the Chinese people live. New Tell is basically in bed with the Chinese government, as they will be purchasing all of the government's Internet companies - 18 in total. The Internet in China is at least ten years behind the U.S., but that will all be changing. Right now it's estimated that there are only 7 to 10 million people online, which is less than 1% of the population. The Chinese Internet industry is at a very early stage and the growth to come will be much higher growth than what we have experienced in the U.S. Wouldn't you all like to be able to turn back the clock five years and have the opportunity to buy shares in America Online (AOL) at five-year-ago share prices? That's the opportunity you all have today with investment in New Tell.
The opportunity before New Tel is truly unbelievable and the growth will be staggering. The company will become China's premier Internet service and content provider. In partnership with Xinhua, China's official news agency, New Tell will acquire unique online content from heavily visited government websites and established ISPs in high user density areas. Investments are profitable and offer immediate cash flow. According to the Asian Wall Street Journal, "China's online revolution is gaining momentum and the Internet promises to attract more foreign investment than any other sector in China." Private Internet domain name registration and Chinese-character domain names are now permitted. Exponential Internet growth is projected to be worth over US$12 billion by 2002, and 33 million users by 2003...in other words, incredible high growth. China now has 200 small ISPs and competition will reduce fees further. Download speed and customer service rather than price remain the two key areas of customer dissatisfaction. A major opportunity exists for investors to cheaply acquire, consolidate and recapitalize established ISPs. Online advertising and e-commerce growth is a function of growth in Internet access and traffic. Online advertising is estimated to have grown from only $5 million in 1998 to $15 million in 1999, so as you can see, the growth potential here is simply staggering!! Advertising revenues are forecast to exceed $200 million by the end of 2001. Currently, there are only 7% of the mainland population who have fixed phone lines and only 2% have cell phones. This number is expected to grow to 800 million people with cell and fixed phones by 2010!!!
It's interesting to note that surveys show that close to 60% of Chinese users who access the Internet, access for information. The ability to deliver unique information content is key to attracting portal traffic in China, and that's exactly where New Tel fits in. The Xinhua relationship is crucial to the success of New Tel and it should be considered a huge asset. After initially establishing Chinadotcom for the Taiwan and Hong Kong markets, Zinhau is working through NewTel to service the mainland market. Xinhua is officially responsible for censorship in China, and can be expected to promote legislation that prevents other internet portals from competing directly with NewTel. Xinhua prestige will help attract local retail support. Chinadotcom provides a precedent for Xinhua bona fides and value of assistance. Chinadotcom is also a benchmark of US investor appetite for China ISP and content. NewTel is Chinadotcom on steroids!! In looking at Chinadotcom, triple digit revenue growth in 1999 was achieved from a rise in repeat advertising, growth in subscribers and Y2K related e-commerce. Resulting sales soared 500%. Daily page views of its entire range of sites averaged 4.2 million hits per day in the 4th quarter, up 68% from the 3rd quarter 1999. The number of registered users quadrupled to 2.2 million Rising share price of Chinadotcom reflects strong revenue growth, with market capitalization rising 1342% in 8 months. When Chinadotcom came public on the Nasdaq in 1999, its market cap was $400 million. Today, Chinadotcom is valued at $5.7 billion....get the picture???
NewTel is expected to outperform Chinadotcom, which primarily operates in Hong Kong and Taiwan, while NewTel will be focused on the higher growth mainland. Chinadotcom is an internet and web design company, while NewTel will be a portal, ISP, content creator, web designer and Voice-Over-ISP telecommunications business. GET THE PICTURE???!!! E-business in the Asia-Pacific is estimated to grow to $1.4 trillion by 2004. There are obviously risks....the risk we see is the fact that we're dealing with a communist country, but the success of Chinadotcom once again seems to outweigh the communist factor. In our view, the potential returns far outweigh the risks, as once again, we can look at the success of Chinadotcom. Does NewTel have the potential to be better than our America Online? We believe the potential is far greater. We asked earlier if you would like to be able to turn back the clock and buy shares of AOL at four or five year ago prices? Adjusted for splits, four years ago you could have purchased shares in AOL for $1.70 a share. AOL since traded to a high of $95.81 which is a return on investment of 5,535%. Even at yesterday's AOL close of $55 1/2, we're still looking at a return on investment of 3,164%. It's our view that investment in NewTel could perform at least as well and probably better than the last four years in AOL.
Shares of New Tel have been halted due to the raising of $59.5 million to kick start its Chinese Internet operation. The Perth company, with backers including Mr Rodney Adler and Sir Laurence Street, placed 17 million new shares at $3.50 a piece. Most of the stock went to domestic institutions as well as high net worth individuals such as the Smorgon family and Melbourne racing clan, the Hains family. A handful of institutions in the UK, the US and Asia also took shares. The placement of these shares should be the hand writing on the wall as to what's in store for this company. The placement was done jointly by Findlay & Co Stockbrokers and Foster Stockbroking. In November New Tel said it would enter the lucrative Chinese market by acquiring at least two Chinese Internet service providers and up to 30 Web portals. New Tel said it would then form a new company in China by buying the assets of China's state-owned Xinhua news agency for $400 million. In return, Xinhua, which already has a 5 per cent stake in New Tel, would up its stake to 45 to 49 per cent. Tell us now....with Xinhua now owning 49% of New Tel, does this not also tell you where the price of this stock is headed??!!!
To finance and market the new company and its Web sites, New Tel plans to conduct a $200 million capital raising by selling 100 million shares at $2 each - (Australian currency). But that $200 million raising needs to be given the green light by shareholders, which is not expected to happen until late April. In the interim, however, New Tel has spied other Internet opportunities in Hong Kong and China in which it would like to become involved. New Tel chief executive Mr Peter Malone said there was a growing number of Internet companies in Hong Kong looking to do deals with companies in mainland China. Mr Malone, currently in Hong Kong discussing the $200 million placement, said New Tel was being dubbed the "fourth big sister" in the Asia Internet market, with China.com, Softbank and Mr Richard Li's Pacific Century CyberWorks, which runs hot Internet portal Tom.com and which earlier this month took control of Hong Kong's blue chip telecoms giant Cable & Wireless HKT.