Boston, MA 04/01/2014 (wallstreetpr) – Sky-mobi Ltd (ADR)(NASDAQ:MOBI) represents Chinese companies and also reflects what they do best. The mobile apps company has shown how niche playing can be a profitable venture.
The Niche market:
The Chinese market for mobile is dominated by cheaper versions of smartphones. They do not have quad speed processors and most of the mobile apps do not work on them. Sky-mobi Ltd (ADR)(NASDAQ:MOBI) has latched on this need as the users are still crazy about mobile apps. That is also the prime reason they go in for smartphones. Most of the software companies develop apps that run on quad processors. These processors can only be found in the high end smartphones sold by the likes of Apple Inc (NASDAQ:AAPL) and Samsung Electronics. The niche is underserviced as software companies do not understand the economies.
In fact, the marketing style of the company provides many lessons to other companies particularly in the handset market. Sky-mobi also ties up with the service providers in China. The service providers in China have the freedom to install any apps they deem fit. By tying up with such companies, Sky-mobi finds a ready userbase.
The financial fundamentals:
As a result of such innovative marketing strategies, Sky-mobi Ltd (ADR)(NASDAQ:MOBI) is able to deliver good financial results consistently. Though its profit margins are not so good, other financial factors are quite strong. The debt is at very reasonable levels and there is growth in the net income. The net income growth has exceeded that of S&P 500 companies as well as outperformed the software industry. It increased by 38% as compared to the same quarter last year. The current return on equity also increased as compared to the same quarter last year. Revenue growth was slower during the last quarter but it could be due to several other reasons. Gross profit margins of 23% and net profit margins of 4% are significantly below industry averages. These are impacted as the company is spread out across several Tier-II and Tier-III cities in China.
