Tranzeo Wireless Technologies Inc TZWLF

Canaccord/Genuity Update

[403xyz1]

---

Tranzeo Wireless Technologies Inc. (TZT : TSX): Emerging markets remain in focus; maintain SPECULATIVE BUY rating and $1.80 target price Event Tranzeo hosted a "business update" conference call after the market closed on June 2 to provide further details on its business and opportunities going forward. Impact Positive. On the conference call the company reiterated its Q2 and FY guidance of C$5-7 million and C$40-45 million, respectively, and that it expects to return to profitability in Q3. In addition, the company disclosed that it currently has access to C$3.5 million worth of credit lines and that to date only C$600k has been used. Furthermore, the company anticipates that a C$10 million credit facility will be in place by the end of the month. Management is confident that this will be sufficient to meet the company's working capital requirements as revenue ramps through the year. On the operational front, management confirmed that its Indonesian WiMAX deployment has proceeded according to plan with initial network deployments recently going on line. Lastly, the company was confident about its pipeline of opportunities in other emerging markets, such as India, China, Russia, and Kuwait, and is experiencing demand for its product in adjacent applications of oil & gas and smart grid. Management noted that some of these opportunities accelerated following the Aperto acquisition. Until these potential deals close, we are leaving our estimates unchanged. Action We are maintaining our SPECULATIVE BUY recommendation and a C$1.80 target based on our DCF and industry comparables analyses. Our target price implies a F2011E P/E multiple of 14x.