DALLAS, TX -- November 30th, 2022 -- Borqs Technologies Inc. (NASDAQ: BRQS): Stonegate Capital Partners initiates their coverage on Borqs Technologies Inc. The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/BRQS_Intiation.pdf
Borqs Technologies Inc. is a global Internet of Things (IoT) and innovative clean energy company with operations in the U.S., India and China. The Company’s IoT segment includes both software and hardware solutions. Its IoT software business mainly serves Qualcomm for its inbedded software in the advanced 5G mobile chipsets and automobile chipsets; its IoT hardware business provides customizable, differentiated and scalable Android-based smart connected devices. Its IoT customers mainly come from the United States, Europe, India and China. Borqs entered into solar and energy storage business by acquiring 51% of Holu Hou Energy LLC (HHE) in October 2021 with its unique proprietary EnergyShare solutions for the residential and commercial market in the U.S. The Company was founded in 2000 and got listed on Nasdaq in August 2017.
- Valuation: Given Borqs has not yet reached profitability, we are valuing the Company on an EV/Revenue multiple, using a Sum of the Parts analysis in valuing both business units separately, based on our 2023 revenue estimates.
- ODM Manufacturing/IoT Support: We are projecting 2022 YoY revenue growth of 48% and 11% growth in 2023. The Company has strong relationships with mobile chipset manufacturers and is well positioned to grow product development workload and recurring client referrals. Given these growth characteristics, we are applying an EV/REV multiple of 0.75x for IOT and arrive at an equity value of ~$36 million.
- Energy Storage Solutions: We are projecting 2022 revenues of $7.8 million and $29.9 million for 2023. The Company has strong backlog of orders into 2024 and is well positioned to expand into California and other states. The Company should also benefit from the tailwinds of the rapidly growing solar industry. We are applying an EV/REV multiple of 1.5X and arrive at an equity value of ~$45 million.
- Applying a sum of the parts for both business units results in an equity value of ~$81 million, or $2.44/share.
- Revamped Business Strategy: Borqs is positioned to revamp its business strategy and along with continuing in its legacy business in providing the hardware and software IoT solutions, it is seeking to develop Borqs’ branded products. The first product is the Energy Storage System (ESS) using HHE brand.
- International Presence: With R&D centers in Wisconsin, U.S., Bangalore, India and Beijing, China, the Company’s international presence appears aligned with global technical talent, production capacity, and efficiency.
- One Stop Solution for IoT devices: What differentiates Borqs operates as a connected products and solutions company that provides technical expertise to help OEMs and global smart device companies from the idea stage and help them productize for commercialization. The Company also supports their customers until the mass production stage when the products are available to the customers. Borqs streamlines the entire product development and handles the challenges of selecting and managing component vendors and service providers (i.e., EMS, certification bodies and test labs), allowing customers to bring their products to market faster.
- Market Reputation: Borqs is recognized as a global leader in smart connected devices and IoT solutions. Deloitte named Borqs as one of the fastest growing technology companies in China and Asia Pacific in 2011, 2012 and 2013. In 2013, 2014, 2015 and 2016, Borqs was named Company of the Year for Innovation and Leadership in Mobile Technology for Asia Pacific from the International Alternative Investment Review. Also, Borqs received the "50 Most Promising IoT Solution Providers 2016" recognition from CIO Review magazine, as well as one of the “10 Most Innovative IoT Solution Providers” by Insights Success in 2017.
- Strategic Relationships: The Company’s marketing advantage centers on strong relationships with mobile chipset manufacturers such as Qualcomm, which provided significant customer referrals. The strategic partnership with Qualcomm was further strengthened by a joint $9 million equity funding by Qualcomm Venture and Accel India IV Ltd, before Borqs’ public listing.
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.