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CIBC投资分析：China GrenTech
CIBC - GRRF-Covering All of China's Cellular Bases Initiating with Sector Performer Rating 8-13-07.pdf
30 pages August-2007
Covering All of China's Cellular Bases
-Effective 8/10/07, we're initiating coverage of China GrenTech with a Sector
Performer rating. GrenTech supplies wireless coverage solutions to Chinese
carriers and RF components to BTS equipment OEMs. With China showing
strong growth and 3G a new catalyst, we're positive on the outlook.
-We expect China wireless CapEx of $18.3B in 2007 and $19.7B in 2008, of
which roughly 4% will be spent on coverage solutions. As the No. 2 supplier
with a 15%-20% market share, GrenTech should grow with the market and
take share with the move to 3G, which requires all new coverage systems.
-Although pressuring margins, the move into RF components should be a
plus. It allows a lower cost base, diversifies the customer base, and
expands the available market. Management targets 300%-400% growth for
this segment in 2007. Key customers include Huawei and ZTE.
-What keeps us on the sidelines are the high revenue concentration and
price pressure with China Mobile and China Unicom, the intensely
competitive market, and current valuation. The stock trades at only a slight
discount to its group P/E multiple and EV/sales multiple.
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