Shares in ZTE Corp surged by the 10 percent daily cap yesterday
after it announced shareholders' approval to sell four billion yuan
(US$526.3 million) in bonds to finance third-generation telephony
development.
Shenzhen-listed ZTE jumped 10 percent to 58.19 yuan, although
the Shenzhen Composite Index dropped by 0.45 percent yesterday.
"The big-cap 3G-related shares, such as China Unicom and ZTE,
are expected to benefit from the coming 3G, and they are favored by
investors," Yue Congzhong, an analyst at Zhongshan Securities, said
in a recent note, who set ZTE's price target above 60 yuan.
ZTE will raise four billion yuan through the sale of five-year
convertible bonds to finance research, manufacture and construction
of 11 projects, including a home-grown TD-SCDMA (Time
Division-Synchronous Code Division Multiple Access) phone and a new
handset platform.
ZTE, the biggest public telecommunications equipment vendor in
China, got the lion's share of China Mobile's 23.7-billion-yuan
order in April to adopt 3G networks in 10 cities, based on
home-grown TD-SCDMA technology.
"The coming 3G will bring a capital feast to equipment makers
and handset vendors," said Wang Jianping, an official at China
Center for Information Industry Development.
Investment in 3G will reach 50 billion yuan to 60 billion yuan
annually from 2007 to 2011, Wang added.
In the first six months, ZTE posted a profit of 460 million
yuan, or 0.48 yuan per share. Its revenue jumped 44 percent to 15.2
billion yuan.
(Shanghai Daily October 18, 2007)
