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A Bearish Call on China Techfaith Wireless (CNTF)

I was a bit surprised by timezero's swift 180 degree attitude change. Maybe the blatant stock price manipulation disappointed him/her. To that extent I can understand.

But to upgrade this to nationalism issue is a bit emotional. Business wise, CNTF story is not over yet. It is still growing in a relatively rapid pace.

1） During conf call, CNTF exec confirmed that their targeted design models are mid to high end. Meanwhile, after restructuring NEC will focus on mid to high end phones in China market. Therefore it is premature to conclude that CNTF will lose most contracts from NEC.

2) Assume a 100% withdrawal of Japanese companies from China cell phone market. If this is the case, Chinese cell phone players will recover. Then, being the No 1 design house in China, CNTF will get more contracts from them.

3) 3G is finally coming. CNTF should have an edge in competing with other local design houses over 3G technology.

4) It is not fair to relate all Japanese company's failure to CNTF. I don't think CNTF is that powerful, yet.

5) Huawei's IPO is nothing to do with CNTF. Huawei's CEO Mr Ren is far from being Warren Buffet, let alone a national hero.

Stock Pick #1: China Techfaith Wireless (CNTF)

looks like it is heading to single digit again. But at 12.5 level it should have some support for a while.

China Techfaith Wireless Beats By $0.04; Guides Above Consensus; Stock Up 12% in After-Hours Trading (CNTF 3Q05 Earnings)

anyone saw any feedbacks from CNTF's analyst meeting?

Investor Assesses China Techfaith Wireless' Weak Stock Performance (CNTF)

According to the filing, Singapore gov owns 2.25M shares. I'm not sure if it refers to American Deposit share. If yes, and if they bought it from open market, then it means 25% of current float (8.7M AD shares) is being held by Singapore government. The available number of shares for trade is only 6.5M. I'm not sure if this is the case.

For those who are bringing the stock down these days, I wonder how did they get the shares to short. There aren't too many shares available to borrow, and the short interest is not high either. How did this happen?

Probably the underwriters have enough shares got at low price in IPO deal, and selling at this level they still can make money? But why don't they distribute it slowly at higher price? Or maybe they just dump the shares from one pocket to another. Who knows.

Or, it could be that someone knows some good reasons (that we don't know yet) which confirms the stock should be traded at, say$5-7 level, so they are taking advantage of knowing that earlier and shorting the stock for profit.

I'm also puzzled by the fact that there is no big buyers even at this level. Without issuing real bad news, the company is 50% on sale from its IPO price labelled just a few months ago.

Will be interesting to see...

Investor Assesses China Techfaith Wireless' Weak Stock Performance (CNTF)

Good point. It will be interesting to see what happens next month, when they will report earning and meanwhile the 6 month lock-up period is up. I can't locate any insider trading information as of now. Management team should be highly motivated to report a good qtr earning when their shares are set free.

Investor Assesses China Techfaith Wireless' Weak Stock Performance (CNTF)

timezero: Longcheer's current market cap is about 100M US$, P/E is less than 5. CNTF's market cap is 4X that of Longcheer, P/E ~10. Is it possible that CNTF drops another 50% from here to match Longcheer's valuation?

More Thoughts on China Techfaith Wireless (CNTF)

I'm not convinced by your reasoning. According to you, 15$ target is used as baseline. On top of that, assuming people totally overlooked the 137M cash, then the 'invisible' cash should have same earning ability as its enterprise value.

I do not agree because:

1) That cash is not totally overlooked. At least Kaufman's analyst should be aware of it.

2) It's hard to say that the cash itself will have same revenue generating rate as the rest part of the company.

Actually a $22 target looks more reasonable from P/E point of view. I think the $15 target is on the conservative side. A healthy growth company should have more than 20x P/E. However, I just don't buy your approach.

Investor Assesses China Techfaith Wireless' Weak Stock Performance (CNTF)

Just a buy rating w/ $15 price target, nothing more. The timing is interesting though.

Investor Assesses China Techfaith Wireless' Weak Stock Performance (CNTF)

Good analysis timezero! Actually the reason for CNTF to go public at Nasdaq was in the hope of getting a better valuation. Its multiple should be better than the two competitors. $6-7 seems too low, but who knows, we just learned that anything can happen. Business wise, CNTF is better positioned than its competitors, especially in terms of global partnership. Being sector leader it deserves higher multiple.

Investor Assesses China Techfaith Wireless' Weak Stock Performance (CNTF)

Low end cellphone is not an issue for cntf. Longcheer and 2000.hk are holding ok recently. Either something specially bad for cntf happened, or it is a pure mm play. I wonder why the underwriter didn't jump out to defend it, it is traded way below IPO price.

Investor Assesses China Techfaith Wireless' Weak Stock Performance (CNTF)

I'm also puzzling. The stock is at free fall without any real news. Apparently there is something negative going on, and the earning estimate was cut lower recently. But I have no idea how bad it is. For the long term, their business model is probably viable.