Comba Announces 2011 Interim Results

Revenue and Net Profit Increase by 27% and 14% Respectively
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                                              Captures Enormous Demand for Wireless Network Enhancement
                                                                 Further Expansion into International Market

Financial Highlights (For the six months ended 30 June)

(24 August 2010 – Hong Kong) – Comba Telecom Systems Holdings Limited (“Comba” or “the Group”, Hong Kong stock code: 2342), a global leading wireless enhancement solutions provider, announced today its unaudited interim results for the six months ended 30 June 2011.

During the review period, driven by increase capital expenditure toward mobile networks in the PRC and growing demand from global mobile operators for network optimization, the Group continued to deliver solid financial results and recorded revenue of HK$2,545 million, representing an increase of 27.1% over the six months ended 30 June 2010 (the “Prior Period”). Gross profit and net profit increased by 20.0% and 13.7% respectively to HK$966 million and HK$317 million. The Board of Directors recommended payment of an interim dividend of HK5 cents per share (Prior Period: HK 6 cents).

Mr. Tony TL Fok, Chairman and President of Comba, said, “Despite uncertainties hovering over the global economy in 2011, China maintained steady economic growth while the country’s telecommunications industry grew by 10.1% in terms of revenue. To tap this growth, Comba continued its strong commitment to R&D and product innovation, which led to a desirable growth in sales and profit. Leveraging our advanced products and solutions, we completed a number of milestone projects, such as the 2G/3G wireless enhancement solution for Galaxy Macau, Qingdao Bay Bridge and Universiades Shenzhen 2011.”

Further penetration of 2G into rural areas and rising number of 3G subscribers and data used have fueled strong demand for 2G/3G network deployment and optimization. During the period under review, sales from 3G mobile network projects reported a 91.7% growth amounting to HK$666 million. In respect of the sales from customers, revenue from China Mobile rose significantly by 39.4% to HK$1,450 million as a result of continuing 2G mobile network enhancement and replacement of base transceiver station antennas to improve network quality. Revenue from China Unicom increased modestly by 3.8% to HK$529 million. Conversely, revenue from China Telecom decreased by 12.7% to HK$159 million, which was due to a delay in network enhancement projects. However, the management expects the projects will be expedited in the second half of the year.

Accordingly to the Chinese Telecom regulator, Ministry of Industry and Information Technology, the number of mobile subscribers reached more than 900 million in China in the first half of 2011, and CAPEX of the telecommunications industry surged by 56.5% to RMB143.1 million compared to the Prior Period. Capturing huge market demand, the Group’s four business segments achieved satisfactory performances. Revenue from the wireless enhancement business increased modestly by 26.9% to HK$879 million and accounted for 34.6% of the Group’s revenue. Revenue from the antennas and subsystems business increased satisfactory by 17.7% to HK$816 billion, accounting for 32.1% of the Group’s revenue. Revenue from wireless access business increased significantly by 124.3% to HK$207 million and accounted for 8.1% of the Group’s revenue. Revenue from services, including installation, network optimization, network upgrade, and after-sales maintenance services, increased by 22.7% to HK$642 million and accounted for 25.2% of the Group’s revenue. The Group expects the services segment will generate greater sales in the months to come as most of the projects in the pipeline will be completed by the end of this year.

In respect of the international market, the Group has expanded its presence and strengthened cooperation with international operators and core equipment vendors. During the period under review, revenue from international customers and core equipment manufacturers increased significantly by 47.2% to HK$350 million, accounting for 13.7% of the Group’s revenue. The increase was primarily due to strong demand for total solutions regarding network deployment and upgrade in some emerging markets along with further diversification of the Group’s international customer portfolio. It is worth noting that the Group also participated in several benchmark overseas projects, such as the supply of wireless equipment to the LTE network in the Middle East and delivery of equipment to a major OEM customer in Latin America, reflecting strong support toward the Group from customers from around the world.

Strong R&D is one of the reasons why Comba has been able to stay at the top of the industry. During the period, R&D costs increased by 48.6% to HK$116 million, representing 4.6% of the Group’s revenue (1H 2010: 3.9%). The increase was mainly due to expansion of the R&D teams and product portfolio. As at 30 June 2011, the Group applied for more than 770 patents.

Mr. Fok added, “The robust growth of smartphones and growing popularity of social media will inevitable urge mobile operators to continue optimizing their 2G networks, and at the same time expedite 3G network upgrades. In the meantime, mobile operators will continue to invest in the development of LTE technology. Despite the international market is affected by the uncertainties surrounding the global economy, we are optimistic towards the expansion of the international market and business growth. The very solid foundation that Comba has built up over the years will help sustain its leading position in the PRC market, as well as spur growth in overseas markets. We will proactively expand the Group’s sales networks via product and project innovation, and will deliver professional end-to-end services and effective marketing strategies.”

“Looking ahead, the fundamental strength of China’s economy is conducive to sustainable growth of the telecommunications industry, and Comba is well poised to capture the enormous market potential. The Group will continue to devote resources toward R&D, and will launch new products and solutions to address the growing needs of customers and end users. At the same time we will optimize our portfolio mix to capture greater market share. We firmly believe that our aim to become the world’s largest wireless communications enhancement supplier will propel Comba to new heights,” Mr. Fok concluded.

                                                                      ~ End~

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