Technics O&G

Technics O&G: larger than expected losses in 3QFY13, as revenue surged 70% qoq to $13.9m, but gross margin shrank to 18% from 53% , while core operating loss widened to $1.5m from $0.4m in 2Q13. DMG estimates that the market is valuing Technic's core operations at 2.8x P/B, a rich premium for a currently loss making business that also does not possess earnings visibility. Believes that Technics is not supported by earnings , book value, or dividends, and the stock's premium is entirely driven by market perception of it as a previously high yield play. Reiterates Sell with TP $0.64.