S U N D A Y , J U N E 19 , 2 0 0 5 15
China market has a penetration rate of only 26 per cent, says Andy Mantel
Comba poised to profit from
huge investment in mobiles
There can be few better examples phones. In between is the wireless $255 million, annual increases of 36
of a growing market than China’s coverage equipment – and that is MANTEL’S CHOICE per cent and 21 per cent respec-
mobile phone industry. With a where Comba comes in. tively.
Paul Clitheroe is a best-selling author on managing money. Photo: SMP mere 25.9 per cent penetration Products such as amplifiers, an- Price on Friday About 74 per cent of the com-
rate, the total subscriber base has tennas and receivers extend cover- recommendation price pany’s turnover was derived from
It isn’t rocket science already swollen to 354 million users
– the world’s largest market.
In the first four months of this
year alone, those phones ran up
age in outdoor areas and eliminate
blind spots indoors. Comba is
China’s leading coverage equip-
ment vendor, with more than 25
indoor products, 16 per cent from
outdoor products and 4.8 per cent
from PHS. From 2001to 2004, Com-
ba had turnover of 36 per cent and
but don’t confuse 378 billion minutes in user time.
To support growth on this scale,
China Mobile has budgeted 65 bil-
per cent market share.
It is believed the Chinese gov-
ernment will issue three 3G licen-
US$18.65 US$12.19 net profit of 28 per cent.
There was strong growth from
indoor-technology sales and ex-
saving with investing lion yuan for capital expenditure
this year, while China Unicom
plans to spend 18 billion yuan.
ces by the end of this year or next
year. The good news is that Comba
has a product stream compatible
The9Ltd US$16.86 US$25.65
ports, but gross margin dropped to
43 per cent from 46 per cent year on
year, due largely to competitive un-
Who is going to benefit from the with the three popular technology (Nasdaq short) dercutting.
consider the average is not enough. investment bonanza? My money is standards used in the new multi- Comba intends to expand its
MEET THE This often happens when they on Comba Telecom, which pro- media networks WCDMA, May 6 customer base so as to win future
MANAGER chase the “next best thing”, choos- vides innovative technology to help CDMA2000 and TD-SCDMA. Petrochina $4.75 $5.35 contracts and management ex-
CHRIS DAVIS ing speculative investment options
that are high risk, or get caught by
operators build reliable network
coverage at lower cost.
Thanks to Comba, telecom opera-
tors will find it relatively easy to up- June 17
pects gross margins to stabilise at
around 40 per cent.
investment scams. More specifically, its antennas, grade to 3G. Comba Telecom $3.25 $3.25 The company is keen to diver-
Australia’s leading media com- Another failing is the tempta- amplifiers and receivers enable The company also diversified sify its product mix and further
mentator on financial issues could tion to time equity markets. Mr operators to avoid building costly last year into the PHS market oper- boost export sales to 10 per cent of
easily afford to retire to his elegant Clitheroe believes success depends base stations. ated by China Telecom and China Comba Telecom’s major customers gross sales this year.
Sydney home and luxury yacht. on time in the market, with assets Apart from China Mobile and Netcom. Although PHS provides SMP Graphic are China Mobile and China Unicom It is trading at 9.6 times estimat-
But 49-year-old Paul Clitheroe, invested over a period. China Unicom – its two major cus- only limited mobile services, the ed earnings with a 2.6 per cent divi-
whose books on making money The Australian government has tomers – Comba is expanding its development of some PHS prod- dend yield, a return on equity of
have sold more than 600,000 copies appointed Mr Clitheroe as chair- international customer base with ucts has helped Comba to establish search and development of digital services after the warranty period about 23 per cent, and a debt-to-
– a rare achievement for an Austra- man of the Consumer and Finan- sales offices in Hong Kong, Singa- relationships with those fixed-line microwave systems, a technology expires. This provides steady and equity ratio of 14 per cent.
lian non-fiction author, carries on cial Literacy Taskforce, which will pore, Thailand and Sweden. operators which are potential can- that complements Comba’s line of recurring income to Comba as its It is estimated that its annual
working, dispensing the same set a national strategy to improve China’s wireless equipment didates for the 3G licences. antennae and repeaters. customer base grows larger. growth rate for the next three years
financial advice that he follows the financial skills of all Australians. market can be categorised in three Comba has also been active in Digital microwave systems are a Although the wireless coverage will be 20 per cent.
himself. His no-hype approach to invest- sectors. The core network equip- the search for high-growth busi- potential growth driver, as large equipment market has competi-
“Investing and, more impor- ing and wealth management fo- ment providers include Huawei nesses that marry well with its stra- enterprises such as oil and power tors like WRI and Powercom, Com- Andy Mantel is managing director
tantly, making money is not as hard cuses on getting rich slowly, al- Technologies and ZTE, who build tegic focus. companies are using microwave ba maintains leadership with com- of Pacific Sun Investment Manage-
as most people might think,” says though his personal wealth was base stations and make routers and For example, last year it in- technology to build internal net- plete provision of equipment and ment and manager of The China
Mr Clitheroe, chairman of Austra- given a hefty boost when AXA Asia switches. The consumer equip- creased its equity interest in US- works to save costs. services. Mantou Fund. The fund is available
lian Money magazine, co-founder Pacific paid A$205 million ($1.21 ment providers including Nokia based WaveLab Holdings to 60 per For current customers, Comba Last year turnover reached to accredited professional investors
and director of financial advice billion) (including $183 million to and Motorola produce mobile cent. WaveLab is engaged in the re- provides extended maintenance $1.093 billion and net profit rose to only. firstname.lastname@example.org
firm ipac, syndicated newspaper shareholders plus a $22 million
columnist and radio commentator. capital injection into the company)
He says investors don’t have to for ipac in 2002.
be rocket scientists to make money He recommends investing in
from investing. “To succeed they quality companies, such as those
need to understand the investment with a fundamental basis behind
facts and learn how to take control their prospective earnings. New
of their investments.” companies that focus on a particu-
This is a discipline that many in- lar market segment such as health
vestors often care could also
overlook. For be of interest,
example, identi- “The key to providing the
fying the differ- investment
ence between investing is not to does not create
saving and in- excessive risk in
vesting is a com- avoid risk but an overall port-
mon cause of sensibly manage it” folio.
confusion. He Quoting the
says saving Paul Clitheroe old maxim that
means putting Investment commentator if the invest-
money aside to ment sounds
cover short- too good to be
term goals such as holidays. This true it probably is, Mr Clitheroe
money should be kept secure and says an element of risk should
accessible. However, in exchange always be considered. “The key to
for security returns are usually low. successful investing is not to avoid
Investing is about accumulating risk but sensibly manage risk. For
money over the long term to pro- example, diversifying investments
vide financial security. This has the across non-correlating investment
potential to generate bigger re- tools such as cash, bonds, property
wards but may be exposed to the and equities.” The same diversifi-
ups and downs of markets. cation concept should apply within
“It is amazing that in so many each investment sector.
instances the better educated the As for the best stock-buying op-
investor or the more money they portunities, Mr Clitheroe says from
earn the more ridiculous their ap- time to time there are episodes of
proach to investing or saving seems genuine panic selling.
to be,” Mr Clitheroe says. Fre- “When an over-priced company
quently executives who are suc- falls a lot, it is a correction,” he said.
cessful in their own businesses fail “Panic is when sellers do not distin-
miserably when it comes to manag- guish between good-quality com-
ing their own investments. panies and poor-quality compa-
Often high-income earners do nies but just want to get cash.
not have a long-term plan and in- “Over the last 30 years there
vest the same amount or less than have been 15 to 20 days of genuine
people on significantly lower in- panic. These provide opportunities
comes. They are also tempted to to buy a good-quality company at
chase high returns because they the same price as a bad company.”
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HANG SENG INDEX DOW JONES INDUSTRIALS
Apr 17 Jun 17 Apr 17 Jun 17
SMP Graphic Source: Bloomberg SMP Graphic Source: Bloomberg
Hong Kong stocks are expected to This week investors tackle the
be range-bound this week with question of how long stocks can
impetus provided by China-linked rise in the face of record high oil
initial public offerings, oil prices prices. Commodity-related shares
and telecom markers, analysts say. pushed up the major stock indexes
“Frankly it could be boring but last week as crude gained four
things are looking more on the days out of five and closed above
upside because liquidity is moving $58 on Friday.
from one sector to another, with “We’ve had a pretty big run in
telecoms appearing the biggest oil prices and it hasn’t seemed to
gainers,” says Conita Hung, head have any impact,” said Alfred
of research at Delta Asia Financial Kugel, chief investment officer at
Group. “Telecoms will be the Atlantic Trust/Stein Roe.
driver, especially the China-related For the week the Dow rose 1.05
telecom stocks.” per cent to 10,623.07, the S&P
For the week the Hang Seng gained 1.57 per cent to 1,216.96,
Index fell 22.73 points, or 0.16 per and Nasdaq was up 1.31 per cent
cent, to 13,912.03. AFP to 2,090.11. Reuters