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ZTE expects overseas sales to triple by 2006

http://english1.people.com.cn/200411/30/eng20041130_165633.html

Shenzhen-based ZTE Corp., the country's second-largest homegrown telecoms gear maker, said Sunday its overseas sales were expected to triple to 40 percent of total sales by 2006.

ZTE, which has already floated its A shares in Shenzhen, plans to raise about US$398 million through another initial public offering in Hong Kong on Dec. 9, Shenzhen Daily reported Tuesday.

It has been exporting to more than 60 countries including India, Pakistan, Russia and Egypt. In the first half of this year, its overseas sales climbed to 13.4 percent of total sales from 11.4 percent in 2002.

"We have been exploring the overseas markets for eight years. In the near term we are focusing on emerging markets, which are very similar to that of China five to 10 years ago," Hou Weigui, chairman of ZTE, told a video conference from New York, where the company is marketing its share offering.

"Due to our successful experience at home in the past, we are able to compete effectively and cover the needs of our customers in those regions, both for CDMA and GSM standards," he said.

ZTE plans to sell 141 million shares, or 15 percent of its enlarged share capital, at HK$17.5 to HK$22.0 per share for its initial public offering. It will fix the IPO price Friday.

There is also an over-allotment option to sell shares representing 13.5 percent of the total number of shares offered.

The company has said it plans to use about 60 percent of the IPO proceeds for overseas expansion.

Higher gross profit margins overseas were offset by bigger distribution costs -- giving a net margin about the same as in the Chinese market, it said.

The rest 40 percent of the IPO proceeds will be used for research and development.

ZTE reported a net profit of 213.2 million yuan (US$25.7) for the third quarter of this year, up from 82.2 million yuan in the same period last year, partially spurred by increased handset sales.

Source: Shenzhen Daily