AsiaInfo tops Q4 profit target, buys rival
By Tony Munroe and Eric Auchard
HONG KONG/NEW YORK, Jan 23 (Reuters) - AsiaInfo Holdings Inc , a Beijing-based supplier of software to China's boom
HONG KONG/NEW YORK, Jan 23 (Reuters) - AsiaInfo Holdings Inc , a Beijing-based supplier of software to China's boom ing telecoms industry, posted fourth quarter profits that beat forecasts and said it paid US$47.3 million to buy a rival.
The company, a favourite of investors eager to tap into the growth of the world's largest mobile phone market, said fourth-quarter net income rose more than four-fold to US$4.3 million, topping the average expectations of US$3.83 million by three analysts surveyed by Reuters.
Fourth-quarter net revenue, which excludes the cost of hardware sold to customers, grew to $20 million, a 42.2 percent increase over the same period of 2000.
Executives said they expected a resumption in demand from mainland carriers after a slowdown in the latter half of 2001 as regulators hashed out a massive restructuring of the industry. Beijing recently said it would reorganise the telecoms sector around four integrated carriers.
"We will start to see gradually in the next few months that the orders should start to pick up from China Telecom, both North and South," president and chief executive James Ding said during a conference call.
Former fixed-line near-monopoly China Telecom is being carved into north and south carriers.
While AsiaInfo signed contracts worth just US$8 million in its third quarter, the figure more than doubled to $18 million in the fourth, indicating that carriers are resuming capital spending, said Salomon Smith Barney analyst David Moy.
"I think everything is on track," Moy said.
BUYING BONSON
AsiaInfo also said it had agreed to pay $47.3 million to buy Guangzhou-based Bonson Information Technology Ltd, a provider of telecoms operation support systems (OSS) used to run communications networks in China. AsiaInfo will pay US$28.9 million in cash and the rest in stock.
Bonson has 200 employees and its chief customer is China Mobile, which is the mainland's biggest cellular carrier.
AsiaInfo said it expects Bonson to post 2001 revenue of US$8.3 million and net profit of US$2.4 million.
"It fits their strategy quite well," Credit Suisse First Boston analyst Jay Chang said of the deal.
Added Salomon's Moy, "one of my concerns was they were holding too much cash and not playing the M&A game."
Bonson's minority shareholders include a unit of Massachusetts based research firm International Data Group.
AsiaInfo said it expects further acquisitions to take place in the fragmented China market for telecoms network services and software.
The firm also said it is well-positioned to fend-off foreign rivals that covet the China market.
AsiaInfo is currently focused on the mobile and data sides of the telecoms business, and is studying opportunities to provide services to the fixed line space. Eventually, executives said the company's services could be applied to industries such as banking, insurance, and brokerages.
For the full year, AsiaInfo reported net income of US$11.7 million, or 28 cents per basic share, compared with a loss of US$2.8 million in 2000. Revenue totaled US$71.4 million, an increase of 60.2 percent.
Including the contribution from Bonson, AsiaInfo said it expects 2002 net revenue to rise between 15 and 25 percent on a pro forma basis, with net income expected in the range of US$18-$19 million.
Shares in AsiaInfo rose 1.36 percent to close at US$18.6505 on Tuesday on Nasdaq. While several analysts say they like AsiaInfo's business, some said the stock is overpriced. The company's price-to-earnings ratio stands at 96.84 times.
00:42 01-23-02
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