Huiyuan to tap DTV market via IPO

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Last updated at: (Beijing Time) Tuesday, March 30, 2004

Huiyuan to tap DTV market via IPO

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Huiyuan Technology Group, one of China's top 100 private electronics firms, is on the verge of listing its subsidiary company Huiyuan High-tech Development Co on the Hong Kong stock exchange, the group's president Zhu Kaiyou said.

The Sichuan-based subsidiary is targetting the lucrative but fledgling digital TV market, which Zhu termed as a "cash cow."

The listing, to be realized in the near future, is expected to help Huiyuan become more competitive on the digital TV and cable market, Zhu said, although no further details were available.

Zhu's group, with information technology, electrical appliances and iron production as mainstays, surprised market observers by merging five Sichuan and Chongqing enterprises within three months late last year.

Involved in the IT business for about ten years, Zhu recalled the "cold winter" that chilled China's IT investors in 1999-2000. Large-scale employee lay-offs, small company shutdowns and poorly-run web sites were commonplace at that time.

It was during this period that the electronics giant, part of the Ministry of Information Industry's top 100, orchestrated a high-profile move.

It bought a listed company in 2001 and put its optical communications business on the yuan-dominated A-share market.

"Now the (IT) bubble is receding," he said. "Resources and capital are flowing to big companies."

Zhu believes his group is on the right track and is capable of attracting talent and resources.

The group notched up a revenue of 2 billion yuan (US$242 million) in 2003, and aims to achieve 3 billion yuan (US$363 million) this year.

Zhu is confident about this lofty target, saying "we are well positioned to make it."

But he refused to comment on whether the listing will play a big part in Huiyuan's performance this year.

But one thing is clear: the ambitious boss is determined to explore the digital TV market.

"Actually, we have been in this market for a long time," he said.

"We feel it is the right time for us to give more priority to this business," he said, referring to an emerging DTV market powered by the country's plan to replace the current analogue TV network with DTV by 2015.

And Zhu's plan for going public is meant to capitalize on this trend.

However, analysts caution Huiyuan should be wary of the uncertainty and ambiguity of this underdeveloped market, although they say Huiyuan's vision is on the ball.

"Domestically, the demand for DTVs and related equipment is still very low," said Luo Qingqi, senior director of Pully Consulting, which has long been monitoring the household electric appliance industry.

"Any blind investment expansion in the sector could be precarious," he said.

The sector remains immature, he explained, as a set of uniform DTV standards are still pending and DTV programmes are poorly supplied.

"The breakneck growth of the sector has not come for the time being," Luo stressed.

"Internationally, our products, like DTVs, are not as competitive as many had imagined," Luo explained, hinting that overseas players flocking in could squeeze domestic players.

Source:China Daily

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