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Press Release -- August 20th, 2015
Source: Comba Telecom
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Comba Telecom’s 2015 Interim Net Profit up 50.5%

Financial Highlights (unaudited)

HKD’000

For the six months ended 30 June 2015

2015

2014

Change

Revenue

3,345,331

3,023,575

+10.6%

Gross Profit

973,504

851,668

+14.3%

Gross Profit Margin

29.1%

28.2%

+0.9pp

Profit Attributable to Shareholders

108,803

72,305

+50.5%

Basic Earnings per Share (HKD Cents)

5.91

3.94 (Restated)

+50.0%

(20 August 2015 - Hong Kong) - Comba Telecom Systems Holdings Limited (“Comba Telecom” or “the Group”, Hong Kong stock code: 2342), a global leading wireless solutions provider, today announced its unaudited interim results for the six months ended 30 June 2015.

In the first half of 2015, the continuous 4G network buildout by mobile network operators and increased investment allocated to wireless enhancement in Mainland China, led to an increase in the Group’s revenue by 10.6% to HK$3,345 million compared to the same period last year. Gross profit increased by 14.3% to HK$974 million and gross profit margin increased slightly to 29.1%, mainly due to the adjustment of product mix and the growing revenue contribution by some new high-end products. Benefited from the increase in revenue, the improvement of gross profit margin, the economies of scale and effective cost control measures, while the contributions were partially offset by the foreign exchange loss, the Group still recorded a substantial increase in operating profit, as a result, net profit also increased significantly by 50.5% over the prior period to HK$109 million. The board recommended the payment of an interim dividend of HK$1.5 cents per share and proposed to distribute one bonus shares for every 10 existing ordinary shares held by the shareholders.

Mr. Zhang Yuejun, Vice Chairman and President of Comba Telecom, said, “Notwithstanding the uncertainties in the global economy, the market landscape of the mobile telecommunications industry in Mainland China has remained largely unaffected. Driven by the kick-off of the 4G network investment cycle, continuous network buildout by mobile network operators, and the favorable government policies which promoted the innovative development of the industry, the market potential has been further promoted and unleashed, and fuelled a substantial increase in the Group’s profit during the period.”

During the period, revenue from 3G and 4G mobile broadband projects stayed at a stable level of HK$1,978 million, accounting for 59.1% of the Group’s revenue. Revenue from China Mobile Group decreased by 22.0% to HK$1,031 million, accounting for 30.8% of the Group’s revenue. Revenue from China Unicom Group increased substantially by 116.9% to HK$807 million, accounting for 24.1% of the Group’s revenue. Revenue from China Telecom Group increased satisfactory by 32.0% to HK$787 million, accounting for 23.5% of the Group’s revenue. On the international front, due to the decreased revenue generated by core equipment manufacturers and the sluggish economic growth in some emerging markets, revenue from international customers and core equipment manufacturers decreased by 12.9% to HK$596 million, accounting for 17.8% of the Group’s revenue.

Due to a steadily growing product demand for continuous 4G network build-outs following the issuance of LTE FDD licenses in Mainland China earlier this year, revenue generated from the antennas and subsystems business increased by 21.9% over the prior period to HK$1,653 million, accounting for 49.4% of the Group’s revenue. As a result of the kick-off of the 4G network investment cycle and increased investment in wireless enhancement in Mainland China, revenue generated from the wireless enhancement business increased by 3.7% to HK$600 million, accounting for 17.9% of the Group’s revenue. In respect to the wireless access and transmission business, despite the progressive increase in revenue contribution from small cells and microwave products, demand for Wi-Fi products by mobile network operators decreased, as a result, revenue generated decreased slightly by 2.5% to HK$140 million, accounting for 4.2% of the Group’s revenue. Revenue from services remained stable at HK$952 million, accounting for 28.5% of the Group’s revenue.

The Group always keeps up with market trends and demand, and offers customers high value-added products and services. With the rise of such emerging technologies as Internet-of-Things, cloud computing and big data, demand for private network solutions increases in various industries and areas. Leveraging on its wireless access technology accumulated over a long period of time, network management big data technology, the Group will achieve a new business growth in respect of product research and development and integration services of enterprise network. Currently, the Group has made some progresses or allocated resources in smart city, smart resorts and intelligent logistics. The Group expects that “Internet Plus” of the enterprise network will represent a new growth area for the Group. In addition, the PRC government is now promoting the comprehensive applications such as satellite communications and satellite navigation system. The satellite communications market is expanding rapidly and this will be another growth driver of the Group. Moreover, the Group entered the nationwide indoor location-based service system (“LBS”) business in June this year. The Group believes more investments from the PRC government or private sector will be directed towards the mobile internet sector in the coming years, further driving the demand for LBS solutions.

In respect to its core business, the Group expects that the wireless enhancement market would gain greater momentum during the 4G network investment cycle in Mainland China. The Group’s new generation of MDAS, DAS and Innovative Cell (iCell), which are designed to accommodate needs in the age of rapid evolution of mobile networks, enable a better user experience with faster data speed and in-depth network coverage. Recently, the Group has also secured a number of both domestic and overseas wireless solutions projects. The Group has also achieved yet another new milestone through successful expansion into the private network market by supplying the TETRA network for in-house and police communications at Macau’s newest resort. In addition, the Group’s strategy to offer customers mid-to-high end products to further improve the profit margin and market share has begun to bear fruit. The Group was delighted to achieve a new technological breakthrough in the launch of a new generation of small form factor lightweight 4G LTE base station antennas a few months ago. This new generation of LTE antennas improves the total cost of ownership for mobile network operators. Several new orders have already been secured from both domestic and overseas customers.

Mr. Tony TL Fok, Chairman of Comba Telecom concluded, “With the growing maturity of the TD-LTE network along with the issuance of FDD-LTE licenses to certain mobile network operators in Mainland China early this year, the country is now in the 4G network investment cycle which will continue to strengthen the development of the Group’s wireless enhancement business. Currently, the mobile telecommunications industry is moving towards an open digital operation. The industry is expected to remain robust, and we are optimistic about the Group’s prospects and future development. With the unwavering high-quality, state-of-the-art and reliable equipment and services, we will capture more new business opportunities, and continue to create value for its customers as the market transforms and thus enabling sustainable business growth of the Group in the future.”

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