Seeking Alpha

Max Analysis'  Instablog

Max Analysis
Send Message
Max Rapaport is a corporate and telecommunications attorney with an avid interest in the universe of small cell technologies, including pico cell, femto cell and microcellular networks, generally. He also publishes articles on the smallcells.com Website related to developments in these areas.... More
My company:
SmallCells
My blog:
SmallCells
  • Core Yamaichi Maintains Buy Rating On Comba – Notes Strength Of Small Cell Initiatives, Citing Comba's Position As An Early Mover In Industry 0 comments
    Jan 2, 2013 10:16 AM | about stocks: CHL, COBJF

    Core Yamaichi maintained its Buy rating on Comba (2342 HK), with a target price: of HK$3.80, and a potential estimated return of +36.2%.

    Notably, the report's authors conducted an interview with Wilson Tong, CFO of Comba, to discuss various development catalysts. Among the core developments noted by Tong was the on-track status of the Comba's small cell roll out. According to Tong, "[u]p to early October, 4 provinces have launched IB-WAS (a form of small cell), while 12 provinces were in trial testing and preparing for commercial application. We believe both Comba and telecos are gaining experience in the technical certification progress, which has been a barrier for the roll out of small cell."

    Moreover, Tong continued, "[w]e now think Femto cell can contribute a single-digit share of revenue in FY13F.

    Furth bolstering Comba's growth prospects, the report notes, core equipment vendors such as "Huawei pose limited competition threat to small cell given that: (i) Promoting small cell solutions aggressively would cannibalize their core equipment business, and (ii) Small cell solutions require service provision as complementary, which is not an advantage of the core equipment vendors."

    One potential growth concern cited by the report is that, although "China Mobile (941 HK) needs small cell service provision to cover its deficiencies in TD-SCDMA network, the pace of IB-WAS roll out is not rapid enough. This is because of the technical certification requirement of a small cell network as its gateway build-up is equivalent to that of a base station. For example, it takes Comba 2 years to complete the certification progress in Guangdong." Notwithstanding, the report concludes, "[w]e believe both Comba and telecos are gaining experience and the certification progress shall speed up…[and we] now think Femto cell can contribute a single-digit share of revenue in FY13F.

    Another concern cited by the report is that "[c]ore equipment vendors like Huawei are stepping into small cell provision. However, management argued the competition threat to Comba is limited given that: (i) Promoting small cell solutions aggressively would cannibalize their core equipment business as there are substitution effect between the two, (ii) Small cell solutions require service provision as complementary, which is not an advantage of the core equipment vendors, and (iii) Core equipment vendors are focusing on small cell products at household level, but with limited presence at corporate level. The report also downplays this concern, noting Comba's position as "the onlyplayer in the wireless enhancement sub-segment with major small cell product offerings, thanks to the Company's first mover advantage in R&D."

Back To Max Analysis' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.