[ET Net News Agency, 24 September 2019] Goldman Sachs yesterday hosted Comba Telecom
(02342) management at its Greater China Technology Corporate Day. The research house sees
the company at an inflection point for earnings growth driven by structural opportunities
in 5G antennas and small cells.
Goldman said Comba consistently enjoyed earnings growth in the first 2 years of previous
capex cycles (i.e. 3G and 4G), and it expects Comba's earnings to grow by 169%/59% in
2020/21 to HK$296mn/472mn, primarily driven by 5G antenna and small cells.
Comba is currently in close cooperation with telcos and chipsets makers on 5G small cell
solutions and expects meaningful contribution from 5G small cell sales in 2020. It secured
20-30% antenna market share by revenue in China over the 4G cycle. However, Comba stated
that its initial 5G antenna market share would be low because initial 5G deployment in
China will focus on massive MIMO AAU (active antenna unit), which combines antenna with
radio units.
However, as 5G network expands to suburban and rural areas, more passive antennas
(32TR/16TR or below) will be used to save capex and telcos are likely to directly procure
antennas from companies like Comba, which is essentially the same market practice as in 4G
and is favorable for Comba's market share expansion.
Goldman maintained its "buy" rating and target price of HK$2.5 on Comba. (KL)