Borqs Technologies Is Moving Up With Growing Success in Telecommunications
It may still rank as a microcap company, but Borqs Technologies is making waves as both an innovator and a company with reliable telecommunications savvy.
Borqs Technologies (Nasdaq: BRQS), a Beijing company that specializes in Internet-of-Things and mobile-virtual-network technologies, is at last stepping out of its role as a low-profile provider of embedded software and mobile device products to assume a place as a global leader in connected solutions and mobile communications services.
Founded in 2007 as Pacific Special Acquisition Corp., the company re-incorporated in the British Virgin Islands as Borqs Technologies in 2015 and began trading on the Nasdaq board. Revenues have been increasing briskly in recent years, from $75.1 million in 2015 to $149 million last year.
Taglich Brothers, a brokerage firm specializing in microcap properties (grossing $250 million or less), began coverage of Borqs this month, projecting 2018 revenues of $182.2 million with a year-ahead per share projection of $8.25.
So far, Borqs' stock has rallied from $4.25 in October of last year to almost $7 per share this week. The company closed Monday at $6.825 per share, up 5 percent on the day.
Borqs' operations include two business units, one to develop connected devices and cloud solutions, the other to operate a mobile network that provides Chinese consumers with a full range of mobile communications services.
The company, which uses almost half of its operating expenses for research and development, is already acknowledged as a major Internet of Things (IoT) innovator. It was recognized recently by Silicon Review as one of the 10 fastest growing IoT companies.
According to Taglich, the company holds 128 patents in China and four in the U.S., with 20 pending in China and six more in the U.S. The company employs 600 people, more than 70 percent of them technical professionals. It has research and development centers in both China and India.
Among the customers for Borqs-developed connected devices are Intel, Qualcomm, Fossil, Vizio, Panasonic and Amazon.
Borqs has also been an early - and singularly productive - user of Android software, which was released in 2008 as an open source operating system by Google. Borqs used Android software in a platform for the deployment of Android-based mobile phones and tablets for Chinese Mobile, the state-owned company that operates a telecommunications network across mainland China. Borqs also developed the software and hardware platform for Intel and Qualcomm phones and tablets.
And Borqs is part of the complex of companies developing Qualcomm's Snapdragon Wear platform, which will service wearbles like smartwatches, smart eyewear, smart headsets and other connectable devices.
To date, Taglich Brothers said, Borqs has "collaborated with six mobile chipset manufacturers and 29 mobile device OEMs to commercially launch Android based connected devices in 11 countries." Borqs' "connected solutions" unit accounts for more than three-quarters of the company's revenue and its software platform is in more than 10 million units worldwide.
The company is pursuing a strategy of acquisitions and strategic alliances to advance its core technology and to expand geographically. For example, this month Borqs signed a letter of intent to buy 60 percent of Shanghai KADI Machinery Technology, which has a $48.5 million contract to supply electric control modules to automotive contractor Shenzhen Esprit Technology Ltd.
At the same time, Borqs acquired a 13.8 percent share of mobile terminal device manufacturer Shenzhen Crave Communication Co. and its Hong Kong affiliate Colmei Technology International, a sales enterprise.
The mobie-virtual-network-operator side of the business – that is, Borqs operating as a wireless communications services provider which does not own its own network infrastructure – provides 2G/3G/4G voice and data services for about 4.5 million subscribers, making it the second-largest MVNO in China.
Meanwhile, one of the company's focuses, the Internet of Things, is offering a largely untapped market, which GrowthEnabler, the data processing firm, projects will grow globally from $157 billion in 2016 to $457 billion by 2020.
GrowthEnabler predicts that 20 billion devices will be connected to the internet by 2020. These may be anything from smart refrigerators that can pre-order groceries to sensors on factory machines that can anticipate breakdowns.
The company pitches itself like this: "A catalyst for smart phones, tablets, watches, trackers, wearables, vehicles, home appliances, machines and smart cities, Borqs is on a mission to generate human potential and enable a more intelligent and interconnected planet."
Taglich Borthers acknowledges the IoT marketplace offers opportunities, but it's fragmented. Borqs' competitive advantage, the firm said, is "reliability, performance, experience, product features and functionality, time-to-market, price and customer support."
For more than two years, company shares hovered consistently near $10 per share. Then, in August, 2017, the price dropped precipitously, by more than 50 percent, with the disclosure that Intel Corp. owned a 13.9 percent passive equity stake in Borqs. The chipmaker has had problems with recently discovered flaws in the company's chip designs that appear to be exploitable by hackers.
Taglich Brothers projects small per-share losses for each of 2017 and 2018 ($1.60 per share and 2 cents per share, respectively). The brokerage firm rates Borqs as a "speculative buy," with a 12-month price target of $8.25 per share.