Hong Kong-based Comba Telecom Systems, the first listingon the Singapore Exchange (SGX) this year, is eyeing a more significant proportion of business outside its primary market in China.
On Jan 4, the company — first listed in Hong Kong in 2003 — made its secondary listing on SGX by introduction. It ended its first trading day flat at 25.5 cents and closed unchanged at 25.5 cents on Jan 5.
Comba joins a short but growing register of secondary listings on SGX, with China-based electric vehicle maker Nio and alcohol distributor Emperador from the Philippines, two examples from last year.
The company was co-founded by chairman Fok Tung Ling in 1995 and has since built up a wide range of capabilities in the mobile telecoms space. Today, it is poised to deliver next-generation 5G systems to better support businesses and industries’ digitalisation.
The bulk of Comba’s business is from the leading China-based telecom operators, but it also has a diverse customer base of around 1,300 companies, including Singapore operators Singapore Telecommunications (Singtel), StarHub and M1. Specifically, it has provided in-building coverage for projects such as Jewel Changi Airport and Marina One.
Comba’s secondary listing in Singapore comes almost two decades after it first established an office in the country in 2003. The Singapore office began with just four employees. Today, the office comprises a team of over 25 who are involved in multiple facets of Comba’s global business.
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In an interview with The Edge Singapore, Comba’s executive director Annabel Huo says that Singapore has always been an “important location” for Comba, and increasingly so as the company looks to expand its footprint globally.
Huo, daughter of Fok, describes the team in Singapore, which supports the neighbouring Asean markets as well, as “very skilled” and specialised. “Because of the talent pool that we found in Singapore, which possesses not just technical expertise but also has a language advantage, we realised that it would be suitable to have a team in Singapore to serve us globally,” she says.
Comba sees Singapore as another fundraising channel and SGX as a new platform to reach out to different investors to complement its primary Hong Kong listing. “We see that as a fundraising platform, Singapore will see more activity in the future. Many buy-side fund managers are based in Singapore,” says Ken Chang, Comba’s CFO.
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Given the company’s increasing business focus on Southeast Asia and the relative amount of capital in Singapore compared to the rest of the region, SGX became a natural listing destination. “Having a secondary listing [in Singapore] will expand our cover market function and also be able to attract more equity capital,” he adds.
Recovery in progress
Comba’s listing on SGX comes just after it reversed into the black for the first half of FY2022 ended December, and as China reopens and its order book fills up. Comba went into the red in FY2020 with a 12.5% y-o-y revenue decrease to HK$5.05 billion ($870 million), making a loss of HK$291 million. Although the company’s revenue bounced back in FY2021 to HK$5.8 billion, its loss wid- ened to HK$672 million.
Comba attributes the red ink to the pandemic, which caused a substantial delay in the progress of 5G rollouts across many markets. “Before the pandemic in 2019, operators were keen to deploy 5G. But the pace of projects slowed globally, and we didn’t see much antenna procurement in FY2020 and the first half of FY2021,” explains Chang.
According to him, this slowdown impacted Comba’s internal business in China significantly, as 80% of the company’s domestic business comes from centralised procurement, which was non-existent for 18 months. With no centralised procurement of base station antennas
in FY2020 from China — which makes up around 70% of Comba’s global revenue — the company’s revenue took a hit. He says that the three leading operators in China — China Telecom, China Unicom and China Mobile — only started the centralised procurement of base station antennas again in the middle of FY2021, resulting in a significant rise in its antenna revenue.
On the other hand, the deployment of macro cells in Comba’s network systems business is still on track despite some delay. Chang says the tide changed for Comba in the middle of last year when China’s three operators were “encouraged and keen” to build 5G macro base stations — cellular base stations that send and receive radio signals through large towers and antennas — which will become a recurring source of revenue for the company. China’s macro base stations have increased from fewer than one million in 2020 to over 2.2 million today.
He believes this has been a suitable “ramp-up” for growth in the Chinese domestic market and that this trend will continue. “There are at least 5.5 million macro base stations for the 4G network. Theoretically, the 5G macro base stations should outnumber the 4G ones to have similar coverage.”
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China plateau, international pick-up
Meanwhile, Comba’s international business — from outside China — has seen steady growth of about 10% to 20% every year, and if the company can have its way, this trend will continue. Comba’s international business has grown from 30% to 35% of its total revenue,
but Chang believes this proportion will continue to increase.
He says this will be driven by markets in Europe, North America, the Middle East and Southeast Asia, and that Comba is “bullish” on emerging markets that are still running on 4G but are determined to roll out 5G eventually.
Comba will consider allocating more resources to Singapore to build out its project base and increase headcount, as well as potentially conducting research and development for Comba’s two major camps of products from here.
Aside from Comba’s antennas and subsystems division which accounts for about 50% of its revenue, it also has a network system division, which makes up about 25% of its business. This comprises network enhancement products and small-cell solutions to improve wireless coverage indoors by establishing a neutral host network.
Chang believes there will be a growing range of industrial uses for 5G vertical integration as Comba continues working with telecom operators to expand 5G+ industrial control applications, continues to increase market share in shared indoor wireless network coverage solutions and 5G+ vertical industries, and partners international mobile operators and world-leading manufacturers of core equipment vendors.
Industrial 5G applications that require wireless networks include factory coverage, robotic automation, smart mining projects and even autonomous driving — all part of the Internet of Things (IoT). “There will potentially be 10 times more connections in the
IoT compared to mobile phones, so there are plenty of business-enabling applications that we can proliferate in the future,” he says.
Comba is also preparing for a spin-off and separate listing of Comba Network Group on the Shanghai Stock Exchange Sci-Tech Board. While this has required restructuring work for the company, Chang says Comba wants to ensure that with the network systems unit’s expansion and spin-off, it can function independently while increasing its brand image.
