Longcheer, Sinotel among companies expected to benefit from new business
By LYNETTE KHOO 12 January 2009
Chinese telecom-related stocks soared last week as investors picked up stocks they believe could gain from the upcoming launch of 3G services in China.
In a bid to bolster its economy that has slowed to a 5-year low, Beijing government on Jan 7 officially awarded the long-awaited licences for third generation (3G) mobile networks to three telephone operators, clearing the way for as much as US$41 billion of spending in network upgrading and expansion over the next two years.
The 3G licences were granted to China Mobile, China Unicom and China Telecom Corp, driving up their shares on expectations that the new technology, which allows services such as video and mapping on mobile phones, will attract higher spending customers.
Closer to home, some S-chips or Singapore-listed Chinese stocks also enjoyed a rally last Friday.
Handset designer Longcheer rose 3.8 per cent to 27 cents, wireless telecom solutions provider Sinotel surged 20.7 per cent to 17.5 cents, printed circuit board maker Surface Mount Technology leapt 27.3 per cent to seven cents, and coaxial cable maker Hengxin gained 2.9 per cent to hit 18 cents.
Telecom-related players told BT they are excited about the development, which they believe would offer new business opportunities.
‘The carriers will definitely be speeding up 3G network upgrading works and we are likely to see tenders for these projects soon,’ said Ben Ng, Sinotel’s vice-president of corporate communications and investor relations.
‘Apart from this, Sinotel will also stand to benefit for having a head-start in distributing 3G network cards,’ he added.
Sinotel has been distributing 3G network cards in Tianjin through its partnership with China Unicom in a trial programme since last July. Mr. Ng said the take-up rate has been encouraging, and he believes 3G cards will be the group’s key driver this year.
In the third quarter ended Sept 30 last year, Sinotel recorded revenue of 18.5 million yuan (S$4 million) from this business segment, which helped lift its sales to 89.7 million yuan, from 78 million yuan a year ago.
Longcheer, a major provider of W-CDMA (wide band-code division multiple access technology) handset design, said this will be a new growth driver for the group and that it has invested heavily in the past to make sure it is positioned to tap that potential.
‘We are working with China Unicom,’ said Longcheer chief financial officer Arthur Chen. ‘It is part of our business development strategy that we will be able to participate once China Unicom is in a position to call for tender.’
Longcheer produces three to four million handsets each quarter, and 25 per cent of these are shipped to overseas markets. About 15 per cent of output are 3G handsets that are shipped to Japan and Europe, and some 85 per cent are 2G handsets targeted at emerging markets.
Notwithstanding the new 3G opportunities in China, companies remain modest in their outlook for 2009, given the uncertainties facing China’s economy and the timeframe for the 3G infrastructure to be put in place.
Mr. Chen projects that end-2009 is the earliest for Chinese mobile carriers to start making bulk purchases of 3G handsets.
‘We will be conservative in our estimates for 2009 because we do not know how bad the industry will be affected as it’s spurred by consumer spending at the end of the day and this will be pegged to how China’s economy behaves,’ Mr. Ng of Sinotel added.
In the third quarter ended Sept 30, 2008, Sinotel managed a 0.9 per cent gain in net profit to 27.48 million yuan as higher costs pared down a 15 per cent rise in revenue to 89.68 million yuan.
Mr. Ng added that growth is likely to be slower in 2009, but the group’s net profit is still expected to be higher this year than in 2008.
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3G Licences Drive Up China Telecom-Related Stocks
Longcheer, Sinotel among companies expected to benefit from new business
By LYNETTE KHOO
12 January 2009
Chinese telecom-related stocks soared last week as investors picked up stocks they believe could gain from the upcoming launch of 3G services in China.
In a bid to bolster its economy that has slowed to a 5-year low, Beijing government on Jan 7 officially awarded the long-awaited licences for third generation (3G) mobile networks to three telephone operators, clearing the way for as much as US$41 billion of spending in network upgrading and expansion over the next two years.
The 3G licences were granted to China Mobile, China Unicom and China Telecom Corp, driving up their shares on expectations that the new technology, which allows services such as video and mapping on mobile phones, will attract higher spending customers.
Closer to home, some S-chips or Singapore-listed Chinese stocks also enjoyed a rally last Friday.
Handset designer Longcheer rose 3.8 per cent to 27 cents, wireless telecom solutions provider Sinotel surged 20.7 per cent to 17.5 cents, printed circuit board maker Surface Mount Technology leapt 27.3 per cent to seven cents, and coaxial cable maker Hengxin gained 2.9 per cent to hit 18 cents.
Telecom-related players told BT they are excited about the development, which they believe would offer new business opportunities.
‘The carriers will definitely be speeding up 3G network upgrading works and we are likely to see tenders for these projects soon,’ said Ben Ng, Sinotel’s vice-president of corporate communications and investor relations.
‘Apart from this, Sinotel will also stand to benefit for having a head-start in distributing 3G network cards,’ he added.
Sinotel has been distributing 3G network cards in Tianjin through its partnership with China Unicom in a trial programme since last July. Mr. Ng said the take-up rate has been encouraging, and he believes 3G cards will be the group’s key driver this year.
In the third quarter ended Sept 30 last year, Sinotel recorded revenue of 18.5 million yuan (S$4 million) from this business segment, which helped lift its sales to 89.7 million yuan, from 78 million yuan a year ago.
Longcheer, a major provider of W-CDMA (wide band-code division multiple access technology) handset design, said this will be a new growth driver for the group and that it has invested heavily in the past to make sure it is positioned to tap that potential.
‘We are working with China Unicom,’ said Longcheer chief financial officer Arthur Chen. ‘It is part of our business development strategy that we will be able to participate once China Unicom is in a position to call for tender.’
Longcheer produces three to four million handsets each quarter, and 25 per cent of these are shipped to overseas markets. About 15 per cent of output are 3G handsets that are shipped to Japan and Europe, and some 85 per cent are 2G handsets targeted at emerging markets.
Notwithstanding the new 3G opportunities in China, companies remain modest in their outlook for 2009, given the uncertainties facing China’s economy and the timeframe for the 3G infrastructure to be put in place.
Mr. Chen projects that end-2009 is the earliest for Chinese mobile carriers to start making bulk purchases of 3G handsets.
‘We will be conservative in our estimates for 2009 because we do not know how bad the industry will be affected as it’s spurred by consumer spending at the end of the day and this will be pegged to how China’s economy behaves,’ Mr. Ng of Sinotel added.
In the third quarter ended Sept 30, 2008, Sinotel managed a 0.9 per cent gain in net profit to 27.48 million yuan as higher costs pared down a 15 per cent rise in revenue to 89.68 million yuan.
Mr. Ng added that growth is likely to be slower in 2009, but the group’s net profit is still expected to be higher this year than in 2008.
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