| Singapore-listed stocks | Recent stock price (S’pore cts) | Market cap (S$ M) | PE | Mar-Sept ’09 net profit (y-o-y change) | Return on Equity (%) | Dividend yield (ttm) |
SINOTEL | 66.5 cts | 205 | 7 | RMB 83.4 m (+31%) | 33 | NA |
| Z-OBEE | 17 cts | 88 | 15.3 | USD 2 m (-49%) | 7.5 | NA |
| LONGCHEER | 52.5 cts | 208 | 7.2 | RMB 68.5 m (-27%) | 23.9 | 5.7 |
| JADASON | 9 cts | 65 | - | S$ 3 m (+325%) | -1.4 | NA |
| ACE ACHIEVE | 10.5 cts | 34 | 11.2 | RMB 8.4 m (+28%) | 6.6 | NA |
| 8 TELECOM | 17 cts | 81.4 | 32 | RMB 18.8 m (+345%) | 4.6 | 7.6 |
ACE ACHIEVE announced on Tuesday (Dec 15) a handsome 28% jump in its net profit for the half year ended September 09, thanks to the 3G network roll out in China.
Executive Chairman Deng Zelin said: “The release of 3G licenses has brought about a revolutionary era in the telecommunications industry in PRC. Widely known as owning the world’s largest telecommunication networks in both network capacity and number of subscribers, the PRC continues seeing fast additions to the mobile, Internet and broadband subscribers base, with a CAGR of 8%.
Ace Achieve recently traded at 10.5 cents
"Such rapid growth only reflects the burgeoning pool of opportunities for the Group, and we believe this will have a positive impact on the Group’s future earnings.”
Ace Achieve is a small company – its market cap is only S$34 million – whose business can be categorised into the following divisions:
1) Telecom Applications Solutions;
2) Wireless Coverage Solutions;
3) Operation & Business Support Solutions; and
4) Broadband Data Solutions.
We looked around at other companies listed on the Singapore Exchange which are exposed to the 3G boom, and do some comparison.
It turned out that not all have been reporting higher profits in the six months ended Sept 09.
Longcheer Holdings and Z-Obee suffered a decline in profit compared to the same period last year.
Longcheer put the blame on an increase in the cost of certain key components, namely flash memory chips, and keen competition.
The average selling prices of Longcheer’s handset solutions for Q1 FY10 (ended Sept 09) decreased 30% to RMB 165.6 due to changes in product mix and price rationalisation within the electronics and related industries.
Jadason CEO Fung Chi Wai in Dongguan. Photo by Leong Chan Teik
The 3G beneficiaries so far are Sinotel Technologies, 8Telecom and Jadason Enterprises.
Sinotel has been widely covered on this website, so let’s look at the other two first.
Jadason Enterprises has a net asset value of 13.94 Singapore cents, which is 55% higher than the recent stock price of 9 cents.
It doesn’t have a PE for last year because it suffered a loss of S$1.4 million, which is also why it has a negative Return on Equity in the table above.
For its Q3 ended September this year, it reported a boom in business: “In January 2009, the Chinese government officially awarded the licences for 3G mobile networks to certain telephone operators. Since then, the Group’s manufacturing and support services business has benefited from customers who have exposure to Chinese 3G infrastructure equipment makers. Currently, the Group’s plants in Dongguan are operating at healthy levels of capacity utilisation.”
8Telecom’s revenue from continuing operations rose 25.8% to RMB92.7 million in 3Q2009. That, said the company which manufactures and supplies telecommunications pipes, telecommunications towers and other related products, underlined the steady growth of its core businesses as China’s telecom operators continue to invest heavily in expanding their 3G network coverage across the country.
Sinotel, which provides wireless solutions to telcos, is the other strong 3G beneficiary, reporting a 31% jump in net profit for the six months ended Sept 09.
Its historical PE of 7 is the lowest, an attractive stock feature that is further enhanced by its Return on Equity being the highest at 33%.
Its market cap of over S$200 million places it on the radar screen of many more fund managers than companies with a market cap of under S$100 million. And it is by far the most liquid of all the six 3G-related stocks.
The above is by no means an exhaustive analysis of the stocks. For more:
8TELECOM: Making minority shareholders happy
SINOTEL gets a US market maker - at last!
DUAL-LISTINGS: XLX, MAP, MIDAS, OCEANUS, Z-OBEE
