SHENZHEN, China, Nov. 8, 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 third quarter ended
September 30, 2011.
Third Quarter 2011 Financial Highlights
- Total revenue was RMB406.2
million (US$63.7 million)(1),
an increase of 2.4% year-over-year compared to RMB396.9 million during the third quarter of
2010
- Gross profit was RMB111.2 million
(US$17.4 million), an increase of
7.2% year-over-year compared to RMB103.8
million during the third quarter of 2010
- Operating income was RMB25.6
million (US$4.0 million), an
increase of 1.0% year-over-year compared to RMB 25.3 million during the third quarter of
2010
- Net income attributable to shareholders was RMB9.1 million (US$1.4
million), a decrease of 29.8% year-over-year compared to
RMB12.9 million during the third
quarter of 2010
- Diluted earnings per ADS(2) was RMB0.39 (US$0.06),
compared to RMB0.54 per ADS during
the third quarter of 2010
"We are pleased to report solid revenues in the third quarter of
RMB406.2 million, or US$63.7 million, an increase of 2.4% over the
comparable period in 2010. Gross profit increased by 7.2%
year-over-year and gross margin increased to 27.4%. Importantly, in
2011, we are placing a strong emphasis on the promotion of new
products and our ability to capitalize upon breakthroughs in new
technology so as to develop new products and enter new businesses,"
said Mr. Yingjie Gao, Chairman and
CEO of GrenTech.
"Our WLAN business has experienced healthy growth compared to
2010, but new business areas such as the CMMB project and subway
network coverage have been slower than projected at the beginning
of the year," Mr. Gao added.
"In the remainder of 2011, we will strive to strategically
improve our business operations and focus on mid- and long-term
growth. We believe that investment by telecommunication operators
in the industry, combined with our new production and technology
introductions, will enable GrenTech to continue to grow on a sound
and steady basis," Mr. Gao concluded.
(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 September 30, 2011 as set forth in the H.10
statistical release of the U.S. Federal Reserve Board, which was
US$1.00=RMB6.3780. 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 September 30, 2011.
|
|
(2) Each ADS
represents 25 of the Company's ordinary shares.
|
|
|
Third Quarter 2011 Financial Results
Revenue
Revenue for the third quarter of 2011 was RMB406.2 million (US$63.7
million), representing an increase of RMB9.3 million (US$1.5
million) or 2.4% compared to the same period of 2010. The
primary drivers were increased revenue of RMB11.1 million (US$1.7
million) generated from China Unicom, representing an
increase of 13.0% from the third quarter of 2010, and increased
revenue of RMB3.9 million
(US$0.6 million) generated from China
Telecom, representing an increase of 10.2% from the third quarter
of 2010. Revenue from China Mobile decreased by RMB9.0 million (US$1.4
million). Revenue generated from base station RF products
decreased by RMB0.1 million
(US$0.02 million) compared to the
same period of 2010.
|
|
|
Three Months
Ended September 30
|
|
2010
|
2011
|
|
Revenues
(RMB'000)
|
Revenues
(RMB'000)
|
Revenues
(US$'000)
|
% of Total
Revenues
|
|
Wireless Coverage Products and
Services
|
|
China Mobile
|
180,348
|
171,316
|
26,860
|
42.2%
|
|
China Unicom
|
85,486
|
96,588
|
15,144
|
23.8%
|
|
China Telecom
|
37,971
|
41,846
|
6,561
|
10.3%
|
|
Overseas
|
3,953
|
966
|
151
|
0.2%
|
|
Non-operators
|
11,444
|
17,953
|
2,815
|
4.4%
|
|
Subtotal
|
319,202
|
328,669
|
51,531
|
80.9%
|
|
Base Station RF
Products
|
|
OEMs
|
77,698
|
77,567
|
12,162
|
19.1%
|
|
Total
|
396,900
|
406,236
|
63,693
|
100.0%
|
|
|
|
|
|
|
|
|
Cost of Revenues
Cost of revenues in the third quarter of 2011 was RMB295.0 million (US$46.3
million), which was relatively unchanged from RMB293.2 million in the same period of 2010.
Gross Profit and Gross Margin
Gross profit for the third quarter of 2011 was RMB111.2 million (US$17.4
million), representing an increase of 7.2% or RMB7.5 million (US$1.2
million) from RMB103.8 million
in the same period of 2010. Gross margin for the third quarter of
2011 was 27.4%, compared to 26.1% in the comparable period of 2010.
The increase in gross margin was a result of the increased sales of
WLAN products, which has a higher margin, compared to the same
period of 2010.
Other Revenue
During the third quarter of 2011, other revenue was RMB5.5 million (US$0.9
million), compared to RMB5.0
million in the same period of 2010. The slight increase was
attributable to the increased rental rate from the area of the
Company's headquarters which are leased to third parties.
Operating Expenses
Total operating expenses for the third quarter of 2011 were
RMB91.1 million (US$14.3 million), representing a 9.3% increase
from RMB83.4 million in the third
quarter of 2010.
Research and Development Costs
Research and development costs for the third quarter of 2011
were RMB20.3 million (US$3.2 million), or 5.0% of sales, representing
an 8.6% decrease from research and development costs of
RMB22.2 million, or 5.6% of sales, in
the third quarter of 2010. The decrease was in line with the
current pace of new product research and development, reflecting
reduced expenditures in research and development materials.
Sales and Distribution Expenses
Sales and distribution expenses for the third quarter of 2011
were RMB47.0 million (US$7.4 million), representing an increase of
17.3% compared to RMB40.1 million in
the corresponding period in 2010. The increase was primarily due to
the increases in salaries, travelling and various promotion
expenses relating to the promotion of new products and related
services.
General and Administrative Expenses
General and administrative expenses for the third quarter of
2011 were RMB23.8 million
(US$3.7 million), representing an
increase of 12.9% compared to RMB21.1
million in the corresponding period in 2010. The increase
was primarily due to the increases in training expenses.
Operating Income
During the third quarter of 2011, operating income was
RMB25.6 million (US$4.0 million), compared to RMB25.3 million in the same period in 2010.
Operating margin for the third quarter of 2011 was 6.3%, relatively
unchanged from the comparable period of 2010.
Other Income/Expense
Interest income during the third quarter of 2011 was
RMB5.1 million (US$0.8 million), representing an increase of
23.1% compared to RMB4.1 million in
the corresponding period in 2010. The increase was primarily due to
the increase in interest rate.
Interest expense during the third quarter of 2011 was
RMB19.9 million (US$3.1 million), representing an increase of
36.9% from RMB14.5 million in the
corresponding period in 2010. The increase in interest expense was
primarily due to a combination of an increase in short-term bank
loans and an increase in the effective interest rate.
Earnings
Net income attributable to equity holders of the Company for the
third quarter of 2011 was RMB9.1
million (US$1.4 million),
representing a decrease of RMB3.8
million or 29.8% compared to net income of RMB12.9 million in the same period of 2010.
Diluted earnings per ADS for the third quarter of 2011 were
RMB0.39 (US$0.06), compared to diluted earnings per ADS
of RMB0.54 in the same period of
2010.
Balance Sheet
Cash, cash equivalents and restricted cash were RMB354.1 million (US$55.5
million) as of September 30,
2011, representing a decrease of 24.7% as compared to
December 31, 2010. This is primarily
attributable to additional cash spending on raw material
procurement, operating expenses and research and development, as
well as the construction of GrenTech High-tech park located in
Longgang District.
Total accounts receivable including long-term accounts
receivable as of September 30, 2011
was RMB1,871.9 million (US$293.5 million), representing an increase of
15.8% as compared to December 31,
2010. This is primarily due to the fact that a majority of
accounts receivable relating to revenue in the third quarter of
2011 have not entered into the collection period.
Inventories as of September 30,
2011 increased by 53.3% to RMB986.1
million (US$154.6 million)
compared to December 31, 2010. The
increase in inventories was mainly due to the fact that more
inventories were reserved for the forecasted massive sales in the
fourth quarter of 2011.
Total assets as of September 30,
2011 were RMB4,118.9 million
(US$645.8 million), representing an
increase of 20.5% from December 31,
2010.
Total liabilities as of September 30,
2011 were RMB 2,567.7 million
(US$402.6 million), representing an
increase of 37.6% from December 31,
2010.
Business Outlook
Wireless Coverage Products and Services
- China Mobile: investment in WLAN business development and
community network coverage business are expected to accelerate in
the fourth quarter. At the same time, the fifth round of TD-SCDMA
investment will commence in the near future.
- China Unicom: after initial success with the 3G business
development in 2011, additional investments are expected to enhance
its development for mass coverage in the next three years. In
addition, the results of the recent centralized bidding for
telecommunication equipment will be announced soon.
- China Telecom: centralized bidding results of telecommunication
equipment will be announced soon.
Base Station RF Products
- The Company believes that market demand for passive modules
will reach peak levels in the fourth quarter, and the Company
expects an increase in shipments; certain overseas customers of the
Company's passive module business will conduct on-site inspection
of the Company's operations and supply chain and confirm GrenTech's
ability to deliver new products in 2012.
- Overseas telecommunication operators will visit the Company's
management and tour the facility in the fourth quarter of 2011
- More efforts will be made on business development for overseas
markets to expand the Company's market share and increase overall
revenue and profitability.
Guidance for Fourth Quarter 2011
For the fourth quarter of 2011, GrenTech forecasts its revenue
to be in the range of RMB800.0 million to
RMB880.0 million.
Conference Call
The Company will host a conference call at 8:00 a.m. Eastern Standard Time / 9:00 p.m. Beijing/Hong
Kong time on November 9, 2011,
to discuss the results for the third 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:
+1-866-519-4004. International callers should dial +65-6723-9381
and Hong Kong callers should dial
800-93-0346. 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 November 9, 2011, 11:00
pm (Eastern). To access the replay, please dial
+1-866-214-5335, international callers dial +61-2-8235-5000, and
enter the pass code 23781701.
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 Sheet
|
|
(RMB and US$
expressed in thousands)
|
|
|
|
December 31,
|
|
September 30,
|
|
September 30,
|
|
|
2010
|
2011
|
2011
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
380,098
|
|
188,729
|
|
29,591
|
|
Restricted cash
|
|
90,132
|
|
165,383
|
|
25,930
|
|
Accounts receivable,
net
|
|
1,154,540
|
|
1,445,580
|
|
226,651
|
|
Inventories
|
|
643,265
|
|
986,143
|
|
154,616
|
|
Other current assets
|
|
106,953
|
|
177,247
|
|
27,791
|
|
Total current
assets
|
|
2,374,988
|
|
2,963,082
|
|
464,579
|
|
Long-term accounts
receivable
|
|
462,521
|
|
426,368
|
|
66,850
|
|
Other non-current
assets
|
|
581,494
|
|
729,486
|
|
114,375
|
|
Total assets
|
|
3,419,003
|
|
4,118,936
|
|
645,804
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Short-term bank loans
|
|
638,229
|
|
1,056,572
|
|
165,659
|
|
Other current
liabilities
|
|
1,133,772
|
|
1,285,442
|
|
201,544
|
|
Total current
liabilities
|
|
1,772,001
|
|
2,342,014
|
|
367,203
|
|
Long-term bank
loan
|
|
90,000
|
|
221,200
|
|
34,682
|
|
Other non-current
liabilities
|
|
4,598
|
|
4,532
|
|
711
|
|
Total
liabilities
|
|
1,866,599
|
|
2,567,746
|
|
402,596
|
|
Equity
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
6,335
|
|
4,982
|
|
781
|
|
Total equity attributable to the
equity shareholders of China GrenTech Corporation
Limited, or GrenTech
|
|
1,546,069
|
|
1,546,208
|
|
242,427
|
|
Total liabilities
and equity
|
|
3,419,003
|
|
4,118,936
|
|
645,804
|
|
|
|
|
|
|
|
|
|
|
China
GrenTech Corporation and Subsidiaries
|
|
Unaudited
Condensed Consolidated Statements of Operations
|
|
(RMB and US$
expressed in thousands)
|
|
|
|
For Three
Months Ended September
30,
|
|
For Nine Months
Ended September
30,
|
|
|
|
2010
|
|
2011
|
|
2011
|
|
2010
|
|
2011
|
|
2011
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
Revenues
|
|
396,900
|
|
406,236
|
|
63,693
|
|
926,677
|
|
983,878
|
|
154,261
|
|
Cost of revenues
|
|
(293,150)
|
|
(295,035)
|
|
(46,258)
|
|
(691,916)
|
|
(717,530)
|
|
(112,501)
|
|
Gross profit
|
|
103,750
|
|
111,201
|
|
17,435
|
|
234,761
|
|
266,348
|
|
41,760
|
|
Other revenue
|
|
4,968
|
|
5,505
|
|
863
|
|
12,500
|
|
13,581
|
|
2,129
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
costs
|
|
(22,218)
|
|
(20,298)
|
|
(3,183)
|
|
(56,564)
|
|
(58,897)
|
|
(9,234)
|
|
Sales and distribution
expenses
|
|
(40,078)
|
|
(47,027)
|
|
(7,373)
|
|
(107,583)
|
|
(117,124)
|
|
(18,364)
|
|
General and administrative
expenses
|
|
(21,084)
|
|
(23,798)
|
|
(3,731)
|
|
(59,878)
|
|
(67,846)
|
|
(10,638)
|
|
Total operating
expenses
|
|
(83,380)
|
|
(91,123)
|
|
(14,287)
|
|
(224,025)
|
|
(243,867)
|
|
(38,236)
|
|
Operating income
|
|
25,338
|
|
25,583
|
|
4,011
|
|
23,236
|
|
36,062
|
|
5,653
|
|
Other
(expense)/income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
4,108
|
|
5,059
|
|
793
|
|
12,836
|
|
14,260
|
|
2,236
|
|
Interest
expense
|
|
(14,531)
|
|
(19,900)
|
|
(3,120)
|
|
(42,590)
|
|
(54,275)
|
|
(8,510)
|
|
Investment
income
|
|
0
|
|
0
|
|
0
|
|
0
|
|
9
|
|
1
|
|
Foreign currency exchange
loss
|
|
40
|
|
(939)
|
|
(147)
|
|
(456)
|
|
(2,468)
|
|
(387)
|
|
Grant
income
|
|
0
|
|
268
|
|
42
|
|
2,100
|
|
368
|
|
58
|
|
Total other
expense
|
|
(10,383)
|
|
(15,512)
|
|
(2,432)
|
|
(28,110)
|
|
(42,106)
|
|
(6,602)
|
|
Income/(loss) before income tax
expense
|
|
14,955
|
|
10,071
|
|
1,579
|
|
(4,874)
|
|
(6,044)
|
|
(949)
|
|
Income tax expense
|
|
(2,529)
|
|
(1,401)
|
|
(220)
|
|
(393)
|
|
3,169
|
|
497
|
|
Net income/(loss)
|
|
12,426
|
|
8,670
|
|
1,359
|
|
(5,267)
|
|
(2,875)
|
|
(452)
|
|
Net income(loss) attributable to
non-controlling interests
|
|
474
|
|
381
|
|
60
|
|
509
|
|
1,354
|
|
212
|
|
Net income/(loss) attributable
to equity shareholders of the Company
|
|
12,900
|
|
9,051
|
|
1,419
|
|
(4,758)
|
|
(1,521)
|
|
(240)
|
|
Earnings/(loss) per share
attributable to the equity shareholders of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Basic
|
|
0.02
|
|
0.02
|
|
0.003
|
|
(0.01)
|
|
(0.003)
|
|
(0.0004)
|
|
– Diluted
|
|
0.02
|
|
0.02
|
|
0.002
|
|
(0.01)
|
|
(0.003)
|
|
(0.0004)
|
|
Weighted average number of
ordinary shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– Basic
|
|
582,387,825
|
|
567,096,425
|
|
567,096,425
|
|
585,815,792
|
|
564,705,303
|
|
564,705,303
|
|
– Diluted
|
|
592,022,210
|
|
575,905,270
|
|
575,905,270
|
|
585,815,792
|
|
564,705,303
|
|
564,705,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China
GrenTech Corporation and Subsidiaries
|
|
Unaudited
Condensed Consolidated Statements of Cash Flows
|
|
(RMB and US$
expressed in thousands)
|
|
|
|
For Nine Months
Ended September
30,
|
|
|
|
2010
|
|
2011
|
|
2011
|
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities
|
|
(321,779)
|
|
(169,611)
|
|
(26,593)
|
|
Net cash used in investing
activities
|
|
(14,581)
|
|
(252,029)
|
|
(39,515)
|
|
Net cash provided by/ (used in)
financing activities
|
|
(10,309)
|
|
232,739
|
|
36,491
|
|
Effect of exchange rate changes
on cash
|
|
(456)
|
|
(2,468)
|
|
(387)
|
|
Net decrease in cash and cash
equivalents
|
|
(347,125)
|
|
(191,369)
|
|
(30,004)
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Grentech Corporation Limited