Phone maker to sell securities

Giant Chinese phone maker Qiaoxing Universal Telephone Inc said yesterday that it will offer securities including both common stocks and warrants worth up to US$100 million to expand the company.

The NASDAQ-listed firm said on Monday (US Eastern Time) that it filed a F-3 universal shelf registration statement with the US Securities and Exchange Commission to sell securities worth US$100 million.

The shelf registration allows Qiaoxing to sell the amount of securities to investors at a time, price and on the terms of its choosing and the company only needs to submit a supplementary filing.

Qiaoxing's stocks on the NASDAQ fell by almost 3 per cent yesterday to US$9.11.

Rick Xiao, Qiaoxing's investor relations officer, said compared with other means of raising capital like issuing convertible bonds, shelf registration is more efficient and cheaper.

"We have been developing very fast in the past two years, so we must use different channels to raise capital for our expansion," said Xiao.

The Huizhou, Guangdong Province-based phone maker said its revenues in the first half of this year reached US$129.8 million and adjusted earnings were US$9.1 million.

The figures for 2003 were US$222 million and US$12.8 million.

Qiaoxing predicted in September that its adjusted earnings for the second half of this year will be around US$18.5 million.

Qiaoxing Chairman Wu Ruilin said the company's growth rate in next year will be another record.

Qiaoxing said in the filing that it intends to use the proceeds for general corporate purposes and working capital, as well as possible investments and acquisitions.

Lu Guoying, a senior telecommunications analyst with domestic research firm CCID Consulting, said competition is intense on the Chinese handset market this year, and with more capital in hand, Qiaoxing will have some advantage in expanding its distribution networks and strengthening its research capability.

According to domestic research house Analysys, shipments of handsets rose by about 10 per cent year-on-year in the third quarter, but their market share fell from 44 per cent in the second quarter to 41 per cent.

As the country is thought to be launching its third-generation (3G) mobile network next year, 3G phones will become an attractive sector requiring a great deal of investment.

Qiaoxing announced last Monday that its subsidiary CECT had developed the first 3G mobile phone and is focusing on developing handsets on the Chinese Time Division Synchronous Code Division Multiple Access (TD-SCDMA) standard.

Source: China Daily