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Enice reports 3.5m RMB loss during China, US expansion

Enice has announced a net loss of 3.5 million RMB on revenue of 161 million RMB and EBITDA of 5.8 million RMB during its expansion across China, the US, and Japan.
Written by Corinne Reichert, Contributor

Chinese telecommunications infrastructure provider Enice has reported its financial results for the first half of calendar 2016, reporting a net loss of 3.5 million RMB -- a 65.13 percent improvement on the 10.1 million RMB loss a year earlier.

Enice (Electronics Network Information of Century East) produced revenue of 160.98 million RMB during the six-month period, up 9 percent from 147.1 million RMB in H1 2015.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) were 5.8 million RMB, up 176.2 percent from 2.1 million RMB.

Enice attributed its rise in revenue and EBITDA primarily to growth in its wireless and radio frequency (RF) products division: A breakdown of its revenue saw Wireless and RF Products add 51.7 million RMB, up 385 percent from 10.67 million RMB; Advanced Solutions add 83.3 million RMB, down from 91.9 million RMB; and Network Engineering Services contribute 26.97 million RMB, down 39 percent from 43.96 million RMB due to "a new business model".

Cash and cash equivalents stood at 3.9 million RMB, down significantly from 31 million RMB last year, with the company expanding across China and into the United States and Japan during the period.

As of June 30, Enice held 29 Chinese registered patents, 28 invention patent applications, and nine software copyrights.

"The first half of 2016 has been a period of continued expansion for the company, with our geographic footprint continuing to grow, as well as successfully securing further contracts with customers in our domestic market of China," said Enice CEO Fred Yu.

"Due to the cyclicality of our business, the majority of the company's revenue and NPAT will be derived from the second half of the year, and we are on track with good momentum going into the second half.

"We are pleased to be building on our relationship with China Tower Company, which is jointly owned by China's three leading telecommunications carriers. With its $36 billion of network assets and plans to build 150,000 telecom towers for base stations, the group is an important partner for Enice."

Enice said it expects initial orders from US customers during the second half of 2016.

Enice in June announced entering the US market via a three-year contract with PCTEL to supply RF products to the data tools, engineering services, and RF vendor.

PCTEL provides solutions to companies in the wireless sector, such as those in healthcare, public safety, education, supervisory control and data acquisition (SCADA), and fleet management. Its connected solutions portfolio sees it deliver antennas and site solutions for carriers, railroads, utility applications, oil and gas companies, and other vertical markets.

Enice, worth AU$8.5 billion in 2015 and predicted to increase by AU$45.5 billion in value over the next four years, debuted on the Australian Securities Exchange (ASX) last October after announcing its initial public offering (IPO) in August 2015.

The supplier has been operating for 15 years in China, building and providing telcos with wireless technologies and supporting services, and claimed that it is in talks with Australian telcos to bring its services to the country.

In January, Enice announced a AU$8.53 million contract to provide China Mobile with 3 million distributed antenna systems (DAS) antennas over 2016 and 2017, and in late December, Enice also secured six new contracts worth a combined AU$14.19 million [PDF] to build out telco infrastructure to the Hubei, Hebei, and Henan provinces.

The contracts involved a network engineering agreement with Zhejiang Mobile, worth AU$3.6 million over 2016 and 2017; a communication pipeline construction project for Henan Mobile, worth AU$2.35 million; DAS services renovation for Hubei Mobile in Q4 2015, worth AU$0.15 million; urban network construction for Jiangsu Mobile in a contract worth AU$3.55 million with Southern Communication; wireless and RF product provision to Hebei Mobile, forecast to generate revenue of AU$1.98 million over 2016 and 2017; and an advanced solutions contract with Nokia-owned Alcatel-Lucent Shanghai Bell, worth AU$2.56 million.

This followed the company announcing its successful tender to supply network engineering services, wireless, and RF products to China Tower [PDF] -- a company owned jointly by China Mobile, China Telecom, and China Unicom -- in mid-December. China Tower was established by the three primary Chinese telcos in 2014 to manage construction, operation, and maintenance of DAS systems, mobile towers, and base stations, holding $36 billion in network assets and planning to build 150,000 mobile towers to act as base stations.

This successful tender saw Enice sign up to supply DAS antennas in the Jiangsu, Henan, and Shandong provinces.

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