Benefits from 2G Network Optimisation
Continual Development of Domestic and International Market
Financial Highlights（For the six months ended 30 June）
| HK$’000 | 2010 | 2009 | Change |
| Revenue | 2,002,261 | 1,767,389 | +13.3% |
| Gross Profit | 805,119 | 729,311 | +10.4% |
| Profit attributable to shareholders | 278,989 | 232,221 | +20.1% |
| Basic earnings per share (HK cents) | 23.66 | 20.50(restated) | +15.4% |
(23 August 2010 – Hong Kong) – Comba Telecom Systems Holdings Limited (“Comba” or “the Group”, Hong Kong stock code: 2342), a leading wireless enhancement solutions provider, announced today its unaudited interim results for the six months ended 30 June 2010.
During the review period, despite the uncertainties in the global economy and a reduction of the capital expenditure in mobile networks in the PRC, the Group’s turnover recorded a growth of 13.3% to HK$2 billion. With the increase of revenue and economy of scale, profit attributable to shareholders jumped 20.1% to HK$279 million. Basic earnings per share was HK 23.66 cents. The Board of Directors recommended payment of an interim dividend of HK 6 cents per share (first half of 2009: HK 6 cents) and a distribution of 1 bonus share for every 10 existing shares held by shareholders (first half of 2009: 1 bonus share for every 10 ordinary shares).
Mr. Tony TL Fok, Chairman and President of Comba, said, “With the growing maturity of the 3G network, as well as the immense and steady demand of the installed 2G mobile network, network optimisation of the Chinese telecommunications industry maintains its strong growth potential which acted as an impetus to the remarkable growth of the Group’s wireless business. In addition, leveraging our advanced research technology and market-leading innovative products, the Group won several notable projects, including Expo 2010 Shanghai China and the Wuhan-Guangzhou High Speed Railway, enabling the Group to maintain its industry-leading position. “
During the period, revenue generated from the PRC mobile operators increased 18.5% to HK$ 1,571 million, accounting for 78.5% of the Group’s revenue. Benefiting from 2G mobile network continued optimisation, revenue from China Mobile Group and China Telecom Group recorded a substantial increase of 41.8% and 63.3% to 946 million and 178 million respectively. On the other hand, revenue from China Unicom Group slumped 18.7% due to the delay of some build-out and enhancement projects of the 3G mobile network in the PRC. The Group expects the capital expenditure in this year will be back-end loaded. As a long term partner of the mobile operators, it is expected that more revenue from both 2G and 3G mobile networks will be recorded in the second half traditional peak season.
During the period, revenue from the wireless enhancement business including installation, network enhancement and after-sales maintenance services recorded a solid growth of 34.9% and 81.1% respectively. Sales of base transceiver station antennas decreased in the period, and overall revenue from the antennas and subsystems business fell by 5.4%. The effect of the incident relating to safety inspection of telecommunications equipment in India meant that revenue generated from the wireless access division including digital microwave systems and wireless local area network (“WLAN”) business decreased by 60.1%. However, it is noted that the Group recorded a strong growth of revenue from the WLAN business in the PRC and the Group anticipates that WLAN to be a high growth product category in the future.
For the international business, the incident relating to safety inspection of telecommunications equipment in India affected the indirect sales of the international operations, and revenue from international customers and core equipment manufacturers slumped 30.5%. Despite this, revenue from direct channels recorded positive growth. In particular, direct sales efforts to operators showed good returns and positive growth during the period. The Group anticipates consistent momentum in order bookings which will drive substantially better international direct sales results in the second half of 2010.
To capture the ample opportunities globally and especially within the PRC, the Group continued to invest in expanding the product portfolio for the global markets and the development of innovative 2G, 3G and WLAN related products, as well as the long-term evolution (LTE) technologies and expand the research and development (“R&D”) team. As a result, R&D cost rose slightly by 2.9% to HK$78 million (first half of 2009: HK$76 million) representing 3.9% of the Group’s consolidated revenue (first half of 2009: 4.3%). Since the telecommunications industry relies heavily on R&D to introduce new products and advanced technologies in a timely manner to meet the market demand, the Group will continue to invest heavily in R&D. In line with the Group’s R&D strategy, the Group is constructing two new R&D buildings and a test laboratory at the existing headquarters in Guangzhou, which is expected to be completed and operational in June 2012.
Mr Fok said, “Currently 2G is still the major mobile network in PRC, with over 99% of subscribers using the network. We expect the 2G and 3G mobile network will co-exist for a long period of time. The Group believes the expected increment in the capital expenditure of domestic operators in the second half will be switching from transceiver station applications to wireless enhancement. Wireless enhancement business has always been the Group’s major source of revenue and we are optimistic towards the future development of the Group.”
“In addition, as another strong growth area, the Group will actively develop its rural coverage capability. The Group will combine different product segments to offer a series of customised solutions to improve penetration in rural areas. Meanwhile, the new infrastructure projects such as high speed railways, convention centres, and the Asia Olympics, will bring tremendous business opportunities to the Group. By applying high value added solutions, the Group will definitely reap benefits and gain higher margins. As the global economy continues its gradual improvement, the international market demand for 2G solutions will continue to swell. Coupled with the issuance of 3G licenses in emerging markets which create further opportunities for growth, we are confident that international markets will be another high growth area of the Group. While affirming its leading position in the PRC, the Group will grasp the opportunities to fortify its foothold in foreign markets.” Mr. Fok concluded.
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