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Data Wind Inc. (DW.TO)

In March, it was reported that this company surpassed Samsung as the #1 seller of tablets in India, with 20.1% of market share. In the third quarter, its Indian share increased to 34%, maintaining its leadership in affordable tablets.

Data Wind Inc. (DW.TO)
From The Quiet Investor

I still like Data Wind Inc. (DW.TO), even more so since it is off from our recommended price of $2.15 Canadian to the present price.

In the company’s most recent third fiscal quarter, it sold more than 300,000 tablets in India, which was 34% of all sold there. Samsung was second, at 21%, and Lenovo in third place, with even less.

In the larger and more expensive class of tablet ($75 Canadian), Data Wind holds 74 % of the market. The company’s products, including the even cheaper phones, include a one-year access to the Internet. Its margins have been in the upper 20% range, which is basically profit on hardware. After one year, the customer can sign up for continuing Internet access for 50c per month—which costs DW 8c per month. These conditions are about to kick in since the product sales only began a little over a year ago. So profit margins should begin to rise further from the software and from advertising.

DW had a Canadian-only bought offering of C$3million a couple of months ago to finance inventory and receivables. Each of the 1.4 million units consisted of one share and a half warrant exercisable at C$2.80. This raises share count modestly above the 22 million then outstanding.

The recent quarter revenues were C$15.5 million, up 81% from the previous year, the sixth consecutive record of increased sales. The company had C$350,000 operating profit and it expects the trend to continue and to achieve bottom line profit soon.

The lower price of the stock gives one a chance to participate in a fast-growing company well down from the IPO, and even from my initial recommendation.

John Gay, The Quiet Investor, 32 Kyle Ct., Willowbrook, IL 60527, 630-654- 1254, June 22, 2016