SHENZHEN, China, May 12, 2011 /PRNewswire-Asia-FirstCall/ -- China
GrenTech Corporation Limited (NASDAQ: GRRF, "GrenTech", or "the
Company"), a leading China-based
provider of radio frequency ("RF") and wireless coverage products
and services, today announced its unaudited financial results for
the first quarter ended March 31,
2011.
First Quarter 2011 Financial
Highlights
- Total revenue was RMB177.6
million (US$27.1 million)(1),
an increase of 11.5% year-over-year
- Gross profit was RMB45.2 million
(US$6.9 million), an increase of
16.8% year-over-year
- Operating loss was RMB18.6
million (US$2.8 million),
compared to a loss of RMB20.3 million
during the first quarter of 2010
- Net loss attributable to the equity shareholders of GrenTech
was RMB23.3 million (US$3.6 million), compared to a loss of
RMB22.9 million during the first
quarter of 2010
- Diluted loss per ADS(2) was RMB1.03 (US$0.16),
compared to a loss of RMB0.95 per ADS
during the first quarter of 2010
(1) The Company’s reporting
currency is Renminbi (“RMB”). The translation of amounts from RMB
to United States dollars is solely for the convenience of the
reader. RMB numbers included in this press release have been
translated into U.S. dollars at the noon buying rate for U.S.
dollars in effect on March 31, 2011 as set forth in the H.10
statistical release of the U.S. Federal Reserve Board, which was
US$1.00=RMB6.5483. No representation is made that RMB amounts could
have been, or could be, converted into U.S. dollars at that rate or
at any other rate on March 31, 2011.
|
|
(2) Each ADS represents 25 of
the Company’s ordinary shares.
|
|
|
"Although the first quarter was affected by the typical
seasonality factors in our industry, we are pleased to report some
positive changes in the first quarter 2011 compared to the same
period last year: Our new products started the year with positive
developments in their respective industries, especially WLAN as a
result of increased investment by each of the three major
operators. China Mobile significantly increased its capital
expenditures on WLAN in 2011, which makes WLAN one of the
investment highlights in 2011 in the telecommunications industry.
China Unicom and China Telecom have followed suit and
increased their capital expenditure budgets on WLAN," said Mr.
Yingjie Gao, Chairman and CEO of
GrenTech.
"Our other business highlights for the first quarter include the
CMMB project. Under this project, each province has started its
individual bidding process, and we have successfully won bids for
five provinces thus far. In addition, we are hopeful that our
bid for network coverage for subways will be successful, and we
have already been selected as one of four bid winners for China
Unicom's headquarters' newly-designed antenna for indoor coverage
system," Mr. Gao added.
"We are also pleased to report an 11.5% increase in revenue in
the first quarter 2011 compared to the same period last year. The
Company will continue to focus on optimizing our product mix and
increasing profitability by seizing new market opportunities and
capitalizing upon the growing potential in the telecommunications
industry. As we strive to maintain market leadership in the
traditional wireless coverage business and base station RF
business, we will concentrate on the development of new business
including WLAN, CMMB, network coverage for subways and
newly-designed and aesthetic antenna. We believe that with the
increased investment by telecommunication operators, new product
development and new customer marketing, we will be able to expand
our business, increase our market share and improve our
profitability in 2011."
First Quarter 2011 Financial
Results
Revenue
Revenue for the first quarter 2011 was RMB177.6 million (US$27.1
million), representing a RMB18.3
million (US$2.8 million) or
11.5% increase compared to the same period of 2010. The primary
driver was the increased revenue of RMB31.2
million (US$4.8 million)
generated from China Mobile in the first quarter, representing an
increase of 102.3% from 2010. Revenue generated from China Unicom
and China Telecom decreased by RMB11.0
million (US$1.7 million) and
RMB1.1 million (US$0.2 million), respectively. Revenue generated
from base station RF products also decreased by RMB7.1 million (US$1.1
million) compared to the same period of 2010.
|
|
|
Three Months Ended March
31
|
|
2010
|
2011
|
|
Revenues
(RMB'000)
|
Revenues
(RMB'000)
|
Revenues
(US$'000)
|
% of Total
Revenues
|
|
Wireless Coverage Products and
Services
|
|
China Mobile
|
30,440
|
61,594
|
9,406
|
34.7%
|
|
China Unicom
|
68,595
|
57,621
|
8,799
|
32.4%
|
|
China Telecom
|
14,038
|
12,963
|
1,980
|
7.3%
|
|
Overseas
|
1,269
|
105
|
16
|
0.1%
|
|
Non-operators
|
379
|
7,828
|
1,195
|
4.4%
|
|
Subtotal
|
114,721
|
140,111
|
21,396
|
78.9%
|
|
Base Station RF
Products
|
|
OEMs
|
44,643
|
37,514
|
5,729
|
21.1%
|
|
Total
|
159,364
|
177,625
|
27,125
|
100.0%
|
|
|
|
|
|
|
|
|
Cost of Revenues
Cost of revenues in the first quarter of 2011 was RMB132.4 million (US$20.2
million), representing a 9.8% year-over-year increase from
RMB120.6 million. The increase was
driven primarily by the increased sales volume.
Gross Profit and Gross Margin
Gross profit for the first quarter of 2011 was RMB45.2 million (US$6.9
million), representing an increase of 16.8%, or RMB6.5 million (US$1.0
million) from RMB38.8 million
in 2010. Gross margin for the first quarter of 2011 was 25.5%,
compared to 24.3% in the comparable period of 2010. Such increase
in gross margin was a result of an increased portion of sales
related to higher margin integrated services compared to the same
period of 2010.
Other Revenue
During the first quarter of 2011, other revenue was RMB3.4 million (US$0.5
million), compared to RMB3.1
million in the same period of 2010. The slight increase was
attributable to an increased rental rate from the area of the
Company's headquarters which are leased to third parties.
Operating Expenses
Total operating expenses for the first quarter of 2011 were
RMB67.2 million (US$10.3 million), representing a 8.0% increase
from RMB62.2 million in the first
quarter of 2010.
Research and Development Costs
Research and development costs for the first quarter of 2011
were RMB18.3 million (US$2.8 million), an increase of 33.3% compared to
RMB13.7 million of the corresponding
period in 2010. The increase was attributable to increased spending
on research and development materials for more projects and
equipment depreciation expenses.
Sales and Distribution Expenses
Sales and distribution expenses for the first quarter 2011 were
RMB29.5 million (US$4.5 million), a slight decrease of 3.3%
compared to RMB30.4 million of the
corresponding period in 2010. The decrease was attributable to the
Company's more stringent spending controls and improved operational
efficiencies.
General and Administrative Expenses
General and administrative expenses for the first quarter of
2011 were RMB19.5 million
(US$3.0 million), representing an
increase of 7.9% compared to RMB18.1
million of the corresponding period last year. The increase
was mainly attributable to the increase of Company's legal and
audit fees incurred in the first quarter.
Operating Loss
During the first quarter of 2011, operating losses were
RMB18.6 million (US$2.8 million), compared to operating losses of
RMB20.3 million in the same period in
2010. The Company has typically reported an operating loss in the
first quarter of each year due to seasonality in wireless coverage
spending trends among Chinese telecom operators. The decrease in
operating losses for the first quarter of 2011 was mainly
attributable to increased sales volume and an improvement in gross
margin.
Other
Income/Expense
Interest income during the first quarter of 2011 was
RMB5.0 million (US$0.8 million), similar to the corresponding
period in 2010 of RMB4.8 million.
Interest expense during the first quarter of 2011 was
RMB16.0 million (US$2.4 million), which increased by 21.2% from
RMB13.2 million during the
corresponding period in 2010. The increase in interest
expense was primarily due to an increase in short-term bank loans
and an increase in the effective interest rate.
Earnings
Net loss for the first quarter of 2011 was RMB23.3 million (US$3.6
million), an increase of RMB0.4
million compared to a net loss of RMB22.9 million in the same period of 2010.
Diluted loss per ADS for the first quarter of 2011 were
RMB1.03 (US$0.16), compared to diluted loss per ADS of
RMB0.95 in the same period of
2010.
Balance Sheet
Cash, cash equivalents and pledged time deposits were
RMB178.7 million (US$27.3 million) as of March 31, 2011, representing a decrease of 62.0%
as compared to December 31, 2010.
This is primarily attributable to additional cash spending on
raw material procurement, research and development, as well as the
enhancement of production facilities.
Total accounts receivable including long-term accounts
receivable as of March 31, 2011 was
RMB1,633.6 million (US$249.5 million), representing an increase of
1.0% as compared to December 31,
2010. This is primarily due to increased revenue in
the first quarter of 2011 for which most accounts receivable have
not entered into the collection period.
Inventories as of March 31, 2011
increased by 8.9% to RMB700.3 million
(US$106.9 million) compared to
December 31, 2010. The increase in
inventories was in line with that in sales as a result of the
business growth.
Total assets as of March 31, 2011
were RMB3,342.5 million (US$510.4 million), a decrease of 2.2% from
December 31, 2010.
Total liabilities as of March 31,
2011 were RMB 1,813.9 million
(US$277.0 million), a decrease of
2.8% from December 31, 2010.
Business Outlook
Wireless Coverage Products and Services
China Mobile significantly raised its capital expenditure
program on building the WLAN, which was followed by a new round of
WLAN investment by China Unicom and China Telecom. As a result, the
Company expects to benefit from the peak of WLAN capital
expenditure in 2011. Meanwhile, the Chinese telecom operators have
already started construction on wireless coverage, which was
earlier than last year, and we expect to witness more revenue from
the wireless coverage business segment in the second quarter of
2011 compared to the same period a year ago. Projects for other
business areas will also commence including CMMB business, network
coverage for subways, and antenna in the second quarter of
2011.
Base Station RF Products
The need for base station RF products is expected to rise as
telecom operators start their wireless network construction.
As a result, we expect to see an increase in shipments of
base station RF parts and components to base station
manufacturers. In addition, after the initial round of
successful trials of our VHF/SHF RRU (RF Subsystem) products in
multiple provinces in China, we
expect to begin sales of these products in bulk to domestic telecom
operators in the second quarter of 2011. Also, product tests
of Tower-Mount-Amplifier (TMA) products and other related RF
products by overseas operators are progressing as planned, which
may become an additional revenue contributor to the RF business
segment in upcoming quarters.
Guidance for Second Quarter 2011
For the second quarter of 2011, GrenTech forecasts revenue to be
in the range of RMB380.0 million to RMB425.0
million.
Conference Call
The Company will host a conference call at 8:00 a.m. ET or 8:00
p.m. Beijing/Hong Kong time on May
13, 2011, to discuss the results for the first quarter 2011.
To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: +1-866-578-5788. International callers should
dial +1-617-213-8057 and Hong Kong
callers should dial 800-96-3844. When prompted by the operator,
mention conference pass code GRENTECHCALL.
If you are unable to participate in the call at this time, a
replay will be available for 7 days starting on May 13, 2011. To access the replay, please dial
+1-888-286-8010, international callers dial +1-617-801-6888, and
enter the pass code 24235917. A live webcast of the conference call
and replay will also be available on the investor relations page of
GrenTech's website at: http://www.GrenTech.cn/Catalog_209.aspx.
About China GrenTech
GrenTech is a leading developer of radio frequency ("RF")
technology in China and a leading
provider of wireless coverage products and services in China. The Company uses RF technology to
design and manufacture wireless coverage products, which his enable
telecommunication operators to expand the reach of their wireless
communication networks to indoor and outdoor areas such as
buildings, highways, subways, tunnels and remote regions.
GrenTech's wireless coverage services include design, installation
and project warranty services. The Company also tailors the design
and configuration of its wireless coverage products to the specific
requirements of its customers.
Based on its in-house RF technology platform, the Company also
develops and produces base station RF parts and components sold to
base station manufacturers. GrenTech is a qualified supplier of RF
parts and components to major global and domestic base station
manufacturers. For more information, please visit
www.GrenTech.com.cn.
Safe Harbor Statement
Statements contained in this press release that are not
historical facts are forward-looking statements, as that term is
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements, including financial projections and
forecasts, involve risks and uncertainties that could cause the
Company's actual results to differ materially from its current
expectations. Factors that could cause the Company's results to
differ materially from those set forth in these forward-looking
statements include: the Company's reliance on business
relationships with the Chinese telecommunications operators and
base station equipment manufacturers; the risk that the Company
will continue to experience downward pressure on the pricing of its
products and services due to the telecommunications operators'
bidding policies or other factors, which could adversely affect the
Company's business and margins; the risk that the
telecommunications operators in China will not expand or maintain their
spending on 2G, 3G, WLAN or other network projects or that the
Company will not be successful in future bids for tenders held by
the operators (including the Company's bids for the CMMB project);
uncertainty as to the future demand for base station RF products by
domestic or international base station equipment manufacturers,
including the risk that demand in China or elsewhere for base stations may not
grow as the Company's management anticipates due to factors beyond
the Company's control; risks associated with large accounts
receivable, long collection periods and accounts receivable cycles
and the Company's ability to maintain or improve its recently
decreasing collection periods; fierce competition in the wireless
communication industry; growth of, and risks inherent in, the
wireless communication industry in China, including uncertainty regarding the
planned integration of telecom, broadcast TV and Internet networks
in China and how such convergence,
if it happens, may affect the Company's business; uncertainty as to
future profitability and the Company's ability to obtain adequate
financing for its planned capital expenditure requirements;
uncertainty as to its ability to continuously develop and
manufacture new RF technologies and keep up with changes in RF
technologies or to develop new markets for wireless coverage
products and services such as industrial users; risks associated
with possible defects and errors in its wireless coverage products
or base station RF products; uncertainty as to the Company's
ability to protect and enforce its intellectual property rights;
and uncertainty as to the Company's ability to attract and retain
qualified executives and personnel, particularly in its research
and development department. Other factors that may causes the
Company's actual results to differ from those set forth in the
forward-looking statements contained in this press release and that
may affect its prospects in general are described in the Company's
filings with the Securities and Exchange Commission, including its
Registration Statement on Form F-1 related to its initial public
offering and its annual reports on Form 20-F. The Company
undertakes no obligation to update or revise forward-looking
statements to reflect subsequent events or changed assumptions or
circumstances.
|
|
Company Contact:
|
Investor Relations
Contact:
|
|
Lian Xin, Senior
Manager
|
David Rudnick, Account
Manager
|
|
China GrenTech Corp. Ltd.
|
CCG Investor
Relations
|
|
Tel: +86 755 2650
3007
|
Tel: + (1)
646-626-4172 (New York)
|
|
E-mail:
investor@powercn.com
|
E-mail:
david.rudnick@ccgir.com
|
|
|
|
|
|
|
|
|
|
|
|
- Financial Tables Follow-
China
GrenTech Corporation and Subsidiaries
Unaudited
Condensed Consolidated Balance Sheets*
(RMB and US$
expressed in thousands)
|
|
|
|
December 31,
|
|
March 31,
|
|
March 31,
|
|
|
2010
|
2011
|
2011
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
380,098
|
|
107,760
|
|
16,456
|
|
Pledged time deposits
|
|
90,132
|
|
70,968
|
|
10,838
|
|
Accounts receivable,
net
|
|
1,154,540
|
|
1,178,690
|
|
179,999
|
|
Inventories
|
|
643,265
|
|
700,275
|
|
106,940
|
|
Other current assets
|
|
106,953
|
|
203,920
|
|
31,141
|
|
Total current
assets
|
|
2,374,988
|
|
2,261,613
|
|
345,374
|
|
Long-term accounts
receivable
|
|
462,521
|
|
454,921
|
|
69,472
|
|
Other non-current
assets
|
|
581,494
|
|
625,921
|
|
95,586
|
|
Total assets
|
|
3,419,003
|
|
3,342,455
|
|
510,432
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term bank loans
|
|
638,229
|
|
746,917
|
|
114,063
|
|
Other current
liabilities
|
|
1,133,772
|
|
972,363
|
|
148,491
|
|
Total current
liabilities
|
|
1,772,001
|
|
1,719,280
|
|
262,554
|
|
Long-term debt
|
|
90,000
|
|
90,000
|
|
13,744
|
|
Other non-current
liabilities
|
|
4,598
|
|
4,576
|
|
699
|
|
Total
liabilities
|
|
1,866,599
|
|
1,813,856
|
|
276,997
|
|
Equity
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
6,335
|
|
5,839
|
|
892
|
|
Total
shareholders' equity
|
|
1,546,069
|
|
1,522,760
|
|
232,543
|
|
Total liabilities and
equity
|
|
3,419,003
|
|
3,342,455
|
|
510,432
|
|
|
|
*Subsequent
to the announcement of the Company's unaudited financial results
for the fourth quarter and fiscal year
ended December 31, 2010,
management of the Company has determined to make an adjustment to
reallocate certain
receivables from cash and cash
equivalents to accounts receivable, net in accordance with
applicable accounting standards,
In addition, an adjustment was
made to other current assets and total shareholders' equity due to
a revision in the number
of shares repurchased as of
December 31, 2010.
|
|
|
|
|
|
|
|
|
China
GrenTech Corporation and Subsidiaries
Unaudited
Condensed Consolidated Statements of Operations
(RMB and US$
expressed in thousands)
|
|
|
|
For Three Months Ended March 31,
|
|
|
|
2010
|
|
2011
|
|
2011
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
Revenues
|
|
159,364
|
|
177,625
|
|
27,125
|
|
Cost of revenues
|
|
-120,608
|
|
-132,376
|
|
-20,215
|
|
Gross profit
|
|
38,756
|
|
45,249
|
|
6,910
|
|
Other revenue
|
|
3,131
|
|
3,423
|
|
523
|
|
Operating expenses
|
|
|
|
|
|
|
|
Research and development
costs
|
|
-13,713
|
|
-18,278
|
|
-2,791
|
|
Sales and distribution
expenses
|
|
-30,441
|
|
-29,451
|
|
-4,498
|
|
General and administrative
expenses
|
|
-18,080
|
|
-19,504
|
|
-2,978
|
|
Total operating
expenses
|
|
-62,234
|
|
-67,233
|
|
-10,267
|
|
Operating
(loss)/income
|
|
-20,347
|
|
-18,561
|
|
-2,834
|
|
Other
(expense)/income
|
|
|
|
|
|
|
|
Interest income
|
|
4,777
|
|
4,989
|
|
762
|
|
Interest
expense
|
|
-13,211
|
|
-16,015
|
|
-2,446
|
|
Investment
income
|
|
0
|
|
9
|
|
1
|
|
Foreign currency exchange
loss
|
|
-43
|
|
-544
|
|
-83
|
|
Grant income
|
|
2,092
|
|
100
|
|
15
|
|
Total other
expense
|
|
-6,385
|
|
-11,461
|
|
-1,751
|
|
(Loss)/income before income tax
benefit and non-controlling
interests
|
|
-26,732
|
|
-30,022
|
|
-4,585
|
|
Income tax
benefit/(expense)
|
|
3,798
|
|
6,217
|
|
949
|
|
(Loss)/income before
non-controlling
interests
|
|
-22,934
|
|
-23,805
|
|
-3,636
|
|
Non-controlling
interests, net of tax
|
|
19
|
|
497
|
|
76
|
|
Net (loss)/income
|
|
-22,915
|
|
-23,308
|
|
-3,560
|
|
Net (loss)/income
attributable to
equity shareholders of
the Company
|
|
-22,915
|
|
-23,308
|
|
-3,560
|
|
Net (loss)/income per
share attributable to
equity shareholders of
the Company:
|
|
|
|
|
|
|
|
– Basic
|
|
-0.04
|
|
-0.04
|
|
-0.006
|
|
– Diluted
|
|
-0.04
|
|
-0.04
|
|
-0.006
|
|
Weighted average number of
ordinary shares outstanding:
|
|
|
|
|
|
|
|
– Basic
|
|
589,932,958
|
|
563,244,750
|
|
563,244,750
|
|
– Diluted
|
|
605,902,514
|
|
563,244,750
|
|
563,244,750
|
|
|
|
|
|
|
|
|
|
|
China
GrenTech Corporation and Subsidiaries
Unaudited
Condensed Consolidated Statement of Cash
Flows
(RMB and US$
expressed in thousands)
|
|
|
|
For Three Months Ended March 31,
|
|
|
|
2010
|
|
2011
|
|
2011
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
-250,470
|
|
-176,535
|
|
-26,959
|
|
Net cash used in investing
activities
|
|
-11,905
|
|
-44,987
|
|
-6,870
|
|
Net cash used in financing
activities
|
|
-75,424
|
|
-50,272
|
|
-7,677
|
|
Effect of exchange rate changes
on cash and cash equivalents
|
|
-43
|
|
-544
|
|
-83
|
|
Net decrease in cash and cash
equivalents
|
|
-337,842
|
|
-272,338
|
|
-41,589
|
|
Cash and cash equivalents at
beginning of the year
|
|
469,454
|
|
380,098
|
|
58,045
|
|
Cash and cash equivalents at end
of the year
|
|
131,612
|
|
107,760
|
|
16,456
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Grentech Corporation Limited